10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-18298

Kemper Corporation

(Exact name of registrant as specified in its charter)

Delaware	95-4255452
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One East Wacker Drive, Chicago, Illinois	60601
(Address of principal executive offices)	(Zip Code)

(312) 661-4600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.10 par value per share	New York Stock Exchange
Preferred Share Purchase Rights pursuant to Rights Agreement	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”,“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller Reporting Company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of June 30, 2013, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $1.9 billion based on the closing sale price as reported on the New York Stock Exchange. Solely for purposes of this calculation, all executive officers and directors of the registrant are considered affiliates.

Registrant had 55,510,825 shares of common stock outstanding as of February 13, 2014.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on May 7, 2014 are incorporated by reference into Part III.

Table of Contents

Caution Regarding Forward-Looking Statements		1
	Part I
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	20
Item 3.	Legal Proceedings	21
Item 4.	Mine Safety Disclosures	21
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 8.	Financial Statements and Supplementary Data	66
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	125
Item 9A.	Controls and Procedures	125
Item 9B.	Other Information	126
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	127
Item 11.	Executive Compensation	127
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	127
Item 13.	Certain Relationships and Related Transactions, and Director Independence	128
Item 14.	Principal Accounting Fees and Services	128
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	129
Power of Attorney		130
Signatures		130
Financial Statement Schedules:
Schedule 1 - Investments Other than Investments in Related Parties		SCH I-1
Schedule 2 - Parent Company Financial Statements		SCH II-1
Schedule 3 - Supplementary Insurance Information		SCH III-1
Schedule 4 - Reinsurance Schedule		SCH IV-1
Exhibit Index		E-1

Caution Regarding Forward-Looking Statements

This 2013 Annual Report on Form 10-K (the “2013 Annual Report”), including, but not limited to, the accompanying consolidated financial statements of Kemper Corporation (“Kemper”) and its subsidiaries (individually and collectively referred to herein as the “Company”) and the notes thereto appearing in Item 8 herein (the “Consolidated Financial Statements”), the Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 7 herein (the “MD&A”) and the other Exhibits and Financial Statement Schedules filed as a part hereof or incorporated by reference herein, 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. The reader can identify these statements by the

fact that they do not relate strictly to historical or current facts. They use words such as “believe(s),” “goal(s),” “target(s),” “estimate(s),” “anticipate(s),” “forecast(s),” “project(s),” “plan(s),” “intend(s),” “expect(s),” “might,” “may” and other words and terms of similar meaning in connection with a discussion of future operating, financial performance or financial condition. Forward-looking statements, in particular, include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.

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 2013 Annual Report. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance; actual results could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company’s actual future results and financial condition. The reader should consider the following list of general factors that could affect the Company’s future results and financial condition, as well as those discussed below under Item 1A., “Risk Factors,” in this 2013 Annual Report.

Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are:

Factors related to the legal and regulatory environment in which Kemper and its subsidiaries operate

• Developments in, and outcomes of, initiatives by state officials that could result in significant changes to unclaimed property laws and claims handling practices with respect to life insurance policies, especially to the extent that such initiatives result in retroactive application of new requirements to existing life insurance policy contracts;

• Adverse outcomes in litigation or other legal or regulatory proceedings involving Kemper or its subsidiaries or affiliates;

• Governmental actions, including, but not limited to, implementation of the provisions of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Care Acts”), the Dodd-Frank Act (the “DFA”), the Risk Management and Own Risk and Solvency Assessment Model Act (“RMORSA”) and other new laws, regulations or court decisions interpreting existing laws and regulations or policy provisions;

• Uncertainties related to regulatory approval of insurance rates, policy forms, license applications and similar matters;

Factors relating to insurance claims and related reserves in the Company’s insurance businesses

• The incidence, frequency, and severity of catastrophes occurring in any particular reporting period or geographic area, including natural disasters, pandemics and terrorist attacks or other man-made events;

• The number and severity of insurance claims (including those associated with catastrophe losses) and their impact on the adequacy of loss reserves;

• Changes in facts and circumstances affecting assumptions used in determining loss and loss adjustment expenses (“LAE”) reserves;

• The impact of inflation on insurance claims, including, but not limited to, the effects attributed to scarcity of resources available to rebuild damaged structures, including labor and materials and the amount of salvage value recovered for damaged property;

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• Developments related to insurance policy claims and coverage issues, including, but not limited to, interpretations or decisions by courts or regulators that may govern or influence losses incurred in connection with hurricanes and other catastrophes;

• Orders, interpretations or other actions by regulators that impact the reporting, adjustment and payment of claims;

• Changes in the pricing or availability of reinsurance, or in the financial condition of reinsurers and amounts recoverable therefrom;

Factors related to the Company’s ability to compete

• Changes in the ratings by rating agencies of Kemper and/or its insurance company subsidiaries with regard to credit, financial strength, claims paying ability and other areas on which the Company is rated;

• The level of success and costs incurred in realizing economies of scale and implementing significant business consolidations, reorganizations and technology initiatives;

• Absolute and relative performance of the Company’s products or services;

Factors relating to the business environment in which Kemper and its subsidiaries operate

• Changes in general economic conditions, including performance of financial markets, interest rates, unemployment rates and fluctuating values of particular investments held by the Company;

• Absolute and relative performance of investments held by the Company;

• Heightened competition, including, with respect to pricing, entry of new competitors, introduction of new technologies, refinements of existing products and the development of new products by new and existing competitors;

• Changes in industry trends and significant industry developments;

• Changes in capital requirements, including the calculations thereof, used by regulators and rating agencies;

• Regulatory, accounting or tax changes that may affect the cost of, or demand for, the Company’s products or services or after-tax returns from the Company’s investments;

• The impact of required participation in windpools and joint underwriting associations, residual market assessments and assessments for insurance industry insolvencies;

• Changes in distribution channels, methods or costs resulting from changes in laws or regulations, lawsuits or market forces;

• Increased costs and risks related to data security; and

Other risks and uncertainties described from time to time in Kemper’s filings with the U.S. Securities and Exchange Commission (“SEC”).

No assurances can be given that the results contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. The Company 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 2013 Annual Report. The reader is advised, however, to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.

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PART I

Item 1.    Business.

Kemper is a diversified insurance holding company, with subsidiaries that provide automobile, homeowners, life, health, and other insurance products to individuals and small businesses. Kemper’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments thereto are accessible free of charge through Kemper’s website, kemper.com, as soon as reasonably practicable after such materials are filed with, or furnished to, the SEC.

(a) GENERAL DEVELOPMENT OF BUSINESS

Credit Agreement

Effective December 31, 2013, Kemper amended its unsecured, revolving credit agreement, expiring March 7, 2016 (the “2016 Credit Agreement”) to, among other things, reduce the amount of the aggregate commitments under the 2016 Credit Agreement by $100 million, bringing the amount of aggregate commitments to $225 million, and to increase the amount of indebtedness that may be incurred and outstanding in the aggregate at any time in connection with borrowings from the Federal Home Loan Bank (“FHLB”) or issuances of surplus notes by $150 million, to $250 million, provided that the aggregate indebtedness incurred and outstanding in connection with issuances of surplus notes may not exceed $100 million at any one time. The action resulted from the completion in December 2013 of a process initiated by two of Kemper’s subsidiaries, United Insurance Company of America (“United Insurance”) and Trinity Universal Insurance Company (“Trinity”), to become members of the FHLBs of Chicago and Dallas, respectively. The FHLB memberships provide United Insurance and Trinity with access to additional sources of liquidity and consequently reduce the need for such liquidity at the parent company level. In connection with the finalization of their FHLB memberships, United Insurance and Trinity purchased capital stock in the FHLB of Chicago and Dallas, respectively. In addition, to complete Trinity’s membership in the FHLB of Dallas, which became effective as of December 31, 2013, Trinity and the FHLB of Dallas entered into agreements pursuant to which Trinity may obtain advances from the FHLB of Dallas. See MD&A, “Liquidity and Capital Resources,” and Note 6, “Notes Payable,” to the Consolidated Financial Statements for additional information.

Reserve National

Reserve National Insurance Company (“Reserve National”) began expanding its distribution channels during 2013. Three marketing channel initiatives have been launched - Kemper Senior Solutions, Kemper Benefits, and Kemper Dental. Kemper Senior Solutions markets life insurance and home health care insurance products focusing on the individual senior age demographic of the market place. Kemper Benefits and Kemper Dental sell voluntary products in the employer market place. Brokers and non-exclusive independent agents market and distribute Reserve National’s supplemental insurance products in these new distribution channels. Reserve National appointed 12,900 independent agents in 2013 in connection with these initiatives. See Item 1A., “Risk Factors,” under the caption “Reserve National’s operating history with its expanded distribution channels and new products is limited” and MD&A, “Life and Health Insurance.”

Realignment of Property and Casualty Insurance Business

On February 11, 2014, Kemper issued a press release announcing that it is realigning its Property and Casualty Insurance business. This realignment will result in one Property and Casualty segment for financial reporting purposes beginning with the first quarter of 2014. Accordingly, Kemper Preferred, Kemper Specialty and Kemper Direct will no longer be reported as business segments beginning with the first quarter of 2014.

(b) BUSINESS SEGMENT FINANCIAL DATA

Financial information about Kemper’s business segments for the years ended December 31, 2013, 2012 and 2011 is contained in the following sections of this 2013 Annual Report and is incorporated herein by reference: (i) Note 18, “Business Segments,” to the Consolidated Financial Statements; and (ii) MD&A.

(c) DESCRIPTION OF BUSINESS

Kemper is a diversified insurance holding company, with subsidiaries that provide automobile, homeowners, life, health, and other insurance products to individuals and small businesses. 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 Company’s operations are conducted solely in the United States.

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Kemper’s subsidiaries employ approximately 6,100 full-time associates supporting their operations, of which approximately 300 are employed in the Kemper Preferred segment, 200 are employed in the Kemper Specialty segment, 100 are employed in the Kemper Direct segment, 1,325 are shared by the Kemper Preferred, Kemper Specialty and Kemper Direct segments, 3,950 are employed in the Life and Health Insurance segment and the remainder are employed in various corporate and other staff functions.

Property and Casualty Insurance Business

General

The Company’s property and casualty insurance business operations are conducted primarily through the Kemper Preferred, Kemper Specialty and Kemper Direct segments. In addition, the Life and Health Insurance segment’s career agents also sell property insurance to its customers. Collectively, these segments provide automobile, homeowners, renters, fire, umbrella and other types of property and casualty insurance to individuals and commercial automobile insurance to businesses.

Earned premiums from automobile insurance in these segments accounted for 50%, 52% and 54% of the Company’s consolidated insurance premiums earned in 2013, 2012 and 2011, respectively. Revenues from automobile insurance in these segments accounted for 44%, 47% and 50% of Kemper’s consolidated revenues from continuing operations in 2013, 2012 and 2011, respectively. Homeowners insurance in these segments accounted for 16%, 15% and 14% of the Company’s consolidated insurance premiums earned in 2013, 2012 and 2011, respectively. Homeowners insurance in these segments accounted for 14%, 14% and 13% of the Company’s consolidated revenues from continuing operations in 2013, 2012 and 2011, respectively.

Property insurance indemnifies an insured with an interest in physical property for loss of, or damage to, such property. Casualty insurance primarily covers liability for damage to property of, or injury to, a person or entity other than the insured. In most cases, casualty insurance also obligates the insurance company to provide a defense for the insured in litigation arising out of events covered by the policy.

Kemper Preferred and Kemper Specialty distribute their products through independent agents who are paid commissions for their services. Kemper Direct distributes its products through employer-sponsored voluntary benefit programs and other affinity relationships and formerly marketed its products directly to consumers. Kemper Direct ceased direct-to-consumer marketing activities in 2012.

Kemper Preferred

Kemper Preferred, based in Jacksonville, Florida, conducts business in 38 states and the District of Columbia. Kemper Preferred primarily sells preferred and standard risk automobile and homeowners insurance. Its insurance products are offered by approximately 6,000 independent insurance agents. Kemper Preferred’s insurance products accounted for 60% of the aggregate insurance premium revenues of the Company’s property and casualty insurance business in 2013. As shown in the following table, five states provided more than half of Kemper Preferred’s premium revenues in 2013.

State	Percentage of Total Premiums
New York	20	%
California	13
North Carolina	13
Texas	9
Connecticut	5

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Kemper Specialty

Kemper Specialty, based in Dallas, Texas, conducts business in 21 states, principally in the southwest and western United States. Kemper Specialty provides personal and commercial automobile insurance. Its policyholders tend to be value-minded consumers who have had difficulty obtaining standard or preferred risk insurance, usually because of their driving records, claims experience or premium payment history. Kemper Specialty’s products are offered through approximately 9,300 independent agents and brokers. Kemper Specialty’s insurance products accounted for 27% of the aggregate insurance premium revenues of the Company’s property and casualty insurance business in 2013. As shown in the following table, five states provided more than three-fourths of Kemper Specialty’s premium revenues in 2013.

State	Percentage of Total Premiums
California	41	%
Texas	22
Louisiana	6
Washington	5
Colorado	5

Kemper Direct

Kemper Direct, based in Chicago, Illinois, underwrites a broad spectrum of personal automobile insurance risks, ranging from preferred to non-standard. Kemper Direct also offers homeowners and renters insurance complementing its automobile insurance business. It currently distributes its 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 marketed its products directly to consumers through a variety of direct-to-consumer websites, including its own websites. Kemper Direct’s insurance products are available in 47 states and the District of Columbia. Kemper Direct’s insurance products accounted for 8% of the aggregate insurance premium revenues of the Company’s property and casualty insurance business in 2013. As shown in the following table, five states provided more than half of Kemper Direct’s premium revenues in 2013.

State	Percentage of Total Premiums
New York	17	%
California	13
Florida	11
Georgia	7
Connecticut	6

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Property and Casualty Loss and Loss Adjustment Expense Reserves

The Company’s reserves for losses and LAE for property and casualty insurance (“Property and Casualty Insurance Reserves”) are reported using the Company’s estimate of its ultimate liability for losses and LAE for claims that occurred prior to the end of any given accounting period but have not yet been paid. Property and Casualty Insurance Reserves by business segment at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Business Segments:
Kemper Preferred	$	412.8	$	452.3
Kemper Specialty	196.4		215.9
Kemper Direct	133.4		177.8
Life and Health Insurance	5.3		7.0
Total Business Segments	747.9		853.0
Discontinued Operations	83.0		100.7
Unallocated Reserves	12.6		16.9
Total Property and Casualty Insurance Reserves	$	843.5	$	970.6

In estimating the Company’s Property and Casualty Insurance Reserves, the Company’s actuaries exercise professional judgment and must consider, and are influenced by, many variables that are difficult to quantify. Accordingly, the process of estimating and establishing the Company’s Property and Casualty Insurance Reserves is inherently uncertain and the actual ultimate net cost of claims may vary materially from the estimated amounts reserved. The reserving process is particularly imprecise for claims involving asbestos, environmental matters, construction defect and other emerging and/or long-tailed exposures that may not be discovered or reported until years after the insurance policy period has ended. Property and Casualty Insurance Reserves related to the Company’s Discontinued Operations are predominantly long-tailed exposures, of which $35.2 million was related to asbestos, environmental matters and construction defect exposures at December 31, 2013. See MD&A, “Critical Accounting Estimates,” under the caption “Property and Casualty Insurance Reserves for Losses and Loss Adjustment Expenses” beginning on page 58 for a discussion of the Company’s reserving process and the factors considered by the Company’s actuaries in estimating the Company’s Property and Casualty Insurance Reserves.

The Company’s goal is to ensure that its total reserves for property and casualty insurance losses and LAE are adequate to cover all costs, while minimizing variation from the time reserves for losses and LAE are initially estimated until losses and LAE are fully developed. Changes in the Company’s estimates of these losses and LAE, also referred to as “development,” will occur over time and may be material. Favorable development is recognized and reported in the Consolidated Financial Statements when the Company decreases its previous estimate of ultimate losses and LAE and results in an increase in net income in the period recognized, whereas adverse development is recognized and reported in the Consolidated Financial Statements when the Company increases its previous estimate of ultimate losses and LAE and results in a decrease in net income.

Development for each of the Company’s continuing business segments and discontinued operations in 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	Favorable (Adverse) Development
	2013		2012		2011
Continuing Operations:
Kemper Preferred	$	27.5	$	4.8	$	19.1
Kemper Specialty	4.9		2.3		9.4
Kemper Direct	25.6		17.8		3.9
Life and Health Insurance	1.8		0.3		2.6
Total Favorable Development from Continuing Operations, Net	59.8		25.2		35.0
Discontinued Operations	4.8		6.3		(1.9		)
Total Favorable Development, Net	$	64.6	$	31.5	$	33.1

See MD&A, “Catastrophes,” “Kemper Preferred,” “Kemper Specialty,” “Kemper Direct,” and “Life and Health Insurance,” for the impact of development on the results reported by the Company’s business segments. Also see MD&A, “Critical Accounting

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Estimates,” under the caption “Property and Casualty Insurance Reserves for Losses and Loss Adjustment Expenses” for additional information about the Company’s reserving practices.

See Note 5, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for a tabular reconciliation for the three most recent annual periods setting forth the Company’s Property and Casualty Insurance Reserves as of the beginning of each year, incurred losses and LAE for insured events of the current year, changes in incurred losses and LAE for insured events of prior years, payments of losses and LAE for insured events of the current year, payments of losses and LAE for insured events of prior years and the Company’s Property and Casualty Insurance Reserves at the end of the year and additional information regarding the nature of adjustments to incurred losses and LAE for insured events of prior years.

Catastrophe Losses

Catastrophes and natural disasters are inherent risks of the property and casualty insurance business. These catastrophic events and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and winter storms. Such events result in insured losses that are, and are expected to be, a material factor in the results of operations and financial position of Kemper’s property and casualty insurance companies. Further, because the level of insured losses that could occur in any one year cannot be accurately predicted, these losses contribute to material year-to-year fluctuations in the results of operations and financial position of these companies. Specific types of catastrophic events are more likely to occur at certain times within the year than others. This factor adds an element of seasonality to property and casualty insurance claims. The occurrence and severity of catastrophic events cannot be accurately predicted in any year. However, some geographic locations are more susceptible to these events than others. The Company has endeavored to manage its direct insurance exposures in certain regions that are prone to naturally occurring catastrophic events through a combination of geographic diversification, restrictions on the amount and location of new business production in such regions, and reinsurance. The Company has adopted the industry-wide catastrophe classifications of storms and other events promulgated by Insurance Services Office, Inc. (“ISO”) to track and report losses related to catastrophes. ISO classifies a disaster as a catastrophe when the event causes $25 million or more in direct insured losses to property and affects a significant number of policyholders and insurers. ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry. The discussions throughout this 2013 Annual Report utilize ISO’s definition of catastrophes.

The process of estimating and establishing reserves for catastrophe losses is inherently uncertain and the actual ultimate cost of a claim, net of reinsurance recoveries, may vary materially from the estimated amount reserved. See Item 1A., “Risk Factors,” under the caption “Catastrophe losses could materially and adversely affect the Company’s results of operations, liquidity and/or financial condition, the availability of reinsurance and the ratings of Kemper and its insurance subsidiaries” for a discussion of catastrophe risk. See Note 20, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for a discussion of the factors that influence the process of estimating and establishing reserves for catastrophes.

Reinsurance

The Company manages its exposure to catastrophes and other natural disasters through a combination of geographical diversification, restrictions on the amount and location of new business production in certain regions and reinsurance. To limit its exposures to catastrophic events, the Company maintains a primary catastrophe reinsurance program for its property and casualty insurance businesses. Coverage for the primary catastrophe reinsurance program is provided in various layers. The Company also purchases reinsurance from the Florida Hurricane Catastrophe Fund (the “FHCF”) for hurricane losses in Florida at retentions lower than those described below for the Company’s primary catastrophe reinsurance program. In addition to these programs, the Kemper Preferred segment purchased reinsurance during a three-year period that ended on June 1, 2013 for catastrophe losses in North Carolina at retentions lower than the Company’s primary catastrophe reinsurance program.

Coverage for the primary catastrophe reinsurance program effective January 1, 2014 is provided in various layers as presented below:

	Catastrophe Losses and LAE				Percentage of Coverage
DOLLARS IN MILLIONS	In Excess of		Up to
Kemper Preferred, Kemper Direct and Kemper Specialty Segments
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		95.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		400.0		95.0

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The estimated aggregate annual premium in 2014 for the program presented in the preceding table is $18.9 million for the Kemper Preferred, Kemper Direct and Kemper Specialty catastrophe reinsurance program. In the event that the Company’s incurred catastrophe losses and LAE covered by its catastrophe reinsurance program exceed the retention for a particular layer, the program requires one reinstatement of such coverage. In such an instance, the Company is required to pay a reinstatement premium to the reinsurers to reinstate the full amount of reinsurance available under such layer. The reinstatement premium is a percentage of the original premium based on the ratio of the losses in excess of the Company’s retention to the reinsurers’ coverage limit.

The coverage presented in the preceding table difers from the coverage provided in 2013, 2012 and 2011. See Note 20, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for information pertaining to the primary catastrophe reinsurance programs for the Kemper Preferred, Kemper Direct and Kemper Specialty segments for 2013, 2012 and 2011.

Prior to 2013, companies operating in the Life and Health Insurance segment participated in a catastrophe reinsurance program separate and apart from the catastrophe reinsurance programs covering the Kemper Preferred, Kemper Direct and Kemper Specialty segments. Over the last several years, the Life and Health Insurance segment has been reducing its exposure to catastrophic events through the intentional run-off of its dwelling insurance business. Accordingly, the Life and Health Insurance segment did not renew its catastrophe reinsurance program for 2013. See Note 20, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for information pertaining to the Life and Health Insurance segment’s participation in the Company’s catastrophe reinsurance programs for 2012 and 2011.

In addition to the catastrophe loss exposures caused by natural events described above, Kemper’s property and casualty insurance companies are exposed to losses from catastrophic events that are not the result of acts of nature, such as acts of terrorism, the nature, occurrence and severity of which in any period cannot be accurately predicted. The companies have reinsurance coverage to address certain exposures to potential future terrorist attacks. The reinsurance coverage for certified events, as designated by the federal government, is from the Terrorist Risk Insurance Act and the coverage for non-certified events is available in the catastrophe reinsurance program for Kemper’s property and casualty insurance companies. However, certain perils, such as biological, chemical, nuclear pollution or contamination, are excluded from the Company’s reinsurance coverage for non-certified events.

In addition to the catastrophe reinsurance programs described above, Kemper’s property and casualty insurance companies utilize other reinsurance arrangements to limit their maximum loss, provide greater diversification of risk and minimize exposures on larger risks.

Under the various reinsurance arrangements, Kemper’s property and casualty insurance companies are indemnified by reinsurers for certain losses incurred under insurance policies issued by the reinsurers. As indemnity reinsurance does not discharge an insurer from its direct obligations to policyholders on risks insured, Kemper’s property and casualty insurance companies remain directly liable. However, provided that the reinsurers meet their obligations, the net liability for Kemper’s property and casualty insurance companies is limited to the amount of risk that they retain. Kemper’s property and casualty insurance companies purchase their reinsurance only from reinsurers rated “A-” or better by A. M. Best Co., Inc. (“A.M. Best”), at the time of purchase. A.M. Best is an organization that specializes in rating insurance and reinsurance companies.

For further discussion of the reinsurance programs, see Note 20, “Catastrophe Reinsurance,” and Note 21, “Other Reinsurance,” to the Consolidated Financial Statements.

Pricing

Pricing levels for property and casualty insurance are influenced by many factors, including the frequency and severity of claims, state regulation and legislation, competition, general business and economic conditions, including market rates of interest, inflation, expense levels, and judicial decisions. In addition, many state regulators require consideration of investment income when approving or setting rates, which could reduce underwriting margins. See MD&A under the captions “Kemper Preferred,” “Kemper Specialty” and “Kemper Direct.”

Competition

Based on the most recent annual data published by A.M. Best as of the end of 2012, there were 1,300 property and casualty insurance groups in the United States. Kemper’s property and casualty group was among the top 15% of property and casualty insurance groups in the United States as measured by net written premiums, policyholders’ surplus and admitted assets in 2012. Among all personal lines automobile insurance writers, Kemper’s property and casualty group was the 22nd largest writer as measured by net written premiums in 2012.

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Rankings by admitted assets, net premiums written and capital and surplus were:

	Ordinal	Percentile
Measurement	Rank	Rank
Net Admitted Assets	120	90	%
Net Written Premiums	55	95
Capital and Surplus	137	89

In 2012, the property and casualty insurance industry’s estimated net premiums written were $467 billion, of which nearly 60% were accounted for by the top 50 groups of property and casualty insurance companies. Kemper’s property and casualty insurance companies wrote less than 1% of the industry’s estimated 2012 premium volume.

Property and casualty insurance is a highly competitive business, particularly with respect to personal automobile insurance. Kemper’s property and casualty insurance companies compete on the basis of, among other measures, (i) using suitable pricing segmentation, (ii) maintaining underwriting discipline, (iii) offering products in selected markets or geographies, (iv) utilizing technological innovations for the marketing and sale of insurance, (v) controlling expenses, (vi) maintaining adequate ratings from A.M. Best and other ratings agencies and (vii) providing quality services to agents and policyholders. See Item 1A., “Risk Factors,” under the caption “The insurance industry is highly competitive.”

Life and Health Insurance Business

The Company’s Life and Health Insurance segment consists of Kemper’s wholly-owned subsidiaries, United Insurance, The Reliable Life Insurance Company (“Reliable”), Union National Life Insurance Company (“Union National Life”), Mutual Savings Life Insurance Company (“Mutual Savings Life”), United Casualty Insurance Company of America (“United Casualty”), Union National Fire Insurance Company (“Union National Fire”), Mutual Savings Fire Insurance Company (“Mutual Savings Fire”) and Reserve National. As discussed below, United Insurance, Reliable, Union National Life, Mutual Savings Life, United Casualty, Union National Fire and Mutual Savings Fire (the “Kemper Home Service Companies”) distribute their products through a network of employee, or “career,” agents. Reserve National distributes its products through a network of independent agents and brokers. These career agents, independent agents and brokers are paid commissions for their services.

Earned premium from life insurance accounted for 19%, 19% and 18% of the Company’s consolidated insurance premiums earned in 2013, 2012 and 2011, respectively. Revenues from life insurance accounted for 24% of the Company’s consolidated revenues from continuing operations in each of the years ended December 31, 2013, 2012 and 2011. As shown in the following table, five states provided approximately half of the premium revenues in this segment in 2013.

State	Percentage of Total Premiums
Texas	21	%
Louisiana	11
Alabama	7
Mississippi	6
Florida	4

Kemper Home Service Companies

The Kemper Home Service Companies, based in St. Louis, Missouri, focus on providing individual life and supplemental accident and health insurance products to customers of modest incomes who desire basic protection for themselves and their families. Their leading product is ordinary life insurance, including permanent and term insurance. Face amounts of these policies are lower than those of policies typically sold to higher income customers by other companies in the life insurance industry. Approximately 78% of the Life and Health Insurance segment’s premium revenues are generated by the Kemper Home Service Companies.

The Kemper Home Service Companies employ nearly 2,600 career agents to distribute their products in 25 states and the District of Columbia. These career agents are full-time employees who call on customers in their homes to sell insurance products, provide services related to policies in force and collect premiums, typically monthly. Premiums average about $18.50

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per policy per month. Permanent and term policies are offered primarily on a non-participating, guaranteed-cost basis. These career agents also distribute certain property insurance products for the Kemper Home Service Companies.

Reserve National

Reserve National, based in Oklahoma City, Oklahoma, is licensed in 44 states throughout the United States and has traditionally specialized in the sale of Medicare Supplement insurance and limited health insurance coverages such as fixed indemnity and accident-only plans, primarily to individuals in rural areas who often do not have access to a broad array of accident and health insurance products tailored to meet their individual and family needs. There are approximately 240 independent agents that typically represent only Reserve National.

Reserve National began expanding its distribution channels during 2013. Three marketing channel initiatives have been launched - Kemper Senior Solutions, Kemper Benefits, and Kemper Dental. Kemper Senior Solutions markets life insurance and home health care products focusing on the individual senior age demographic of the market place. Kemper Benefits and Kemper Dental sell voluntary products in the employer market place. Brokers and non-exclusive independent agents are utilized to market and distribute products in these new distribution channels. Reserve National appointed 12,900 independent agents in 2013 in connection with these initiatives.

See “Regulation,” under this Item 1 beginning on page 11, Item 1A., “Risk Factors,” under the caption “Reserve National’s operating history with its expanded distribution channels and new products is limited,” and MD&A, “Life and Health Insurance,” for a discussion of the impact of the Health Care Acts on Reserve National.

Reinsurance

Consistent with insurance industry practice, the Company’s life and health insurance companies utilize reinsurance arrangements to limit their maximum loss, provide greater diversification of risk and minimize exposures on larger risks. Prior to 2013, the segment’s reinsurance arrangements included excess of loss reinsurance coverage specifically designed to protect against losses arising from catastrophic events under the property insurance policies distributed by the Kemper Home Service Companies’ agents and written by Kemper’s subsidiaries, United Casualty, Union National Fire and Mutual Savings Fire, and reinsured by Kemper’s subsidiary, Trinity, or written by Capitol County Mutual Fire Insurance Company (“Capitol”), a mutual insurance company owned by its policyholders, and its subsidiary, Old Reliable Casualty Company (“ORCC”), and reinsured by Trinity. Over the last several years, the segment has been intentionally reducing its exposure to catastrophic events through the run-off of its dwelling insurance business. Accordingly, except for catastrophe reinsurance provided by the FHCF, the Kemper Home Service Companies, Capitol and ORCC did not renew the primary catastrophe reinsurance program for 2013. The FHCF provides reinsurance for catastrophe losses in Florida. See Note 20, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for additional information pertaining to the segment’s primary catastrophe reinsurance programs for 2012 and 2011.

Lapse Ratio

The lapse ratio is a measure of a life insurer’s loss of in-force policies. For a given year, this ratio is commonly computed as the total face amount of individual life insurance policies lapsed, surrendered, expired and decreased during such year, less policies increased and revived during such year, divided by the total face amount of policies at the beginning of the year plus the face amount of policies issued and reinsurance assumed in the prior year. The Life and Health Insurance segment’s lapse ratio for individual life insurance was 7%, 8% and 9% in 2013, 2012 and 2011, respectively.

The customer base served by the Kemper Home Service Companies and competing life insurance companies tends to have a higher incidence of lapse than other demographic segments of the population. Thus, to maintain or increase the level of its business, the Kemper Home Service Companies must write a high volume of new policies.

Pricing

Premiums for life and health insurance products are based on assumptions with respect to mortality, morbidity, investment yields, expenses, and lapses and are also affected by state laws and regulations, as well as competition. Pricing assumptions are based on the experience of Kemper’s life and health insurance subsidiaries, as well as the industry in general, depending on the factor being considered. The actual profit or loss produced by a product will vary from the anticipated profit if the actual experience differs from the assumptions used in pricing the product.

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Premiums for policies sold by the Kemper Home Service Companies are set at levels designed to cover the relatively high cost of “in-home” servicing of such policies. As a result of such higher expenses, incurred claims as a percentage of earned premiums tend to be lower for companies utilizing this method of distribution than the life insurance industry average.

Premiums for Medicare supplement and other accident and health policies must take into account the rising costs of medical care. The annual rate of medical cost inflation has historically been higher than the general rate of inflation, necessitating frequent rate increases, most of which are subject to approval by state regulators.

Competition

Based on the most recent data published by A.M. Best as of the end of 2012, there were 485 life and health insurance company groups in the United States. The Company’s Life and Health Insurance segment ranked in the top 20% of life and health insurance company groups, as measured by admitted assets, net premiums written and capital and surplus. Rankings by admitted assets, net premiums written and capital and surplus were:

	Ordinal	Percentile
Measurement	Rank	Rank
Net Admitted Assets	87	82	%
Net Written Premiums	89	81
Capital and Surplus	84	82

Kemper’s life and health insurance subsidiaries generally compete by using appropriate pricing, offering products to selected markets or geographies, controlling expenses, maintaining adequate ratings from A.M. Best and providing competitive services to agents and policyholders.

Investments

The quality, nature and amount of the various types of investments that can be made by insurance companies are regulated by state laws. Depending on the state, these laws permit investments in qualified assets, including, but not limited to, municipal, state and federal government obligations, corporate bonds, real estate, preferred and common stocks, investment partnerships, and limited liability investment companies and limited partnerships. In addition, the quality, nature and amount of the various types of investments held by Kemper’s insurance subsidiaries affect the amount of asset risk calculated by regulators and rating agencies in determining risk-based capital (“RBC”). See “Regulation” immediately following this subsection of Item 1 and Item 1A., “Risk Factors,” under the caption “The Company’s investment portfolio is exposed to a variety of risks that may negatively impact net investment income and cause realized and unrealized losses.”

The Company employs a total return investment strategy, with an emphasis on yield, while maintaining liquidity to meet both its short and long-term insurance obligations. See the discussions of the Company’s investments under the headings “Investment Results,” “Investment Quality and Concentrations,” “Investments in Limited Liability Companies and Limited Partnerships,” “Liquidity and Capital Resources” and “Critical Accounting Estimates,” in the MD&A, “Quantitative and Qualitative Disclosures about Market Risk,” in Item 7A and Note 3, “Investments,” Note 13, “Income from Investments,” and Note 22, “Fair Value Measurements,” to the Consolidated Financial Statements.

Regulation

Insurance Regulation

Kemper’s insurance subsidiaries are subject to extensive regulation in the states in which they do business. Such regulation pertains to a variety of matters, including, but not limited to, policy forms, premium rate plans, licensing of agents, licenses to transact business, market conduct, trade practices, claims practices, investments and solvency. The majority of Kemper’s insurance operations are in states requiring prior approval by regulators before proposed rates for property, casualty, or health insurance policies may be implemented. However, provided that the policy form has been previously approved, rates proposed for life insurance generally become effective immediately upon filing with a state, even though the same state may require prior rate approval for other types of insurance. Insurance regulatory authorities perform periodic examinations of an insurer’s market conduct and other affairs. Kemper’s health insurance subsidiaries are also subject to certain regulation by the federal government. For example, the Health Care Acts, and the regulations promulgated thereunder, have established minimum loss ratios, rating restrictions, mandates for essential health benefit coverages, and restrictions or prohibitions on pre-existing condition exclusions and annual and lifetime policy limits for health insurance policies.

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Insurance companies are required to report their financial condition and results of operation in accordance with statutory accounting principles prescribed or permitted by state insurance regulators in conjunction with the National Association of Insurance Commissioners (the “NAIC”). State insurance regulators also prescribe the form and content of statutory financial statements, perform periodic financial examinations of insurers, set minimum reserve and loss ratio requirements and establish standards for the types and amounts of investments. In addition, state regulators require minimum capital and surplus levels and incorporate RBC standards promulgated by the NAIC. These RBC standards are intended to assess the level of risk inherent in an insurance company’s business and consider items such as asset risk, credit risk, underwriting risk and other business risks relevant to its operations. In accordance with RBC formulas, a company’s RBC requirements are calculated and compared to its total adjusted capital to determine whether regulatory intervention is warranted. At December 31, 2013, the total adjusted capital of each of Kemper’s insurance subsidiaries exceeded the minimum levels required under applicable RBC rules.

Kemper’s insurance subsidiaries are required to pay assessments up to prescribed limits to fund policyholder losses or liabilities of insolvent insurance companies under the guaranty fund laws of most states in which they transact business. Kemper’s insurance subsidiaries are also required to participate in various involuntary pools or assigned risk pools, principally involving windstorms and high risk drivers. In most states, the involuntary pool participation of Kemper’s insurance subsidiaries is set in proportion to their voluntary writings of related lines of business in such states. See Item 1A., “Risk Factors,” under the caption “Catastrophe losses could materially and adversely affect the Company’s results of operations, liquidity and/or financial condition, the availability of reinsurance and the ratings of Kemper and its insurance subsidiaries” for a discussion of the impact of required participation in windstorm pools and joint underwriting associations on the ability of the Company to manage its exposure to catastrophic events.

Kemper and its insurance subsidiaries are also subject to the insurance holding company laws of a number of states. Certain dividends and distributions by an insurance subsidiary are subject to prior approval by the insurance regulators of its state of domicile. See Item 1A., “Risk Factors,” under the caption “Kemper relies on receiving dividends from its subsidiaries to service its debt, to pay dividends to its shareholders or make repurchases of its stock.” Other significant transactions between an insurance subsidiary and its holding company or other affiliates may require approval by insurance regulators in the state of domicile of each participating insurance subsidiary. A number of pending and recently approved legislative and regulatory measures may significantly affect the insurance business. In particular, nearly half of all states have already adopted extensive modifications to their holding company laws based on amendments to the Model Insurance Holding Company System Regulatory Act (“IHCS”) adopted by the NAIC in December 2010. With varying effective dates beginning in 2014, these modifications impose new reporting requirements and substantially expand the oversight and examination powers of state insurance regulators with regulatory authority over an insurance company to assess enterprise risks within such company’s entire holding company system that may arise from operations of its insurance and non-insurance affiliates. They also impose new reporting requirements on the ultimate controlling persons of such insurance companies in respect of, among other things, affiliated transactions and divestiture of controlling interests in the insurance companies. In addition, a number of states have adopted the Risk Management and Own Risk and Solvency Assessment Model Act (“RMORSA”) adopted by the NAIC in September 2012. With varying effective dates beginning in 2015, RMORSA requires insurers to maintain an enterprise risk management (“ERM”) framework, perform regular assessments of the adequacy of the ERM framework and the company’s solvency and file an annual ERM assessment summary report. It is anticipated that most states will adopt legislation based on IHCS and RMORSA. Additional regulation has also resulted from other measures in recent years including, among other things, tort reform, the Health Care Acts, the DFA, consumer privacy and data security requirements, credit score regulation, producer compensation regulations, corporate governance requirements and financial services regulation initiatives.

State insurance laws also impose requirements that must be met prior to a change of control of an insurance company or insurance holding company based on the insurer’s state of domicile and, in some cases, additional states in which it is deemed commercially domiciled due to the substantial amount of business it conducts therein. These requirements may include the advance filing of specific information with the state insurance regulators, a public hearing on the matter, and the review and approval of the change of control by such regulators. The Company has insurance subsidiaries domiciled in Alabama, California, Illinois, Louisiana, Missouri, New York, Oklahoma, Oregon, Texas or Wisconsin. In these states, except Alabama, “control” generally is presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of an insurance company. Control is presumed to exist in Alabama with a 5% or more ownership interest in such securities. Any purchase of Kemper’s shares that would result in the purchaser owning Kemper’s voting securities in the foregoing percentages for the states indicated would be presumed to result in the acquisition of control of Kemper’s insurance subsidiaries in those states. Therefore, acquisitions subject to the 10% threshold generally would require the prior approval of insurance regulators in each state in which Kemper’s insurance subsidiaries are domiciled or deemed commercially domiciled, including those in Alabama, while acquisitions subject to the 5% threshold generally would require the prior approval of only Alabama regulators. Similarly, consistent with the IHCS, several states have enacted legislation that requires either the acquiring and/or divesting company to notify and receive regulatory approval for a change in control. Other states are expected to adopt similar provisions.

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Many state statutes also require pre-acquisition notification to state insurance regulators of a change of control of an insurance company licensed in the state if specific market concentration thresholds would be triggered by the acquisition. Such statutes authorize the issuance of a cease and desist order with respect to the insurance company if certain conditions, such as undue market concentration, would result from the acquisition. These regulatory requirements may deter, delay or prevent transactions effecting control of Kemper or its insurance subsidiaries, or the ownership of Kemper’s voting securities, including transactions that could be advantageous to Kemper’s shareholders.

Dodd-Frank Act

The DFA, enacted in July 2010, profoundly increases federal regulation of the financial services industry, of which the insurance industry is a part. Among other things, the DFA formed a Federal Insurance Office charged with monitoring the insurance industry and conducting a study on methods to modernize and improve the insurance regulatory system in the United States. A report on this study that was delivered to Congress in mid-December 2013 concludes that a hybrid approach to regulation, involving a combination of state and federal government action, could improve the U.S. insurance system by attaining uniformity, efficiency and consistency, particularly with respect to solvency and market conduct regulation. A hybrid approach was also recommended to address the perceived need for uniform supervision of insurance companies with national and global activities. It is too early to know whether or how the report’s recommendations might result in changes to the current state-based system of insurance industry regulation or ultimately impact Kemper’s operations.

Item 1A.    Risk Factors.

Kemper is exposed to numerous risk factors that could cause actual results to differ materially from recent results or anticipated future results. The following discussion details the significant risk factors that are specific to the Company. In addition to those described below, the Company’s business, financial condition and results of operations could be materially affected by other factors not presently known by, or considered material to, the Company. Readers are advised to consider all of these factors along with the other information included in this 2013 Annual Report, and to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.

Changes in the application of state unclaimed property laws and related insurance claims handling practices, particularly attempts by state officials to apply such changes retroactively to existing insurance policies through examinations and audits, could result in new requirements that would have a significant effect on (including an acceleration of) the payment and/or escheatment of life insurance death benefits and significantly increase claims handling costs relative to what is currently contemplated by Kemper. If attempts by state officials to impose such new requirements on existing insurance policies are successful on a wide scale, there is a potential for their collective effects to be materially adverse to the Company’s profitability, financial position and cash flows (the “Unclaimed Property Risk Factor”).

In recent years, many states have begun to aggressively expand the application of their unclaimed property laws as they relate to life insurance proceeds. The treasurers or controllers (collectively, “Treasurers”) of a large majority of states have engaged private audit firms to examine the practices and procedures of life insurance companies with respect to the reporting and remittance of proceeds associated with life insurance policies, annuity contracts and retained asset accounts under state unclaimed property laws. Certain related measures are also being taken or considered by state insurance regulators, both individually, and collectively through the auspices of the NAIC. Some state insurance regulators have held administrative hearings and/or have initiated market conduct examinations focused on claims handling and escheatment practices of life insurance companies.

As a result of these audits and examinations, a number of large life insurance companies have agreed to alter historic practices that were previously considered to be lawful and appropriate relative to claims handling and the reporting and remittance of life insurance policy proceeds to the states under state unclaimed property laws. Based on published reports, at least thirteen life insurance companies have entered into settlement agreements with state insurance regulators and eighteen with Treasurers. Under the terms of these agreements, the settling insurance companies typically have agreed to establish a practice of periodically searching for deceased insureds, even prior to the receipt of a death claim, by comparing their in-force policy records against a database of reported deaths maintained by the Social Security Administration or a comparable database (collectively, a “Death Master File” or “DMF”). The settlements typically apply to policies that were in force at any time since January 1, 1992. In conducting these data comparisons against a Death Master File, the insurers are required to use complex matching criteria which may result in ambiguous matches. In such cases, the insurer must either accept such matches as valid and escheat the related policy benefits to the states if the beneficiaries cannot be found, or assume a costly and administratively burdensome process of disproving any such ambiguous matches which may, in some cases, necessitate a review of older records that are not in electronic form. All settlements to date with insurance regulators have involved payment of monetary

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penalties (involving amounts ranging from about $1.9 million up to $40 million), while settlements with Treasurers have required payment of interest on sums remitted to the Treasurers dating from the date of death of the insured (rather than from a date linked to the insurer’s first awareness of death) and extending as far back as January 1, 1995. As hereafter described, Kemper’s life insurance subsidiaries (the “Life Companies”) have resisted attempts to date by certain state officials and their agents to mandate changes to the Life Companies’ claims handling and escheatment practices of the sort embodied in the foregoing settlements and have challenged through legal proceedings the authority of such officials to require such changes. There can be no assurances that the Life Companies will ultimately be successful in resisting any such attempts.

Separately, the National Council of Insurance Legislators (“NCOIL”), has adopted model legislation which, if enacted by states as proposed, would require life insurance companies to compare their in-force life insurance policy records against a Death Master File for the purpose of proactively identifying potentially deceased insureds for whom the subject life insurance company has not yet received a claim, including due proof of death. Seven states have enacted legislation of this type, with varying effective dates (the “DMF Statutes”). Such statutes, if construed to apply to life insurance policies in force on the statute’s effective date, could have a significant effect on, including an acceleration of, the payment of life insurance benefits to beneficiaries or, in instances where beneficiaries could not be located, the remittance of such benefits to the states under their unclaimed property laws. In contrast, New Mexico has enacted a version of the model legislation that applies only prospectively to life insurance companies, like Kemper’s life insurance companies (the “Life Companies”), that have not previously used a Death Master File. Similarly, Alabama, has enacted a statute that applies only to policies issued on or after January 1, 2016. In addition, several states have already introduced some form of DMF Statute in 2014, and Kemper believes that it is likely that a number of other states will similarly introduce legislation of this sort in their legislative sessions this year. Kemper cannot presently predict whether any of such legislation will be enacted or, if enacted, exactly what form such legislation will take.

Certain of the Life Companies have filed a lawsuit challenging the validity of the Kentucky DMF Statute insofar as it purports to impose new requirements with respect to existing, previously issued life insurance policies. The trial court in that case denied the subject Life Companies’ motion for summary judgment and held that the requirements of the Kentucky DMF Statute apply to life insurance policies issued before the Kentucky DMF Statute’s January 1, 2013 effective date. The case is on appeal by the subject Life Companies and a decision by the Court of Appeals is unlikely before the second half of 2014. In July 2013, certain of the Life Companies filed a declaratory judgment action, similar to the Kentucky proceeding, in state court in Maryland, asking the court to construe the Maryland DMF Statute as only applying to policies issued on and after the statute’s October 1, 2013 effective date. The State of Maryland defendants filed a motion to dismiss the action on procedural grounds. A decision by the trial court in Maryland on the state’s motion to dismiss is unlikely before the second quarter of 2014.

The Life Companies are the subject of an unclaimed property compliance audit (the “Treasurers’ Audit”) by a private audit firm retained by the Treasurers of thirty-eight states (the “Audit Firm”). In July 2013, the California State Controller (the “CA Controller”) filed a complaint for injunctive relief against the Life Companies in state court in California, seeking an order requiring the Life Companies to produce all of their in-force insurance policy records to the Audit Firm to enable the firm to perform a comparison of such records against a Death Master File and to ascertain whether any of the insureds under such policies may be deceased. The Life Companies have filed a counterclaim in this case against the CA Controller, seeking a declaration that there is no obligation under California’s unclaimed property law to perform a DMF comparison and that the Audit Firm cannot obtain the Life Companies’ records for the purpose of performing such a comparison.

The Life Companies are the subject of a multi-state market conduct examination by six state insurance regulators that is focused on the Life Companies’ claim settlement and policy administration practices, and specifically their compliance with state unclaimed property statutes (the “Multi-State Exam”). In July 2013, the Life Companies received requests from the Illinois Department of Insurance, as the managing lead state for the Multi-State Exam, for a significant volume of additional information, including all of the subject Life Companies’ records of in-force policies and other information of the type requested by the Audit Firm as part of the Treasurers’ Audit and which is the subject of the CA Controller’s complaint.

In September 2013, certain of the Life Companies filed declaratory judgment actions against the insurance regulators in four states participating in the Multi-State Exam, asking the courts in those states to declare that applicable insurance laws do not require life insurers to search a Death Master File to ascertain whether insureds are deceased. The subject Life Companies are also asking the courts to declare that regulators in those states do not have legal authority to (i) obtain life insurers’ policy records for the purpose of comparing data from those records against a Death Master File, and (ii) impose payment obligations on life insurers before a claim and due proof of death have been submitted. These cases are in various stages procedurally and a decision in any of them is unlikely before the second quarter of 2014.

Should these various efforts by state officials succeed in retroactively imposing new claims handling and escheatment requirements with regard to previously issued life insurance policies, they could have a material adverse effect on the

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Company’s profitability, financial position and cash flows. The Company’s stance in opposition to the aforementioned actions by state legislators, Treasurers and insurance regulators, including the Company’s initiation of the litigation described above, also creates a risk of reputational damage to the Company among various constituencies (including its principal insurance regulators, rating agencies, investors, and insurance agents) if the Company’s position is not ultimately vindicated.

See Note 23, “Contingencies,” to the Consolidated Financial Statements and the sections of the MD&A entitled “Life and Health Insurance” and “Liquidity and Capital Resources” for additional information on these matters.

Kemper’s insurance subsidiaries are subject to significant regulation, and emerging practices in the evolving legal and regulatory landscape in which they operate could result in increased operating costs, reduced profitability and limited growth.

Kemper’s insurance subsidiaries operate under an extensive insurance regulatory system. Current laws and regulations encompass a wide variety of matters, including policy forms, premium rates, licensing, market conduct, trade practices, claims practices, investment standards, statutory capital and surplus requirements, reserve and loss ratio requirements, restrictions on transactions among affiliates and consumer privacy. They also require the filing of annual and quarterly financial reports and reports on holding company issues and other matters. Pre-approval requirements restrict the companies from implementing premium rate changes for property, casualty and health insurance policies, and many other actions. Insurance regulators conduct periodic examinations of Kemper’s insurance subsidiaries and can suspend or delay their operations or licenses, require corrective actions, and impose penalties or other remedies available for compliance failures. For a more detailed discussion of the regulations applicable to Kemper’s subsidiaries and these new developments, see “Regulation” in Item 1, beginning on page 11.

These laws and regulations, and their interpretation by the various regulators and courts, are undergoing continual revision and expansion. The legal and regulatory landscape within which Kemper’s insurance subsidiaries conduct their businesses is often unpredictable. As industry practices and regulatory, judicial, political, social and other conditions change, unexpected and unintended issues may emerge. These emerging practices, conditions and issues could adversely affect Kemper’s insurance subsidiaries in a variety of ways, including, for example, by expansion of coverages beyond their underwriting intent, increasing the number or size of claims or accelerating the payment of claims. Industry practices that were considered legally-compliant and reasonable for years may suddenly be deemed unacceptable by virtue of an unexpected court or regulatory ruling or changes in regulatory enforcement policies and practices. One example is the changing application by various state officials of state unclaimed property laws and related claims handling practices that is discussed in the preceding risk factor. Another example involves a rule adopted in 2013 by the Department of Housing and Urban Development (“HUD”) codifying the circumstances in which corporate practices that result in a disparate impact on protected classes may constitute a violation of the Fair Housing Act, even though such practices are neutral on their face. Two insurance industry trade associations have filed lawsuits challenging HUD’s authority to promulgate this rule, though the outcomes of these suits will not likely be known for quite some time. Anticipating such shifts in the law and the impact they may have on the Company and its operations is a difficult task and there can be no assurances that the Company will not encounter such shifts in the future.

The financial market turmoil has resulted in additional scrutiny and proposed regulation of the financial services industry, including insurance companies and their holding company systems. While it is not possible to predict how new laws or regulations or new interpretations of existing laws and regulations may impact the operations of Kemper’s insurance subsidiaries, several recent developments have the potential to significantly impact such operations. This includes state adoption of extensive modifications to the IHCS that will, among other things, substantially expand the oversight and examination powers of state insurance regulators beyond licensed insurance companies to their non-insurance affiliates, and impose new reporting requirements with respect to, among other things, enterprise risk to the organization as a whole, affiliated transactions, and any divestiture of controlling interests in an insurer. In addition, federal legislation has resulted in regulations affecting health insurers under the Health Care Acts, and potential changes to the state insurance regulatory system may result from the DFA. See the discussion of the NAIC model act and the DFA under “Regulation” in Item 1, beginning on page 11.

These new developments and significant changes in, or new interpretations of, existing laws and regulations could make it more expensive for Kemper’s insurance subsidiaries to conduct and grow their businesses.

Legal and regulatory proceedings are unpredictable and, in particular, the phenomenon of runaway jury verdicts could result in one or more unexpected verdicts against the Company that could have a material adverse effect on the Company’s financial results for any given period.

Kemper and its subsidiaries are from time to time involved in lawsuits, regulatory inquiries, and other legal proceedings arising out of the ordinary course of their businesses. Some of these proceedings may involve matters particular to Kemper or one or

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more of its subsidiaries, while others may pertain to business practices in the industry in which Kemper and its subsidiaries operate. Some lawsuits may seek class action status that, if granted, could expose the Company to potentially significant liability by virtue of the size of the putative classes. These matters raise difficult factual and legal issues and are subject to uncertainties and complexities, and the outcomes of these matters are difficult to predict, and the amounts or ranges of potential loss at particular stages in the proceedings are in most cases difficult or impossible to ascertain. A further complication is that even where the possibility of an adverse outcome is deemed to be remote using traditional legal analysis, juries sometimes can and do substitute their subjective views in place of facts and established legal principles. Given the unpredictability of the legal and regulatory landscape in which the Company operates, there can be no assurance that one or more of these matters will not produce a result that could have a material adverse effect on the Company’s financial results for any given period.

For information about the Company’s pending litigation, see Note 23, “Contingencies,” to the Consolidated Financial Statements.

Catastrophe losses could materially and adversely affect the Company’s results of operations, liquidity and/or financial condition, the availability of reinsurance and the ratings of Kemper and its insurance subsidiaries.

Kemper’s property and casualty insurance subsidiaries are subject to claims arising out of catastrophes that may have a significant effect on their results of operations, liquidity and financial condition. Catastrophes can be caused by various events, including, but not limited to, hurricanes, tornadoes, windstorms, earthquakes, hail storms, explosions, severe winter weather and wildfires and may include man-made events, such as terrorist attacks and hazardous material spills. The incidence, frequency and severity of catastrophes are inherently unpredictable, and may be impacted by the uncertain effects of climate change. The extent of the Company’s losses from a catastrophe is a function of both the total amount of insured exposure in the geographic area affected by the event and the severity of the event. The Company could experience more than one severe catastrophic event in any given period.

Kemper’s Life and Health Insurance subsidiaries are particularly exposed to risks of catastrophic mortality, such as pandemic or other events that result in large numbers of deaths. In addition, the occurrence of such an event in a concentrated geographic area could have a severe disruptive effect on the Company’s workforce and business operations. The likelihood and severity of such events cannot be predicted and are difficult to estimate.

The Company uses catastrophe modeling tools developed by third parties to project its potential exposure to catastrophic events under various scenarios. Such models are based on various assumptions and judgments which may turn out to be wrong. The actual impact of one or more catastrophic events could adversely and materially differ from these projections.

Kemper’s insurance subsidiaries seek to reduce their exposure to catastrophe losses through the purchase of catastrophe reinsurance. Reinsurance does not relieve Kemper’s insurance subsidiaries of their direct liability to their policyholders. As long as the reinsurers meet their obligations, the net liability for Kemper’s insurance subsidiaries is limited to the amount of risk that they retain. While the Company’s principal reinsurers are each rated “A-” or better by A.M. Best at the time reinsurance is purchased, the Company cannot be certain that reinsurers will pay the amounts due from them either now, in the future, or on a timely basis. A reinsurer’s insolvency or inability to make payments under the terms of its reinsurance agreement could have a material adverse effect on the Company’s financial position, results of operations and liquidity.

In addition, market conditions beyond the Company’s control determine the availability of the reinsurance protection that Kemper’s insurance subsidiaries may purchase. A decrease in the amount of reinsurance protection that Kemper’s insurance subsidiaries purchase generally should increase their risk of loss. However, if the amount of available reinsurance is reduced, Kemper’s insurance subsidiaries may be forced to incur additional expenses for reinsurance or may not be able to obtain sufficient reinsurance on acceptable terms, which could adversely affect the ability of Kemper’s insurance subsidiaries to write future insurance policies or result in their retaining more risk with respect to such policies.

Kemper’s insurance subsidiaries also manage their exposure to catastrophe losses through underwriting strategies such as reducing exposures in, or withdrawing from, catastrophe-prone areas, establishing appropriate guidelines for insurable structures, and setting appropriate rates, deductibles, exclusions and policy limits. The extent to which Kemper’s insurance subsidiaries can manage their exposure through such strategies may be limited by law or regulatory action. For example, laws and regulations may limit the rate or timing at which insurers may non-renew insurance policies in catastrophe-prone areas or require insurers to participate in wind pools and joint underwriting associations. Generally an insurer’s participation in such pools and associations are based on the insurer’s market share determined on a state-wide basis. Accordingly, even though Kemper’s insurance subsidiaries may not incur a direct insured loss as a result of managing direct catastrophe exposures, they may incur indirect losses from required participation in pools and associations. Laws and regulations requiring prior approval of policy forms and premium rates may limit the ability of Kemper’s insurance subsidiaries to increase rates or deductibles on a

16

timely basis, which may result in additional losses or lower returns than otherwise would have occurred in an unregulated market. See the risk factor below entitled “Kemper’s insurance subsidiaries are subject to significant regulation, and emerging practices in the evolving legal and regulatory landscape in which they operate could result in increased operating costs, reduced profitability and limited growth.”

If the catastrophic risk retained by Kemper’s insurance subsidiaries increases, rating agencies may downgrade the ratings of Kemper and/or its insurance subsidiaries or require Kemper to retain more capital in its insurance businesses to maintain existing ratings. See the risk factor below entitled “A significant downgrade in the ratings of Kemper or its insurance subsidiaries could adversely affect the Company.”

A significant downgrade in the ratings of Kemper or its insurance subsidiaries could adversely and materially affect the Company.

Third-party rating agencies assess the financial strength and rate the claims-paying ability of insurance companies based on criteria established by the rating agencies. Third-party ratings are important competitive factors in the insurance industry. Financial strength ratings are used to assess the financial strength and quality of insurers. A significant downgrade by a recognized rating agency in the ratings of Kemper’s insurance subsidiaries, particularly those operating in the preferred and standard market or offering homeowners insurance, could result in a substantial loss of business if agents or policyholders of such subsidiaries move to other companies with higher claims-paying and financial strength ratings. Any substantial loss of business could have a material adverse effect on the financial condition and results of operations of such subsidiaries. A downgrade in Kemper’s credit rating by Standard & Poor’s (“S&P”), Moody’s Investors Services (“Moody’s”) or Fitch Ratings (“Fitch”) may reduce Kemper’s ability to access the capital markets for general corporate purposes or refinance existing debt.

The insurance industry is highly competitive.

The Company’s insurance businesses face significant competition, and its ability to compete is affected by a variety of issues relative to others in the industry, such as product pricing, service quality, financial strength and name recognition. Competitive success is based on many factors, including, but not limited to, the following:

• Competitiveness of prices charged for insurance policies;

• Selection of agents, web portals and other business partners;

• Compensation paid to agents;

• Underwriting discipline;

• Selectiveness of sales markets;

• Effectiveness of marketing materials;

• Product and technological innovation;

• Ability to detect and prevent fraudulent insurance claims;

• Ability to control operating expenses;

• Financial strength ratings; and

• Quality of services provided to agents and policyholders.

The inability to compete effectively in any of the Company’s insurance businesses could materially reduce the Company’s customer base and revenues and could adversely affect the future results and financial condition of the Company.

See “Competition” in Item 1 of Part I beginning on page 8 and page 11, for more information on the competitive rankings in the property and casualty insurance markets and the life and health insurance markets, respectively, in the United States.

Reserve National’s operating history with its expanded distribution channels and new products is limited.

Reserve National’s business model, which has traditionally focused on providing limited benefit and supplemental accident and health insurance coverages to persons who lack access to traditional private options, continues to be adversely affected by the Health Care Acts. In response, Reserve National has been adapting its business model by placing emphasis on designing and selling supplemental health insurance products that are not expected to be as severely impacted by the Health Care Acts and ceasing to issue health insurance products that are expected to be severely impacted. Because Reserve National’s operating history with respect to some of these supplemental health insurance products, such as dental and vision insurance products, is limited, it supplements its data with industry data and experience in determining rates to charge for these products and projecting returns. It will take several years to develop company-specific experience. Reserve National’s actual experience could adversely and materially differ from the data and experience on which assumptions and projections are based.

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Reserve National also began expanding its distribution channels during 2013. Three marketing channel initiatives have been launched - Kemper Senior Solutions, Kemper Benefits, and Kemper Dental. Kemper Senior Solutions markets small face (final expense) life insurance and home health care products focusing on the individual senior age demographic of the market place. Kemper Benefits and Kemper Dental sell voluntary supplemental insurance products in the employer market place. Brokers and non-exclusive independent agents are utilized to market and distribute products in all three of these new distribution channels. Reserve National appointed 12,900 independent agents in 2013 in connection with these initiatives. Reserve National has limited history on how its products will perform using these distribution channels. It will take several years to determine if actual performance meets, exceeds or is below expectations. If performance is below expectations, Reserve National’s financial position, returns and valuation could be adversely and materially impacted for many years due to the long-term nature of some of the products sold through these distribution channels.

Failure to maintain the security of personal data and the availability of critical systems may result in lost business, reputational harm, and legal costs and regulatory penalties.

Kemper’s insurance subsidiaries obtain and store vast amounts of personal data that can present significant risks to the Company and its customers and employees. An increasing array of laws and regulations govern the use and storage of such data, including, for example, social security numbers, credit card data, and personal health information. The Company’s data systems are vulnerable to security breaches due to the sophistication of cyber-attacks, viruses, malware, hackers and other external hazards, as well as inadvertent errors, equipment and system failures, and employee misconduct. The Company also relies on the ability of its business partners to maintain secure systems and processes that comply with legal requirements and protect personal data. These increased risks and expanding regulatory requirements related to personal data security expose the Company to potential data loss and resulting damages, reputational risk and significant increases in compliance and litigation costs. In the event of non-compliance with the Payment Card Industry Data Security Standard, an information security standard for organizations that handle cardholder information for the major debit, credit, prepaid, e-purse, ATM and point-of-sale cards, such organizations could prevent Kemper’s insurance subsidiaries from collecting premium payments from customers by way of such cards and impose significant fines on Kemper’s insurance subsidiaries.

The Company’s business operations rely on the continuous availability of its computer systems. In addition to disruptions caused by cyber-attacks or other data breaches, such systems may be adversely affected by natural and man-made catastrophes. The Company’s failure to maintain business continuity in the wake of such events may prevent the timely completion of critical processes across its operations, including, for example, insurance policy administration, claims processing, billing, treasury and investment operations and payroll. These failures could result in significant loss of business, fines and litigation.

The Company’s investment portfolio is exposed to a variety of risks that may negatively impact net investment income and cause realized and unrealized losses.

The Company maintains a diversified investment portfolio that is exposed to significant financial and capital market risks, including interest rate, credit, equity price, liquidity risks, risks from changes in tax laws and regulations, and other general economic conditions.

The interest rate environment has a significant impact on the Company’s financial results and position. In recent years, rates have been at or near historic lows. A protracted low interest rate environment would continue to place pressure on net investment income, particularly related to fixed income securities, short-term investments and limited liability investment companies and limited partnerships accounted for under the equity method of accounting (“Equity Method Limited Liability Investments”) that invest in distressed and mezzanine debt of other companies. A decline in interest rates would generally increase the carrying value of the Company’s fixed income securities and its Equity Method Limited Liability Investments that exhibit debt-like characteristics, but it may have an adverse effect on the Company’s investment income as it invests cash in new investments that may yield less than the portfolio’s average rate. In a declining interest rate environment, borrowers may seek to refinance their borrowings at lower rates and, accordingly, prepay or redeem securities the Company holds as investments more quickly than the Company initially expected. Such prepayment or redemption action may cause the Company to reinvest the redeemed proceeds in lower yielding investments. An increase in interest rates would generally reduce the carrying value of a substantial portion of the Company’s investment portfolio, particularly fixed income securities and Equity Method Limited Liability Investments, which typically provide higher returns but at a higher risk.

The Company invests a significant portion of its investment portfolio in equity securities, which generally have more volatile returns than fixed income securities and may experience sustained periods of depressed values. There are multiple factors that could negatively impact the performance of the Company’s equity portfolio, including general economic conditions, industry or sector deterioration and issuer-specific concerns. A decline in equity values may result in a decrease in dividend income, realized losses upon sales of the securities, or other-than-temporary impairment charges on securities still held.

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Interest rates and equity returns also have a significant impact on the Company’s pension and postretirement employee benefit plans. In addition to the impact on carrying values and yields of the underlying assets of the funded plans, interest rates also impact the discounting of the projected and accumulated benefit obligations of the plans. A decrease in interest rates may have a negative impact on the funded status of the plans.

The nature and cash flow needs of the Company and the insurance industry in general present certain liquidity risks that may impact the return of the investment portfolio. If the Company were to experience several significant catastrophic events over a relatively short period of time, investments may have to be sold in advance of their maturity dates to fund payments to claimants, which could result in realized losses. Additionally, increases in illiquidity in the financial markets may increase uncertainty in the valuations of the Company’s investments. This increases the risk that the fair values reported in the Company’s consolidated financial statements may differ from the actual price that may be obtained in an orderly sales transaction.

The Company has also benefited from certain tax laws related to its investment portfolio, including dividends received deductions and tax-exempt municipal securities. Changes in tax laws may have a detrimental effect on the after-tax return of the Company’s investment portfolio.

The Company’s entire investment portfolio is subject to broad risks inherent in the financial markets, including, but not limited to, inflation, regulatory changes, inactive capital markets, governmental and social stability, economic outlooks, unemployment and recession. Changes to these risks and how the market perceives them may impact the financial performance of the Company’s investments.

Kemper and its insurance subsidiaries are subject to various risk rating and capital adequacy measurements that are significantly impacted by various characteristics of their invested assets, including asset type, class and credit rating. The Company’s insurance subsidiaries are also subject to various limitations on the amounts at which they can invest in individual assets or certain asset classes in the aggregate. Asset risk is one factor used by insurance regulators and rating agencies to determine the RBC for Kemper’s insurance subsidiaries. Accordingly, a deterioration in the quality of the investments held by Kemper’s insurance subsidiaries or an increase in the investment risk inherent in their investment portfolios could increase capital requirements. See risk factor below entitled “Kemper relies on receiving dividends from its subsidiaries to service its debt, to pay dividends to its shareholders or make repurchases of its stock”.These factors may inhibit the Company from shifting its investment mix to produce higher returns. The Company is also subject to concentration risk to the extent that the portfolio is heavily invested, at any particular time, in specific asset types, classes, industries, sectors, or collateral types, among other defining features. Developments and the market’s perception thereof in any of these concentrations may exacerbate the negative effects on our investment portfolio compared to other companies.

Estimating losses and LAE for determining property and casualty insurance reserves, or determining premium rates, is inherently uncertain, and the Company’s results of operations may be materially impacted if the Company’s insurance reserves or premium rates are insufficient.

The Company establishes loss and LAE reserves to cover estimated liabilities, which remain unpaid as of the end of each accounting period, and to investigate and settle all claims incurred under the property and casualty insurance policies that it has issued. Loss and LAE reserves are established for claims that have been reported to the Company as of the end of the accounting period, as well as for claims that have occurred but have not yet been reported to the Company. The estimates of loss and LAE reserves are based on the Company’s assessment of the facts and circumstances known to it at the time, as well as estimates of the impact of future trends in the severity of claims, the frequency of claims and other factors. See MD&A, “Critical Accounting Estimates,” under the caption “Property and Casualty Insurance Reserves for Losses and Loss Adjustment Expenses” beginning on page 58 for a discussion of the Company’s reserving process and the factors considered by the Company’s actuaries in estimating the Company’s Property and Casualty Insurance Reserves.

As the process of estimating property and casualty insurance reserves is inherently uncertain, the reserves established by the Company are not precise estimates of liability and could prove to be inadequate to cover its ultimate losses and expenses for insured events that have occurred. The process of estimating loss reserves is complex and imprecise. The estimate of the ultimate cost of claims for insured events that have occurred must take into consideration many factors that are dependent on the outcome of future events associated with the reporting, investigation and settlement of claims. The impacts on the Company’s estimates of property and casualty insurance reserves from these factors are difficult to assess accurately. A change in any one or more of the factors is likely to result in a projected ultimate loss that is different than the previous projected ultimate loss, and may have a material impact on the Company’s estimate of the projected ultimate loss. Increases in the estimates of ultimate losses and LAE will decrease earnings, while decreases in such estimates will increase earnings, as

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reported by the Company in the results of its operations for the periods in which the changes to the estimates are made by the Company.

The Company’s actuaries also consider trends in the severity and frequency of claims and other factors when determining the premium rates to charge for its property and casualty insurance products. An unanticipated change in any one or more of these factors or trends, as well as a change in competitive conditions, may also result in inadequate premium rates charged for insurance policies issued by Kemper’s property and casualty insurance subsidiaries in the future. Such pricing inadequacies could have a material impact on the Company’s operating results.

Kemper relies on receiving dividends from its subsidiaries to service its debt, to pay dividends to its shareholders or make repurchases of its stock.

As a holding company with no business operations of its own, Kemper depends on the dividend income that it receives from its subsidiaries as the primary source of funds to pay interest and principal on its outstanding debt obligations, to pay dividends to its shareholders and to make repurchases of its stock. Kemper’s insurance subsidiaries are subject to significant regulatory restrictions under state insurance laws and regulations that limit their ability to declare and pay dividends. These laws and regulations impose minimum solvency and liquidity requirements on dividends between affiliated companies and require prior notice to, and may require approval from, state insurance regulators before dividends can be paid. In addition, third-party rating agencies monitor statutory capital and surplus levels for capital adequacy. Even though a dividend may be payable without regulatory approval, an insurance subsidiary may forgo paying a dividend to Kemper and retain the capital in its insurance subsidiaries to maintain or improve the ratings of Kemper’s insurance subsidiaries. The inability of one or more of Kemper’s insurance subsidiaries to pay sufficient dividends to Kemper may materially affect Kemper’s ability to timely pay its debt obligations, to pay dividends to its shareholders or make repurchases of its stock.

Managing technology initiatives to address business developments present significant challenges to the Company.

While technological developments can streamline many business processes and ultimately reduce the cost of operations, technology initiatives can present short-term cost and implementation risks. In addition, projections of expenses, implementation schedules and utility of results may be inaccurate and can escalate over time. The financial services industry is highly regulated, and the Company faces rising costs and competing time constraints in meeting compliance requirements of new and proposed regulations.

Item 1B.    Unresolved Staff Comments.

Not applicable.

Item 2.    Properties.

Owned Properties

Kemper’s subsidiaries together own and occupy 13 buildings located in seven states consisting of approximately 49,000 square feet in the aggregate. Kemper’s subsidiaries hold additional properties that are not occupied by Kemper or its subsidiaries solely for investment purposes .

Leased Facilities

In 2013, the Company sold the building where Kemper’s corporate and business executive offices and the home office of Kemper Direct are headquartered. In connection with the sale, the Company leased back five floors, or approximately 67,000 square feet of the 41-story office building.

Kemper Preferred, Kemper Specialty and Kemper Direct lease, either separately or on a shared-basis, facilities with an aggregate square footage of approximately 427,000 at 12 locations in 8 states. The latest expiration date of the existing leases is in September of 2018. Kemper’s Life and Health Insurance segment leases facilities with aggregate square footage of approximately 460,000 at 122 locations in 27 states. The latest expiration date of the existing leases is in January of 2025. Kemper’s corporate data processing operation leases facilities with aggregate square footage of approximately 36,000 square feet at two locations in two states. The latest expiration date of the existing leases is in September of 2018.

The properties described above are in good condition. The properties utilized in the Company’s operations consist of facilities suitable for general office space, call centers and data processing operations.

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Item 3.    Legal Proceedings.

Proceedings

Information concerning pending legal proceedings is incorporated herein by reference to Note 23, “Contingencies,” to the Consolidated Financial Statements.

Item 4.    Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Kemper’s common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol of “KMPR.” Quarterly information pertaining to market prices of Kemper common stock in 2013 and 2012 is presented below.

DOLLARS PER SHARE	Three Months Ended								Year Ended
	Mar 31, 2013		Jun 30, 2013		Sep 30, 2013		Dec 31, 2013		Dec 31, 2013
Common Stock Market Prices:
High	$	33.88	$	34.79	$	36.56	$	41.31	$	41.31
Low	29.87		30.43		33.23		33.49		29.87
Close	32.61		34.25		33.60		40.88		40.88
DOLLARS PER SHARE	Three Months Ended								Year Ended
	Mar 31, 2012		Jun 30, 2012		Sep 30, 2012		Dec 31, 2012		Dec 31, 2012
Common Stock Market Prices:
High	$	30.99	$	31.23	$	33.00	$	31.98	$	33.00
Low	27.77		28.14		30.08		28.20		27.77
Close	30.28		30.75		30.71		29.50		29.50

Holders

As of January 16, 2014, the number of record holders of Kemper’s common stock was 4,446.

Dividends

Quarterly information pertaining to payment of dividends on Kemper’s common stock is presented below.

DOLLARS PER SHARE	Three Months Ended								Year Ended
	Mar 31, 2013		Jun 30, 2013		Sep 30, 2013		Dec 31, 2013		Dec 31, 2013
Cash Dividends Paid to Shareholders (per share)	$	0.24	$	0.24	$	0.24	$	0.24	$	0.96
	Three Months Ended								Year Ended
DOLLARS PER SHARE	Mar 31, 2012		Jun 30, 2012		Sep 30, 2012		Dec 31, 2012		Dec 31, 2012
Cash Dividends Paid to Shareholders (per share)	$	0.24	$	0.24	$	0.24	$	0.24	$	0.96

Kemper’s insurance subsidiaries are subject to various state insurance laws that may restrict the ability of these insurance subsidiaries to pay dividends without prior regulatory approval. See MD&A, “Liquidity and Capital Resources” and Note 8, “Shareholders’ Equity,” to the Consolidated Financial Statements for information on Kemper’s ability and intent to pay dividends.

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Issuer Purchases of Equity Securities

Information pertaining to purchases of Kemper common stock for the three months endedDecember 31, 2013 follows.

				Total	Maximum
				Number of Shares	Dollar Value of Shares
		Average		Purchased as Part	that May Yet Be
	Total	Price		of Publicly	Purchased Under
	Number of Shares	Paid per		Announced Plans	the Plans or Programs
Period	Purchased (1)	Share		or Programs (1)	(Dollars in Millions)
October 1 - October 31	346,938	$	35.08	346,938	$	114.6
November 1 - November 30	60,678	$	37.72	60,678	$	112.3
December 1 - December 31	21,242	$	37.92	20,900	$	111.5

(1) On February 2, 2011, Kemper’s Board of Directors authorized the repurchase of up to $300 million of Kemper’s common stock. The repurchase program does not have an expiration date.

Total Number of Shares Purchased in the preceding table include 342 shares that were withheld to satisfy tax withholding obligations on the vesting of restricted stock awards under Kemper’s long-term equity-based compensation plans during the quarter ended December 31, 2013. In addition to the shares withheld and purchased on the vesting of restricted stock awards, 20,899 shares were withheld to satisfy tax withholding obligations relating to the exercise of stock appreciation rights under Kemper’s long-term equity-based compensation plans during the quarter ended December 31, 2013. Such shares are not considered “purchased” and are excluded from preceding table.

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Kemper Common Stock Performance Graph

The following graph assumes $100 invested on December 31, 2008 in (i) Kemper common stock, (ii) the S&P MidCap 400 Index and (iii) the S&P Supercomposite Insurance Index, in each case with dividends reinvested. Kemper is a constituent of each of these two indices.

The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of Kemper common stock.

Company / Index	2008		2009		2010		2011		2012		2013
Kemper Corporation	$	100.00	$	149.22	$	172.12	$	211.99	$	221.14	$	315.15
S&P MidCap 400 Index	100.00		137.38		173.98		170.96		201.53		269.04
S&P Supercomposite Insurance Index	100.00		110.79		128.54		119.66		142.54		207.74

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Item 6.Selected Financial Data.

Selected financial information as of and for the years ended December 31, 2013, 2012, 2011, 2010 and 2009 is presented below.

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	2013			2012			2011			2010			2009
FOR THE YEAR
Earned Premiums	$	2,025.8		$	2,107.1		$	2,173.6		$	2,289.4		$	2,455.5
Net Investment Income	314.7			295.9			298.0			325.7			319.9
Other Income	0.8			0.8			1.0			1.3			2.5
Net Realized Gains on Sales of Investments	99.1			65.4			33.7			42.6			24.6
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)	(16.5		)	(50.4		)
Total Revenues	$	2,426.5		$	2,462.3		$	2,495.0		$	2,642.5		$	2,752.1
Income from Continuing Operations	$	214.5		$	91.8		$	61.7		$	162.4		$	161.8
Income (Loss) from Discontinued Operations	3.2			11.6			12.8			15.5			(2.8		)
Net Income	$	217.7		$	103.4		$	74.5		$	177.9		$	159.0
Per Unrestricted Share:
Income from Continuing Operations	$	3.75		$	1.55		$	1.02		$	2.62		$	2.60
Income (Loss) from Discontinued Operations	0.06			0.20			0.21			0.25			(0.05		)
Net Income	$	3.81		$	1.75		$	1.23		$	2.87		$	2.55
Per Unrestricted Share Assuming Dilution:
Income from Continuing Operations	$	3.74		$	1.54		$	1.02		$	2.62		$	2.60
Income (Loss) from Discontinued Operations	0.06			0.20			0.21			0.25			(0.05		)
Net Income	$	3.80		$	1.74		$	1.23		$	2.87		$	2.55
Dividends Paid to Shareholders Per Share	$	0.96		$	0.96		$	0.96		$	0.88		$	1.07
AT YEAR END
Total Assets	$	7,656.4		$	8,009.1		$	7,934.7		$	8,260.8		$	8,489.8
Insurance Reserves	$	4,061.0		$	4,132.2		$	4,131.8		$	4,182.4		$	4,239.3
Unearned Premiums	598.9			650.9			666.2			678.6			724.9
Certificates of Deposits	—			—			—			321.4			682.4
Notes Payable	606.9			611.4			610.6			609.8			561.4
All Other Liabilities	338.1			452.9			409.5			445.6			447.9
Total Liabilities	5,604.9			5,847.4			5,818.1			6,237.8			6,655.9
Shareholders’ Equity	2,051.5			2,161.7			2,116.6			2,023.0			1,833.9
Total Liabilities and Shareholders’ Equity	$	7,656.4		$	8,009.1		$	7,934.7		$	8,260.8		$	8,489.8
Book Value Per Share	$	36.86		$	36.98		$	35.13		$	33.13		$	29.41

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Index to

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Summary of Results	27
Catastrophes	28
Loss and LAE Reserve Development	30
Non-GAAP Financial Measures	30
Kemper Preferred	32
Kemper Specialty	36
Kemper Direct	40
Life and Health Insurance	43
Investment Results	46
Investment Quality and Concentrations	50
Investments in Limited Liability Companies and Limited Partnerships	52
Interest and Other Expenses	53
Income Taxes	53
Liquidity and Capital Resources	53
Off-Balance Sheet Arrangements	56
Contractual Obligations	56
Critical Accounting Estimates	57
Recently Issued Accounting Pronouncements	63

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations

SUMMARY OF RESULTS

Net Income was $217.7 million ($3.81 per unrestricted common share) for the year ended December 31, 2013, compared to $103.4 million ($1.75 per unrestricted common share) for the year ended December 31, 2012. Income from Continuing Operations was $214.5 million ($3.75 per unrestricted common share) in 2013, compared to $91.8 million ($1.55 per unrestricted common share) in 2012.

Catastrophe losses and LAE from continuing operations (excluding loss and LAE reserve development from prior accident years) were $50.7 million before tax for the year ended December 31, 2013, compared to $124.5 million in 2012, a decrease of $73.8 million. Catastrophe losses and LAE before tax decreased by $64.3 million and $6.0 million, in the Kemper Preferred and Kemper Direct segments, respectively. The Company reported Income from Discontinued Operations of $3.2 million and $11.6 million for the years ended December 31, 2013 and 2012, respectively.

A reconciliation of Total Segment Net Operating Income to Net Income for the years ended December 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS	2013			2012			2013 Increase (Decrease)			2011			2012 Increase (Decrease)
Segment Net Operating Income (Loss):
Kemper Preferred	$	63.1		$	(11.2	)	$	74.3		$	(17.6	)	$	6.4
Kemper Specialty	10.4			1.2			9.2			19.8			(18.6		)
Kemper Direct	27.1			(0.9		)	28.0			(27.5		)	26.6
Life and Health Insurance	89.3			90.8			(1.5		)	98.9			(8.1		)
Total Segment Net Operating Income	189.9			79.9			110.0			73.6			6.3
Unallocated Net Operating Loss	(30.7		)	(26.1		)	(4.6		)	(26.5		)	0.4
Consolidated Net Operating Income	159.2			53.8			105.4			47.1			6.7
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	64.4			42.5			21.9			21.9			20.6
Net Impairment Losses Recognized in Earnings	(9.1		)	(4.5		)	(4.6		)	(7.3		)	2.8
Income from Continuing Operations	214.5			91.8			122.7			61.7			30.1
Income from Discontinued Operations	3.2			11.6			(8.4		)	12.8			(1.2		)
Net Income	$	217.7		$	103.4		$	114.3		$	74.5		$	28.9

Earned Premiums were $2,025.8 million in 2013, compared to $2,107.1 million in 2012, a decrease of $81.3 million. Earned Premiums decreased by $44.6 million, $27.0 million, $7.0 million and $2.7 million in the Kemper Direct, Kemper Specialty, Life and Health Insurance and Kemper Preferred segments, respectively.

Net Investment Income increased by $18.8 million in 2013 due primarily to $17.1 million in higher net investment income from Equity Method Limited Liability Investments and $12.3 million in higher net investment income from Dividends on Equity Securities, partially offset by $10.6 million of lower net investment income from Interest and Dividends on Fixed Maturities.

Net Realized Gains on Sales of Investments were $99.1 million in 2013, compared to $65.4 million in 2012. The Company sold the building where Kemper’s corporate offices are headquartered and recognized a realized gain of $43.6 million in 2013.

Net Impairment Losses Recognized in Earnings for the years ended December 31, 2013 and 2012 were $13.9 million and $6.9 million, respectively.

The Company cannot predict when or if similar investment gains or losses may occur in the future. See MD&A, “Investment Results,” for additional information pertaining to investment performance.

27

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CATASTROPHES

The Company manages its exposure to catastrophes and other natural disasters through a combination of geographical diversification, management of the amount and location of new business production in certain regions and primary catastrophe reinsurance programs for its property and casualty insurance businesses. Coverage for each primary catastrophe reinsurance program is provided in various layers (see Note 20, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for further discussion of these programs). In addition to these programs, the Kemper Preferred segment had a reinsurance treaty covering the three-year period that ended June 1, 2013 for catastrophe losses in North Carolina at retentions lower than the Company’s primary catastrophe reinsurance programs (“the Kemper Preferred NC Program”). The Company purchases reinsurance from the FHCF for hurricane losses in Florida at retentions lower than the Company’s primary catastrophe reinsurance programs.

Catastrophe reinsurance premiums for the Company’s primary reinsurance programs, the Kemper Preferred NC Program and the FHCF reduced earned premiums for the years endedDecember 31, 2013, 2012 and 2011 by the following:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	23.2	$	24.6	$	20.0
Kemper Specialty	0.1		0.1		0.1
Kemper Direct	0.3		0.4		0.8
Life and Health Insurance	—		2.0		2.3
Total Ceded Catastrophe Reinsurance Premiums	$	23.6	$	27.1	$	23.2

The Life and Health Insurance segment did not renew its catastrophe reinsurance program in 2013. See MD&A, “Life and Health Insurance,” for additional information.

Catastrophe losses and LAE (excluding loss and LAE reserve development) by business segment for the years ended December 31, 2013, 2012 and 2011 are presented below:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	41.1	$	105.4	$	144.2
Kemper Specialty	3.7		4.8		3.8
Kemper Direct	2.3		8.3		6.7
Life and Health Insurance	3.6		6.0		9.1
Total Catastrophe Losses and LAE	$	50.7	$	124.5	$	163.8

28

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CATASTROPHES (Continued)

The number of catastrophic events and catastrophe losses and LAE (excluding loss and LAE reserve development) by range of loss for the years endedDecember 31, 2013, 2012 and 2011 are presented below:

	Year Ended
	Dec 31, 2013			Dec 31, 2012			Dec 31, 2011
DOLLARS IN MILLIONS	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	27	$	44.3	19	$	25.6	22	$	37.4
$5 - $10	1	6.4		5	39.4		3	21.9
$10 - $15	—	—		1	11.0		1	10.9
$15 - $20	—	—		—	—		2	37.2
$20 - $25	—	—		—	—		1	23.0
Greater Than $25	—	—		1	48.5		1	33.4
Total	28	$	50.7	26	$	124.5	30	$	163.8

As shown in the preceding table, catastrophe losses and LAE decreased for the year endedDecember 31, 2013, compared to 2012, due primarily to no occurrences of events with losses in excess of $25 million in 2013, compared with one event in 2012; no occurences of losses in the $10 million to $15 million range in 2013, compared with one event in 2012; and lower frequency and severity of losses ranging from $5 million to $10 million per event in 2013, compared to 2012, partially offset by higher frequency and severity of losses below $5 million per event in 2013, compared to 2012.

As shown in the preceding table, catastrophe losses and LAE decreased for the year endedDecember 31, 2012, compared to 2011, due primarily to lower severity of losses below $5 million per event in 2012, compared to 2011, and lower frequency of losses in excess of $15 million per event in 2012, compared to 2011, partially offset by higher frequency of losses ranging from $5 million to $10 million per event in 2012, compared to 2011.

The five events in the $5 million to $10 million range and one event in the $10 million to $15 million range for the year endedDecember 31, 2012 were related to hail or wind events in either Texas, Colorado or the Midwest and mid-Atlantic states. In the fourth quarter of 2012, the Company incurred claims related to one event in the greater than $25 million range which was Superstorm Sandy. In late October 2012, Superstorm Sandy, a named catastrophe and at one point a level two hurricane while over the Atlantic ocean, caused a significant amount of damage in several northeastern states. Catastrophe losses and LAE for the year ended December 31, 2012 includes $48.5 million related to Superstorm Sandy, of which $44.0 million is included in the Kemper Preferred segment.

Events below $5 million for the year endedDecember 31, 2011 are due primarily to spring storms. In the second quarter of 2011, the United States experienced a high volume of spring storms, including a record level of tornadoes in April resulting in two events in the $15 million to $20 million range and one event which was $32.1 million. In the third quarter of 2011, the Company incurred claims related to one event in the $20 million to $25 million range which was Hurricane Irene. Catastrophe losses and LAE for the year ended December 31, 2011 includes $23.0 million related to Hurricane Irene, of which $22.1 million is included in the Kemper Preferred segment.

Total catastrophe loss and LAE reserves, net of reinsurance recoverables, developed favorably by $14.5 million, $6.3 million and $6.4 million in 2013, 2012 and 2011, respectively. Favorable catastrophe loss and LAE reserve development in 2013 included favorable development of $1.5 million from Superstorm Sandy and favorable development, net of reinsurance, of $2.0 million resulting from a final assessment issued by the Mississippi Windstorm Underwriting Association (“MWUA”) that reduced the Company’s share of MWUA’s losses for the 2004 through 2006 policy periods. See MD&A, “Loss and LAE Reserve Development,” of this 2013 Annual Report for catastrophe loss and LAE reserve development by business segment.

29

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LOSS AND LAE RESERVE DEVELOPMENT

Increases (decreases) in the Company’s property and casualty loss and LAE reserves for the years ended December 31, 2013, 2012 and 2011 to recognize adverse (favorable) loss and LAE reserve development from prior accident years in continuing operations, hereinafter also referred to as “reserve development” in the discussion of segment results, is presented below:

DOLLARS IN MILLIONS	2013			2012			2011
Kemper Preferred:
Non-catastrophe	$	(15.6	)	$	1.4		$	(13.6	)
Catastrophe	(11.9		)	(6.2		)	(5.5		)
Total	(27.5		)	(4.8		)	(19.1		)
Kemper Specialty:
Non-catastrophe	(4.9		)	(2.4		)	(9.5		)
Catastrophe	—			0.1			0.1
Total	(4.9		)	(2.3		)	(9.4		)
Kemper Direct:
Non-catastrophe	(25.0		)	(17.5		)	(4.4		)
Catastrophe	(0.6		)	(0.3		)	0.5
Total	(25.6		)	(17.8		)	(3.9		)
Life and Health Insurance:
Non-catastrophe	0.2			(0.4		)	(1.1		)
Catastrophe	(2.0		)	0.1			(1.5		)
Total	(1.8		)	(0.3		)	(2.6		)
Decrease in Total Loss and LAE Reserves Related to Prior Years:
Non-catastrophe	(45.3		)	(18.9		)	(28.6		)
Catastrophe	(14.5		)	(6.3		)	(6.4		)
Decrease in Total Loss and LAE Reserves Related to Prior Years	$	(59.8	)	$	(25.2	)	$	(35.0	)

See MD&A, “Critical Accounting Estimates,” of this 2013 Annual Report for additional information pertaining to the Company’s process of estimating property and casualty insurance reserves for losses and LAE, and the estimated variability thereof, development of property and casualty insurance losses and LAE, and a discussion of some of the variables that may impact them.

NON-GAAP FINANCIAL MEASURES

Pursuant to the rules and regulations of the SEC, the Company is required to file consolidated financial statements prepared in accordance with the accounting principals generally accepted in the United States (“GAAP”). The Company is permitted to include non-GAAP financial measures in its filings provided that they are defined along with an explanation of their usefulness to investors, are no more prominent than the comparable GAAP financial measures and are reconciled to such GAAP financial measures.

These non-GAAP financial measures should not be considered a substitute for the comparable GAAP financial measures, as they do not fully recognize the overall profitability of the Company’s business.

Underlying Combined Ratio

The following discussions for the Kemper Preferred, Kemper Specialty and Kemper Direct segments use the non-GAAP financial measures of (i) Underlying Losses and LAE and (ii) Underlying Combined Ratio. Underlying Losses and LAE (also referred to in the discussion as “Current Year Non-catastrophe Losses and LAE”) exclude the impact of catastrophe losses, and loss and LAE reserve development from the Company’s Incurred Losses and LAE, which is the most directly comparable GAAP financial measure. The Underlying Combined Ratio is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Incurred Expense Ratio. The most directly comparable GAAP financial measure is the combined ratio, which uses total incurred losses and LAE, including the impact of catastrophe losses, and loss and LAE reserve development.

30

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

NON-GAAP FINANCIAL MEASURES (Continued)

The Company believes Underlying Losses and LAE and the Underlying Combined Ratio are useful to investors and are 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 may cause the Company’s 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 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 the Company’s 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.

Consolidated Net Operating Income

Consolidated Net Operating Income is an after-tax, non-GAAP measure and is computed by excluding from Income from Continuing Operations the after-tax impact of 1) Net Realized Gains on Sales of Investments, 2) Net Impairment Losses Recognized in Earnings related to investments and 3) other 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 Income from Continuing Operations.

The Company believes that 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. Net Realized Gains on Sales of Investments and Net Impairment Losses Recognized in Earnings 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. 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 Consolidated Net Operating Income to Income from Continuing Operations for the years ended December 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS	2013			2012			2011
Consolidated Net Operating Income	$	159.2		$	53.8		$	47.1
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	64.4			42.5			21.9
Net Impairment Losses Recognized in Earnings	(9.1		)	(4.5		)	(7.3		)
Income from Continuing Operations	$	214.5		$	91.8		$	61.7

There were no applicable significant non-recurring items that the Company excluded from the calculation of Consolidated Net Operating Income for the years ended December 31, 2013, 2012 and 2011.

31

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER PREFERRED

Selected financial information for the Kemper Preferred segment follows:

DOLLARS IN MILLIONS	2013			2012			2011
Net Premiums Written	$	847.8		$	891.7		$	868.8
Earned Premiums:
Automobile	$	503.6		$	515.5		$	510.9
Homeowners	317.9			308.5			294.9
Other Personal	55.2			55.4			54.0
Total Earned Premiums	876.7			879.4			859.8
Net Investment Income	55.7			45.0			48.8
Other Income	0.2			0.4			0.3
Total Revenues	932.6			924.8			908.9
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	578.8			608.4			584.6
Catastrophe Losses and LAE	41.1			105.4			144.2
Prior Years:
Non-catastrophe Losses and LAE	(15.6		)	1.4			(13.6		)
Catastrophe Losses and LAE	(11.9		)	(6.2		)	(5.5		)
Total Incurred Losses and LAE	592.4			709.0			709.7
Insurance Expenses	252.5			243.8			239.8
Operating Profit (Loss)	87.7			(28.0		)	(40.6		)
Income Tax Benefit (Expense)	(24.6		)	16.8			23.0
Segment Net Operating Income (Loss)	$	63.1		$	(11.2	)	$	(17.6	)
Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	66.1		%	69.1		%	67.9		%
Current Year Catastrophe Losses and LAE Ratio	4.7			12.0			16.8
Prior Years Non-catastrophe Losses and LAE Ratio	(1.8		)	0.2			(1.6		)
Prior Years Catastrophe Losses and LAE Ratio	(1.4		)	(0.7		)	(0.6		)
Total Incurred Loss and LAE Ratio	67.6			80.6			82.5
Incurred Expense Ratio	28.8			27.7			27.9
Combined Ratio	96.4		%	108.3		%	110.4		%
Underlying Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio	66.1		%	69.1		%	67.9		%
Incurred Expense Ratio	28.8			27.7			27.9
Underlying Combined Ratio	94.9		%	96.8		%	95.8		%
Non-GAAP Measure Reconciliation
Underlying Combined Ratio	94.9		%	96.8		%	95.8		%
Current Year Catastrophe Losses and LAE Ratio	4.7			12.0			16.8
Prior Years Non-catastrophe Losses and LAE Ratio	(1.8		)	0.2			(1.6		)
Prior Years Catastrophe Losses and LAE Ratio	(1.4		)	(0.7		)	(0.6		)
Combined Ratio as Reported	96.4		%	108.3		%	110.4		%

32

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER PREFERRED (Continued)

INSURANCE RESERVES

DOLLARS IN MILLIONS	Dec 31, 2013		Dec 31, 2012
Insurance Reserves:
Automobile	$	276.7	$	287.6
Homeowners	97.9		123.7
Other Personal	38.2		41.0
Insurance Reserves	$	412.8	$	452.3
Insurance Reserves:
Loss Reserves:
Case	$	259.2	$	284.7
Incurred but Not Reported	97.4		105.5
Total Loss Reserves	356.6		390.2
LAE Reserves	56.2		62.1
Insurance Reserves	$	412.8	$	452.3

2013 Compared with 2012

Earned Premiums in the Kemper Preferred segment decreased by $2.7 million for the year endedDecember 31, 2013, compared to 2012, due primarily to lower volume of $44.3 million, partially offset by higher average premium of $41.6 million. Earned premiums on automobile insurance decreased by $11.9 million in 2013, compared to 2012, due primarily to lower volume of $24.8 million, partially offset by higher average premium of $12.9 million. Earned premiums on homeowners insurance increased by $9.4 million in 2013, compared to 2012, due primarily to higher average premium of $26.6 million, partially offset by lower volume of $17.2 million. Earned premiums on other personal insurance decreased by $0.2 million in 2013, compared to 2012, due primarily to lower volume of $2.3 million, partially offset by higher average premium of $2.1 million.

Net Investment Income in the Kemper Preferred segment increased by $10.7 million for the year endedDecember 31, 2013, compared to 2012, due primarily to higher net investment income from Equity Method Limited Liability Investments, higher dividends on equity securities and higher levels of investments allocated to the Kemper Preferred segment, partially offset by lower yields on fixed maturities. The Kemper Preferred segment reported net investment income from Equity Method Limited Liability Investments of $10.1 million in 2013, compared to $4.0 million in 2012.

Operating Profit in the Kemper Preferred segment was $87.7 million for the year endedDecember 31, 2013, compared to an Operating Loss of $28.0 million in 2012. Operating results improved due primarily to lower catastrophe losses and LAE (excluding reserve development), lower underlying losses and LAE as a percentage of earned premiums, higher favorable loss and LAE reserve development and higher net investment income, partially offset by higher insurance expenses as a percentage of earned premiums. Underlying losses and LAE exclude the impact of catastrophes and loss and LAE reserve development. Catastrophe losses and LAE (excluding reserve development) were $41.1 million in 2013, compared to $105.4 million in 2012. Underlying losses and LAE as a percentage of earned premiums improved due to lower underlying losses as a percentage of earned premiums in homeowners insurance and other personal insurance. Favorable loss and LAE reserve development (including catastrophe development) was $27.5 million in 2013, compared to $4.8 million in 2012. Kemper Preferred continues to take actions intended to improve profitability, including additional rate increases, enhanced pricing segmentation, higher deductibles, in particular for wind or hail events, and other underwriting actions.

Automobile insurance incurred losses and LAE were $388.5 million, or 77.1% of automobile insurance earned premiums, for the year endedDecember 31, 2013, compared to $413.7 million, or 80.3% of automobile insurance earned premiums, in 2012. Automobile insurance incurred losses as a percentage of automobile earned premiums decreased by 3.2% due primarily to a favorable impact from a change in loss and LAE reserve development and lower catastrophe losses and LAE (excluding reserve development), partially offset by higher underlying losses and LAE as a percentage of automobile insurance earned premiums. Favorable loss and LAE reserve development was $3.2 million in 2013, compared to adverse loss and LAE reserve development of $7.3 million in 2012. Catastrophe losses and LAE (excluding reserve development) were $3.5 million in 2013,

33

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER PREFERRED (Continued)

compared to $12.7 million in 2012. Underlying losses and LAE as a percentage of automobile insurance earned premiums were 77.1% in 2013, compared to 76.4% in 2012. Underlying losses and LAE as a percentage of automobile insurance earned premiums increased due primarily to higher severity of bodily injury and collision losses, partially offset by higher average premium and lower frequency of bodily injury and comprehensive claims.

Homeowners insurance incurred losses and LAE were $183.6 million, or 57.8% of homeowners insurance earned premiums, for the year endedDecember 31, 2013, compared to $264.5 million, or 85.7% of homeowners insurance earned premiums, in 2012. Homeowners insurance incurred losses and LAE as a percentage of homeowners insurance earned premiums decreased due primarily to lower catastrophe losses and LAE (excluding reserve development), lower underlying losses and LAE as a percentage of homeowners insurance earned premiums and higher levels of favorable loss and LAE reserve development. Catastrophe losses and LAE (excluding reserve development) on homeowners insurance were $36.4 million in 2013, compared to $87.8 million in 2012. Catastrophe losses and LAE (excluding reserve development) incurred in 2012 were due in part to $44.0 million of catastrophe losses and LAE from Superstorm Sandy and several hail and wind events throughout the United States. Underlying losses and LAE as a percentage of homeowners insurance earned premiums were 52.4% in 2013, compared to 60.3% in 2012. Underlying losses and LAE as a percentage of homeowners insurance earned premiums decreased by 7.9% due primarily to lower severity of losses and higher average premium. Favorable loss and LAE reserve development was $19.2 million in 2013, compared to $9.4 million in 2012.

Other personal insurance incurred losses and LAE were $20.3 million, or 36.8% of other personal insurance earned premiums, for the year endedDecember 31, 2013, compared to $30.8 million, or 55.6% of other personal insurance earned premiums, in 2012. Other personal insurance incurred losses and LAE decreased by $10.5 million due primarily to lower underlying losses and LAE as a percentage of other personal insurance earned premiums, lower catastrophe losses and LAE (excluding reserve development) and higher levels of favorable loss and LAE reserve development. Underlying losses and LAE as a percentage of other personal insurance earned premiums were 43.8% in 2013, compared to 51.6% in 2012. Underlying losses and LAE as a percentage of other personal insurance earned premiums decreased by 7.8% due primarily to lower frequency of umbrella liability insurance claims, lower severity of losses in other insurance lines (excluding umbrella liability) and higher average premium, partially offset by higher severity of umbrella liability insurance losses. Catastrophe losses and LAE (excluding reserve development) were $1.2 million in 2013, compared to $4.9 million in 2012. Favorable loss and LAE reserve development was $5.1 million in 2013, compared to $2.7 million in 2012.

Insurance Expenses increased by $8.7 million for the year endedDecember 31, 2013, compared to 2012, due primarily to higher employee compensation and agent incentives related to improved performance and higher regulatory audit and examination costs.

The Kemper Preferred segment reported Segment Net Operating Income of $63.1 million for the year endedDecember 31, 2013, compared to Segment Net Operating Loss of $11.2 million in 2012. The Kemper Preferred segment’s effective income tax rate differs from the federal statutory income tax rate due primarily to tax-exempt investment income and dividends received deductions. Tax-exempt investment income and dividends received deductions were $16.7 million in 2013, compared to $20.2 million in 2012.

2012 Compared with 2011

Earned Premiums in the Kemper Preferred segment increased by $19.6 million for the year ended December 31, 2012, compared to 2011, due primarily to higher volume, and to a lesser extent, higher average premium. Earned premiums on automobile insurance increased by $4.6 million in 2012, compared to 2011, due primarily to higher volume, partially offset by lower average premium. Earned premiums on homeowners insurance increased by $13.6 million in 2012, compared to 2011, due primarily to higher volume and, to a lesser extent, higher average premium. Earned premiums on other personal insurance increased by $1.4 million in 2012, compared to 2011, due primarily to higher volume and, to a lesser extent, higher average premium.

Net Investment Income in the Kemper Preferred segment decreased by $3.8 million for the year ended December 31, 2012, compared to 2011, due primarily to lower net investment income from Equity Method Limited Liability Investments. The Kemper Preferred segment reported net investment income from equity method limited liability investments of $4.0 million in 2012, compared to $8.0 million in 2011.

Operating Loss in the Kemper Preferred segment decreased by $12.6 million before taxes for the year ended December 31, 2012, compared to 2011, due primarily to lower incurred catastrophe losses and LAE, partially offset by lower levels of

34

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER PREFERRED (Continued)

favorable loss and LAE reserve development, higher underlying losses and LAE as a percentage of earned premiums and lower Net Investment Income. Catastrophe losses and LAE (excluding reserve development) were $105.4 million in 2012, compared to $144.2 million in 2011. Favorable loss and LAE reserve development (including catastrophe development) was $4.8 million in 2012, compared to $19.1 million in 2011. Underlying losses and LAE as a percentage of earned premiums were 69.1% in 2012, compared to 67.9% in 2011.

Automobile insurance incurred losses and LAE were $413.7 million, or 80.3% of automobile insurance earned premiums, for the year ended December 31, 2012, compared to $389.5 million, or 76.2% of automobile insurance earned premiums, in 2011. Automobile insurance incurred losses and LAE as a percentage of automobile earned premiums increased by 4.1% due primarily to higher underlying losses and LAE as a percentage of automobile insurance earned premiums and an unfavorable impact from a change in loss and LAE reserve development, partially offset by lower incurred catastrophe losses and LAE (excluding reserve development). Underlying losses and LAE as a percentage of automobile insurance earned premiums were 76.4% in 2012, compared to 73.8% in 2011. Underlying losses and LAE as a percentage of automobile insurance earned premiums increased due primarily to higher frequency in bodily injury coverages and higher severity in all coverages, partially offset by lower frequency in comprehensive and personal injury protection coverages. Unfavorable loss and LAE reserve development was $7.4 million in 2012, compared to favorable loss and LAE reserve development of $1.3 million in 2011. Catastrophe losses and LAE (excluding reserve development) were $12.7 million in 2012, compared to $14.1 million in 2011.

Homeowners insurance incurred losses and LAE were $264.5 million, or 85.7% of homeowners insurance earned premiums, for the year ended December 31, 2012, compared to $293.5 million, or 99.5% of homeowners insurance earned premiums, in 2011. Homeowners insurance incurred losses and LAE as a percentage of homeowners insurance earned premiums decreased due primarily to lower catastrophe losses and LAE (excluding reserve development), lower underlying losses and LAE as a percentage of homeowners insurance earned premiums, partially offset by lower levels of favorable loss and LAE reserve development. Catastrophe losses and LAE (excluding reserve development) on homeowners insurance were $87.8 million in 2012, compared to $124.5 million in 2011. Catastrophe losses and LAE incurred in 2012 were due in part to $44.0 million of catastrophe losses and LAE from Superstorm Sandy and several hail and wind events throughout the United States. For the year ended December 31, 2011, the catastrophe losses were primarily related to Hurricane Irene and several severe tornadoes and other storms throughout the United States. Underlying losses and LAE as a percentage of homeowners insurance earned premiums were 60.3% in 2012, compared to 61.6% in 2011. Underlying losses and LAE as a percentage of homeowners insurance earned premiums decreased by 1.3% due primarily to lower non-catastrophe storm losses, partially offset by higher fire and water damage losses. Favorable non-catastrophe loss and LAE reserve development was $3.6 million in 2012, compared to $7.1 million in 2011.

Other personal insurance incurred losses and LAE were $30.8 million, or 55.6% of other personal insurance earned premiums, for the year ended December 31, 2012, compared to $26.7 million, or 49.4% of other personal insurance earned premiums, in 2011. Other personal insurance incurred losses and LAE increased by $4.1 million due primarily to lower levels of favorable loss and LAE reserve development and higher underlying losses and LAE, partially offset by lower catastrophe losses and LAE (excluding reserve development). Favorable loss and LAE reserve development was $2.7 million in 2012, compared to $5.0 million in 2011. Underlying losses and LAE were $28.6 million in 2012, compared to $26.1 million in 2011. Catastrophe losses and LAE (excluding reserve development) were $4.9 million in 2012, compared to $5.6 million in 2011.

Insurance Expenses increased by $4.0 million for the year ended December 31, 2012, compared to 2011, due primarily to increased new business and renewal production.

The Kemper Preferred segment reported Segment Net Operating Loss of $11.2 million for the year ended December 31, 2012, compared to Segment Net Operating Loss of $17.6 million in 2011. The Kemper Preferred segment’s effective income tax rate differs from the federal statutory income tax rate due primarily to tax-exempt investment income and dividends received deductions. Tax-exempt investment income and dividends received deductions were $20.2 million in 2012, compared to $24.5 million in 2011.

35

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER SPECIALTY

Selected financial information for the Kemper Specialty segment follows:

DOLLARS IN MILLIONS	2013			2012			2011
Net Premiums Written	$	383.1		$	415.1		$	438.2
Earned Premiums:
Personal Automobile	$	340.5		$	376.3		$	405.2
Commercial Automobile	52.3			43.5			40.0
Total Earned Premiums	392.8			419.8			445.2
Net Investment Income	21.8			19.0			22.8
Other Income	0.3			0.3			0.5
Total Revenues	414.9			439.1			468.5
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	315.6			347.9			358.4
Catastrophe Losses and LAE	3.7			4.8			3.8
Prior Years:
Non-catastrophe Losses and LAE	(4.9		)	(2.4		)	(9.5		)
Catastrophe Losses and LAE	—			0.1			0.1
Total Incurred Losses and LAE	314.4			350.4			352.8
Insurance Expenses	88.2			91.5			91.5
Operating Profit (Loss)	12.3			(2.8		)	24.2
Income Tax Benefit (Expense)	(1.9		)	4.0			(4.4		)
Segment Net Operating Income	$	10.4		$	1.2		$	19.8
Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	80.3		%	83.0		%	80.4		%
Current Year Catastrophe Losses and LAE Ratio	0.9			1.1			0.9
Prior Years Non-catastrophe Losses and LAE Ratio	(1.2		)	(0.6		)	(2.1		)
Prior Years Catastrophe Losses and LAE Ratio	—			—			—
Total Incurred Loss and LAE Ratio	80.0			83.5			79.2
Incurred Expense Ratio	22.5			21.8			20.6
Combined Ratio	102.5		%	105.3		%	99.8		%
Underlying Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio	80.3		%	83.0		%	80.4		%
Incurred Expense Ratio	22.5			21.8			20.6
Underlying Combined Ratio	102.8		%	104.8		%	101.0		%
Non-GAAP Measure Reconciliation
Underlying Combined Ratio	102.8		%	104.8		%	101.0		%
Current Year Catastrophe Losses and LAE Ratio	0.9			1.1			0.9
Prior Years Non-catastrophe Losses and LAE Ratio	(1.2		)	(0.6		)	(2.1		)
Prior Years Catastrophe Losses and LAE Ratio	—			—			—
Combined Ratio as Reported	102.5		%	105.3		%	99.8		%

36

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER SPECIALTY (Continued)

INSURANCE RESERVES

DOLLARS IN MILLIONS	Dec 31, 2013		Dec 31, 2012
Insurance Reserves:
Personal Automobile	$	140.5	$	164.8
Commercial Automobile	49.3		43.9
Other	6.6		7.2
Insurance Reserves	$	196.4	$	215.9
Insurance Reserves:
Loss Reserves:
Case	$	120.7	$	130.9
Incurred but Not Reported	44.1		48.3
Total Loss Reserves	164.8		179.2
LAE Reserves	31.6		36.7
Insurance Reserves	$	196.4	$	215.9

2013 Compared with 2012

Earned Premiums in the Kemper Specialty segment decreased by $27.0 million for the year endedDecember 31, 2013, compared to 2012, due to lower earned premiums on personal automobile insurance, partially offset by higher earned premiums on commercial automobile insurance. Personal automobile insurance earned premiums decreased by $35.8 million in 2013, compared to 2012, as lower volume of personal automobile insurance decreased personal automobile insurance earned premiums by $63.4 million, while higher average premium accounted for a $27.6 million increase in earned premiums. Personal automobile insurance policies in force were approximately 208,000 at December 31, 2013, compared to 260,000 at the beginning of 2013 and 302,000 at the beginning of 2012. Commercial automobile insurance earned premiums increased by $8.8 million in 2013, compared to 2012, due primarily to higher volume from an increase in new business production.

Net Investment Income in the Kemper Specialty segment increased by $2.8 million for the year endedDecember 31, 2013, compared to 2012, due primarily to higher net investment income from Equity Method Limited Liability Investments and higher dividends on equity securities, partially offset by lower yields on fixed maturities. The Kemper Specialty segment reported net investment income of $4.0 million from Equity Method Limited Liability Investments in 2013, compared to $1.7 million for 2012.

Operating Profit in the Kemper Specialty segment was $12.3 million for the year endedDecember 31, 2013, compared to Operating Loss of $2.8 million in 2012. Operating results improved due primarily to lower underlying losses and LAE as a percentage of earned premiums, higher net investment income and a higher level of favorable reserve development, partially offset by higher underwriting expenses as a percentage of earned premiums.

Personal automobile insurance operating results increased by $27.8 million for the year endedDecember 31, 2013, compared to 2012, due primarily to a favorable impact from a change in loss and LAE reserve development and lower underlying losses and LAE as a percentage of personal automobile insurance earned premiums. Underlying losses and LAE exclude the impact of catastrophes and loss and LAE reserve development. Loss and LAE reserve development on personal automobile insurance had a favorable effect of $1.9 million in 2013, compared to an adverse effect of $10.3 million in 2012. Underlying losses and LAE were $271.9 million, or 79.9% of personal automobile insurance earned premiums in 2013, compared to $312.5 million, or 83.1% of personal automobile insurance earned premiums in 2012. Personal automobile insurance underlying losses and LAE as a percentage of personal automobile insurance earned premiums decreased due primarily to higher average premium and lower frequency of bodily injury and comprehensive claims, partially offset by higher severity of losses in all coverages.

37

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER SPECIALTY (Continued)

Commercial automobile insurance operating profit decreased by $12.7 million for the year endedDecember 31, 2013, compared to 2012, due primarily to lower levels of favorable loss and LAE reserve development and higher underlying losses and LAE as a percentage of commercial automobile insurance earned premiums, partially offset by higher net investment income. Favorable loss and LAE reserve development on commercial automobile insurance was $3.0 million in 2013, compared to favorable development of $12.6 million in 2012. Underlying losses and LAE as a percentage of commercial automobile insurance earned premiums were 83.5% in 2013, compared to 81.4% in 2012. Underlying losses and LAE as a percentage of commercial automobile insurance earned premiums increased due primarily to higher frequency of bodily injury, property damage and comprehensive claims and higher severity of property damage and collision losses, partially offset by higher average premium.

Insurance expenses as a percentage of earned premiums was 22.5% for the year endedDecember 31, 2013, compared to 21.8% in 2012. Insurance expenses as a percentage of earned premiums increased due primarily to higher incentive pay due to improving performance and higher fixed costs as a percentage of earned premiums.

Segment Net Operating Income in the Kemper Specialty segment was $10.4 million for the year endedDecember 31, 2013, compared to $1.2 million in 2012. The Kemper Specialty segment’s effective income tax rate differs from the federal statutory income tax rate due primarily to tax-exempt investment income and dividends received deductions. Tax-exempt investment income and dividends received deductions were $6.4 million in 2013, compared to $8.5 million in 2012.

2012 Compared with 2011

Earned Premiums in the Kemper Specialty segment decreased by $25.4 million for the year endedDecember 31, 2012, compared to 2011, due primarily to lower earned premiums for personal automobile insurance, partially offset by higher earned premiums on commercial automobile insurance. Personal automobile insurance earned premiums decreased by $28.9 million in 2012, compared to 2011, due primarily to lower volume, partially offset by higher average premium. Personal automobile insurance policies in force were approximately 260,000 at December 31, 2012, compared to 302,000 at the beginning of 2012 and 329,000 at the beginning of 2011. Commercial automobile insurance earned premiums increased by $3.5 million in 2012, compared to 2011, due primarily to higher volume from an increase in new business production.

Net Investment Income in the Kemper Specialty segment decreased by $3.8 million for the year endedDecember 31, 2012, compared to 2011, due primarily to lower net investment income from equity method limited liability investments and lower levels of investments allocated to Kemper Specialty. The Kemper Specialty segment reported net investment income of $1.7 million from equity method limited liability investments in 2012, compared to $3.7 million for 2011.

Operating Loss in the Kemper Specialty segment was $2.8 million for the year endedDecember 31, 2012, compared to Operating Profit of $24.2 million in 2011. Operating results deteriorated due primarily to higher underlying losses and LAE as a percentage of earned premiums, lower favorable reserve development, lower net investment income and higher underwriting expenses as a percentage of earned premiums.

Personal automobile insurance operating results decreased by $30.5 million for the year endedDecember 31, 2012, compared to 2011, due primarily to higher underlying losses and LAE as a percentage of personal automobile insurance earned premiums, unfavorable loss and LAE reserve development, higher insurance expenses as a percentage of personal automobile insurance earned premiums and lower net investment income. Underlying losses and LAE were $312.5 million, or 83.0% of personal automobile insurance earned premiums in 2012 compared to $328.5 million, or 81.1% of personal automobile insurance earned premiums in 2011. Personal automobile insurance underlying losses and LAE as a percentage of personal automobile insurance earned premiums increased due primarily to higher claims handling costs in 2012, compared to 2011.Loss and LAE reserve development on personal automobile insurance had an adverse effect of $10.3 million in 2012, compared to a favorable effect of $3.6 million in 2011, and was related primarily to the 2011 and 2010 accident years.

38

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER SPECIALTY (Continued)

Commercial automobile insurance operating profit increased by $3.3 million for the year endedDecember 31, 2012, compared to 2011, due primarily to the favorable effects of loss and LAE reserve development, partially offset by higher underlying losses and LAE as a percentage of commercial automobile insurance earned premiums. Favorable loss and LAE reserve development on commercial automobile insurance was $12.6 million in 2012, of which $5.9 million related to 2011 and 2010 accident years, with the balance of $6.7 million dispersed over several older accident years. Favorable loss and LAE reserve development was $6.1 million in 2011. Underlying losses and LAE as a percentage of commercial automobile insurance earned premiums were 81.5% in 2012, compared to 74.3% in 2011, and increased due primarily to higher frequency of losses.

Other insurance operating profit increased by $0.2 million for the year endedDecember 31, 2012, compared to 2011. Other insurance consists of certain reinsurance pools in run-off and other personal insurance in run-off. Loss and LAE reserve development on certain reinsurance pools in run-off, had adverse development of $0.4 million in 2011. There was no loss and LAE reserve development on reinsurance pools in run-off in 2012.

Insurance expenses as a percentage of earned premiums was 21.8% for the year endedDecember 31, 2012, compared to 20.6% in 2011. Insurance expenses as a percentage of earned premiums increased in 2012, compared to 2011, due primarily to higher expenses associated with information technology initiatives.

Segment Net Operating Income in the Kemper Specialty segment was $1.2 million for the year endedDecember 31, 2012, compared to $19.8 million in 2011. The Kemper Specialty segment’s effective income tax rate differs from the federal statutory income tax rate due primarily to tax-exempt investment income and dividends received deductions. Tax-exempt investment income and dividends received deductions were $8.5 million in 2012, compared to $11.3 million in 2011.

39

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER DIRECT

Selected financial information for the Kemper Direct segment follows:

DOLLARS IN MILLIONS	2013			2012			2011
Net Premiums Written	$	111.3		$	147.3		$	209.0
Earned Premiums:
Automobile	$	115.0		$	158.3		$	213.3
Homeowners	8.3			9.5			9.2
Other Personal	0.1			0.2			0.2
Total Earned Premiums	123.4			168.0			222.7
Net Investment Income	13.4			13.9			17.4
Other Income	—			—			0.1
Total Revenues	136.8			181.9			240.2
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	85.8			139.0			194.8
Catastrophe Losses and LAE	2.3			8.3			6.7
Prior Years:
Non-catastrophe Losses and LAE	(25.0		)	(17.5		)	(4.4		)
Catastrophe Losses and LAE	(0.6		)	(0.3		)	0.5
Total Incurred Losses and LAE	62.5			129.5			197.6
Insurance Expenses	34.7			57.2			76.3
Write-off of Intangible Asset from Direct Response Acquisition	—			—			13.5
Operating Profit (Loss)	39.6			(4.8		)	(47.2		)
Income Tax Benefit (Expense)	(12.5		)	3.9			19.7
Segment Net Operating Income (Loss)	$	27.1		$	(0.9	)	$	(27.5	)
Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	69.5		%	82.8		%	87.5		%
Current Year Catastrophe Losses and LAE Ratio	1.9			4.9			3.0
Prior Years Non-catastrophe Losses and LAE Ratio	(20.3		)	(10.4		)	(2.0		)
Prior Years Catastrophe Losses and LAE Ratio	(0.5		)	(0.2		)	0.2
Total Incurred Loss and LAE Ratio	50.6			77.1			88.7
Incurred Expense Ratio, Including Write-off of Intangible Asset	28.1			34.0			40.3
Combined Ratio	78.7		%	111.1		%	129.0		%
Underlying Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio	69.5		%	82.8		%	87.5		%
Incurred Expense Ratio, Including Write-off of Intangible Asset	28.1			34.0			40.3
Underlying Combined Ratio	97.6		%	116.8		%	127.8		%
Non-GAAP Measure Reconciliation
Underlying Combined Ratio	97.6		%	116.8		%	127.8		%
Current Year Catastrophe Losses and LAE Ratio	1.9			4.9			3.0
Prior Years Non-catastrophe Losses and LAE Ratio	(20.3		)	(10.4		)	(2.0		)
Prior Years Catastrophe Losses and LAE Ratio	(0.5		)	(0.2		)	0.2
Combined Ratio as Reported	78.7		%	111.1		%	129.0		%

40

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER DIRECT (Continued)

INSURANCE RESERVES

DOLLARS IN MILLIONS	Dec 31, 2013		Dec 31, 2012
Insurance Reserves:
Automobile	$	128.6	$	173.3
Homeowners	2.0		2.7
Other	2.8		1.8
Insurance Reserves	$	133.4	$	177.8
Insurance Reserves:
Loss Reserves:
Case	$	91.3	$	115.4
Incurred but Not Reported	27.5		39.7
Total Loss Reserves	118.8		155.1
LAE Reserves	14.6		22.7
Insurance Reserves	$	133.4	$	177.8

2013 Compared with 2012

In 2012, the Company announced that the Kemper Direct segment would continue to solicit business for its worksite and affinity programs and would place its direct-to-consumer operations in run-off. Kemper Direct policies in-force declined 25% in 2013 and is expected to decline 25% to 35% in 2014 as a result of this and other actions. Kemper Direct believes that it should be able to manage its underlying loss and LAE ratio, but believes there is upward pressure on the expense ratio as fixed expenses will be spread over a declining premium base. Earned Premiums in the Kemper Direct segment decreased by $44.6 million for the year endedDecember 31, 2013, compared to 2012, due primarily to lower volume, partially offset by higher average premium.

Net Investment Income in the Kemper Direct segment decreased by $0.5 million for the year endedDecember 31, 2013, compared to 2012, due primarily to lower levels of investments allocated to the Kemper Direct segment and lower yields on investments in fixed maturities, partially offset by higher net investment income from Equity Method Limited Liability Investments and higher dividends on equity securities.

The Kemper Direct segment reported Operating Profit of $39.6 million for the year endedDecember 31, 2013, compared to an Operating Loss of $4.8 million in 2012. Operating results improved, due primarily to lower underlying losses and LAE, higher levels of favorable reserve development, lower insurance expenses and lower catastrophe losses and LAE.

Incurred losses and LAE were $62.5 million, or 50.6% as a percentage of earned premiums, for the year endedDecember 31, 2013, compared to $129.5 million, or 77.1% as a percentage of earned premiums, in 2012. Incurred losses and LAE decreased in 2013, due primarily to the impact of lower earned premiums, lower underlying losses and LAE as a percentage of earned premiums, higher levels of favorable loss and LAE reserve development and lower catastrophe losses and LAE (excluding reserve development). Underlying losses and LAE as a percentage of earned premiums were 69.5% in 2013, compared to 82.8% in 2012. Underlying losses and LAE as a percentage of earned premiums decreased due primarily to lower severity of automobile insurance losses and lower frequency of automobile insurance claims. Favorable loss and LAE reserve development was $25.6 million in 2013, compared to $17.8 million in 2012. Catastrophe losses and LAE (excluding reserve development) were $2.3 million in 2013, compared to $8.3 million in 2012.

41

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

KEMPER DIRECT (Continued)

Insurance Expenses were $34.7 million, or 28.1% of earned premiums, for the year endedDecember 31, 2013, compared to $57.2 million, or 34.0% of earned premiums, in 2012. Insurance Expenses as a percentage of earned premiums decreased due primarily to reduced salaries and marketing related expenses.

Kemper Direct reported Segment Net Operating Income of $27.1 million for the year endedDecember 31, 2013, compared to a Segment Net Operating Loss of $0.9 million in 2012. The Kemper Direct segment’s effective income tax rate differs from the federal statutory income tax rate due primarily to tax-exempt investment income and dividends received deductions. Tax-exempt investment income and dividends received deductions were $4.0 million in 2013, compared to $6.2 million in 2012.

2012 Compared with 2011

Earned Premiums in the Kemper Direct segment decreased by $54.7 million for the year ended December 31, 2012, compared to 2011, due primarily to lower volume, partially offset by higher average premium rates.

Net Investment Income in the Kemper Direct segment decreased by $3.5 million for the year ended December 31, 2012, compared to 2011, due primarily to lower net investment income from Equity Method Limited Liability Investments and lower levels of investments allocated to Kemper Direct. Net investment income from Equity Method Limited Liability Investments was $1.3 million in 2012, compared to $2.9 million in 2011.

The Kemper Direct segment reported an Operating Loss of $4.8 million for the year ended December 31, 2012, compared to an Operating Loss of $47.2 million in 2011. Operating results improved in the Kemper Direct segment in 2012, compared to 2011, due primarily to lower levels of unprofitable business, higher levels of favorable reserve development, the impact of the partial write-off in 2011 of an intangible asset from the acquisition of Direct Response Corporation (“Direct Response”) that did not recur in 2012 and lower underlying losses and LAE, partially offset by lower net investment income.

Incurred losses and LAE were $129.5 million, or 77.1% as a percentage of earned premiums, for the year ended December 31, 2012, compared to $197.6 million, or 88.7% as a percentage of earned premiums, in 2011. Incurred losses and LAE decreased in 2012, due primarily to the impact of lower earned premiums, higher levels of favorable loss and LAE reserve development and lower underlying losses and LAE as a percentage of earned premiums, partially offset by higher incurred catastrophe losses and LAE (excluding reserve development). Favorable loss and LAE reserve development was $17.8 million in 2012, compared to $3.9 million in 2011. Underlying losses and LAE as a percentage of earned premiums were 82.8% in 2012, compared to 87.5% in 2011. Underlying losses and LAE as a percentage of earned premiums decreased in both automobile and homeowners insurance. Catastrophe losses and LAE (excluding reserve development) were $8.3 million in 2012, compared to $6.7 million in 2011.

The Incurred Expense Ratio, including Write-off of Intangible Asset, was 34.0% of earned premiums for the year ended December 31, 2012, compared to 40.3% of earned premiums in 2011. In 2011, the book of business acquired in connection with the acquisition of Direct Response was not improving at the rate that Kemper Direct had initially expected, and Kemper Direct determined that the customer relationships intangible asset related to the Direct Response acquisition was impaired at December 31, 2011 and recognized a charge of $13.5 million in 2011 to write down the asset to its estimated fair value. Insurance Expenses as a percentage of earned premiums were 34.0% in 2012, compared to 34.3% of earned premiums in 2011. Insurance Expenses as a percentage of earned premiums decreased due primarily to reduced acquisition and marketing related expenses, partially offset by other underwriting costs not declining at the same pace as earned premiums.

Kemper Direct reported a Segment Net Operating Loss of $0.9 million for the year ended December 31, 2012, compared to a Segment Net Operating Loss of $27.5 million in 2011. The Kemper Direct segment’s effective income tax rate differs from the federal statutory income tax rate due primarily to tax-exempt investment income and dividends received deductions. Tax-exempt investment income and dividends received deductions were $6.2 million in 2012, compared to $8.7 million in 2011.

42

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE AND HEALTH INSURANCE

Selected financial information for the Life and Health Insurance segment follows:

DOLLARS IN MILLIONS	2013			2012			2011
Earned Premiums:
Life	$	392.7		$	393.4		$	395.1
Accident and Health	161.4			165.2			166.3
Property	78.8			81.3			84.5
Total Earned Premiums	632.9			639.9			645.9
Net Investment Income	209.9			204.3			200.5
Other Income	0.2			0.1			0.1
Total Revenues	843.0			844.3			846.5
Policyholders’ Benefits and Incurred Losses and LAE	387.9			393.1			385.6
Insurance Expenses	318.2			310.8			308.6
Operating Profit	136.9			140.4			152.3
Income Tax Expense	(47.6		)	(49.6		)	(53.4		)
Segment Net Operating Income	$	89.3		$	90.8		$	98.9

INSURANCE RESERVES

DOLLARS IN MILLIONS	Dec 31, 2013		Dec 31, 2012
Insurance Reserves:
Future Policyholder Benefits	$	3,157.7	$	3,103.1
Incurred Losses and LAE Reserves:
Life	37.6		36.8
Accident and Health	22.2		21.7
Property	5.3		7.0
Total Incurred Losses and LAE Reserves	65.1		65.5
Insurance Reserves	$	3,222.8	$	3,168.6

2013 Compared with 2012

Earned Premiums in the Life and Health Insurance segment decreased by $7.0 million for the year endedDecember 31, 2013, compared to 2012. Earned premiums on life insurance decreased by $0.7 million in 2013, compared to 2012, due primarily to a lower volume of insurance, as a decrease of $6.4 million from life insurance products offered by the Kemper Home Service Companies (“KHSC”) was partially offset by an increase of $5.7 million from life insurance products offered by Reserve National. In late 2012, Reserve National began offering its life insurance products through an expanded network of brokers and non-exclusive independent agents (See Item 1A., “Risk Factors” entitled “Reserve National’s operating history with its expanded distribution channels and new products is limited”). Earned premiums on accident and health insurance decreased by $3.8 million in 2013, compared to 2012, due primarily to lower volume of insurance resulting primarily from the run-off of certain health insurance products, partially offset by higher volume of supplemental health insurance products and higher average premium. The Company believes that some of the health insurance products previously sold by Reserve National could be adversely impacted by some provisions of the Health Care Acts. In particular, a provision which sets minimum loss ratios for health insurance policies; a provision, beginning in 2014, establishing health insurance exchanges; and a provision, beginning in 2014, prohibiting the renewal of certain policies issued by Reserve National after the issuance of the Health Care Acts could adversely impact Reserve National’s business. Such affected health insurance products (the “Affected Products”) accounted for $49.6 million, or 31%, of the Life and Health Insurance segment’s accident and health insurance earned premiums in 2013 and $62.5 million, or 38%, of the Life and Health Insurance segment’s accident and health insurance earned premiums in 2012. Reserve National has been adapting its business model in response to the Health Care Acts and ceased selling the Affected Products at the end of 2011 and began transitioning its sales to supplemental health insurance products that are not expected to be as severely impacted by the Health Care Acts. Reserve National expects earned premiums from the Affected Products to decrease by approximately 37% in 2014 and expects an increase in earned premiums from sales of supplemental insurance

43

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE AND HEALTH INSURANCE (Continued)

products to offset much of the decline. Earned premiums on property insurance decreased by $2.5 million in 2013, compared to 2012, due primarily to lower volume of insurance from the run-off and, in certain geographical areas, the non-renewal of insurance policies providing dwelling coverage (“Dwelling Policies”), partially offset by the impact of non-renewing the Life and Health Insurance segment’s catastrophe reinsurance program. Catastrophe reinsurance premiums reduced earned premiums by $2.0 million for the year endedDecember 31, 2012 with no such reduction in 2013. Given the actions taken by KHSC to reduce its exposures to catastrophes and except for catastrophe reinsurance provided by the FHCF, KHSC did not renew its catastrophe reinsurance program in 2013. The Life and Health Insurance segment has been intentionally running off Dwelling Policies to reduce its exposure to catastrophe risks. Over the last several years, the Life and Health Insurance segment has halted new sales of Dwelling Policies in all markets and non-renewed Dwelling Policies in certain geographical, mainly coastal, areas while continuing to renew policies in other geographical areas. Earned premiums from dwelling coverage comprised 23%, 26% and 30% of the Life and Health Insurance segment’s earned premiums on property insurance in 2013, 2012 and 2011, respectively.

Net Investment Income increased by $5.6 million for the year endedDecember 31, 2013, compared to 2012, due primarily to a higher level of investments in fixed maturities, higher investment income from Equity Method Limited Liability Investments and higher dividends on equity securities, partially offset by lower book yields on fixed maturities. Net investment income from Equity Method Limited Liability Investments was $8.4 million for the year endedDecember 31, 2013, compared to $1.8 million in 2012.

Operating Profit in the Life and Health Insurance segment was $136.9 million before taxes for the year endedDecember 31, 2013, compared to $140.4 million in 2012. Policyholders’ Benefits and Incurred Losses and LAE decreased by $5.2 million in 2013 due primarily to lower underlying losses on property insurance, lower catastrophe losses and LAE and higher favorable loss and LAE reserve development, partially offset by higher policyholders’ benefits on life insurance and higher incurred accident and health insurance losses. Policyholders’ benefits on life insurance were $269.6 million in 2013, compared to $265.3 million in 2012, an increase of $4.3 million. Policyholders’ benefits on life insurance increased due primarily to higher volume of insurance from policies issued by Reserve National and slightly higher mortality rates related to insurance policies issued by KHSC, partially offset by the impact of a higher lapse rate for KHSC’s in-force book of business. Incurred accident and health insurance losses were $90.9 million, or 56.3% of accident and health insurance earned premiums, in 2013, compared to $88.9 million, or 53.8% of accident and health insurance earned premiums, in 2012. Incurred accident and health insurance losses as a percentage of accident and health insurance earned premiums increased due primarily to higher severity of accident and health insurance losses, partially offset by lower frequency of claims.

Incurred losses and LAE on property insurance were $27.4 million, or 34.8% of property insurance earned premiums, in 2013, compared to $38.9 million, or 47.8% of property insurance earned premiums, in 2012. Underlying losses and LAE on property insurance were $25.6 million, or 32.5% of property insurance earned premiums, in 2013, compared to $33.2 million, or 40.8% of property insurance earned premiums, in 2012 and decreased due primarily to lower severity of insurance losses. Catastrophe losses and LAE (excluding reserve development) were $3.6 million in 2013, compared to $6.0 million in 2012. Favorable loss and LAE reserve development was $1.8 million in 2013, compared to $0.3 million in 2012. Favorable loss and LAE reserve development in 2013 resulted primarily from a final assessment issued by the MWUA that reduced KHSC’s share of MWUA’s losses for the 2004 through 2006 policy periods by $2.0 million.

Insurance Expenses in the Life and Health Insurance segment increased by $7.4 million in 2013, compared to 2012, due primarily to higher legal costs and start-up expenses to expand Reserve National’s distribution channels, partially offset by lower commissions.

Certain state insurance regulators, legislators and treasurers/controllers are involved in an array of initiatives that could result in significant changes to the application of unclaimed property laws and related claims handling practices with respect to life insurance policies. These initiatives seek, in various ways, to impose a new duty on the part of life insurers to proactively search for deaths of their insureds. It is the Company’s position that state officials lack the legal authority to impose new requirements that have the effect of changing the terms of existing life insurance contracts. See Item 1A., “Risk Factors,” under the caption “Unclaimed Property Risk Factor” MD&A, “Liquidity and Capital Resources,” and Note 23, “Contingencies,” to the Consolidated Financial Statements for additional information about these matters.

Segment Net Operating Income in the Life and Health Insurance segment was $89.3 million for the year endedDecember 31, 2013, compared to $90.8 million in 2012.

44

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE AND HEALTH INSURANCE (Continued)

2012 Compared with 2011

Earned Premiums in the Life and Health Insurance segment decreased by $6.0 million for the year ended December 31, 2012, compared to 2011. Earned premiums on life insurance decreased by $1.7 million in 2012, compared to 2011, due primarily to lower volume of insurance. Earned premiums on accident and health insurance decreased by $1.1 million in 2012, compared to 2011, due primarily to lower volume of insurance resulting from the suspension of sales of the Affected Policies described above and, to a lesser extent, lower volume of Medicare supplement insurance, partially offset by higher volume of supplemental health insurance products and higher average premium. Earned premiums on property insurance decreased by $3.2 million in 2012, compared to 2011, due primarily to lower volume of insurance from the run-off and, in certain geographical areas, the non-renewal of Dwelling Policies.

Net Investment Income increased by $3.8 million for the year ended December 31, 2012, compared to 2011, due primarily to higher investment income from Equity Method Limited Liability Investments, partially offset by lower book yields on fixed maturities and lower levels of capital allocated to the segment. Net investment income from Equity Method Limited Liability Investments was income of $1.8 million in 2012, compared to a loss of $6.3 million in 2011.

Operating Profit in the Life and Health Insurance segment was $140.4 million for the year ended December 31, 2012, compared to $152.3 million in 2011. Policyholders’ Benefits and Incurred Losses and LAE increased by $7.5 million in 2012 due primarily to higher policyholders’ benefits on life insurance and the impact of Loss and LAE reserve development onproperty insurance, partially offset by lower catastrophe losses and LAE and lower underlying losses on property insurance. Policyholders’ benefits on life insurance were $265.3 million in 2012, compared to $253.2 million in 2011, an increase of $12.1 million. Policyholder benefits on life insurance increased due primarily to reserve adjustments in 2011 associated with correcting expiry dates for certain extended term life insurance policies and a lower level of net lapse in 2012, partially offset by better mortality experience. Incurred accident and health insurance losses were $88.9 million, or 53.8% of accident and health insurance earned premiums, in 2012, compared to $88.9 million, or 53.4% of accident and health insurance earned premiums, in 2011. Incurred accident and health insurance losses were flat as higher average incurred claim costs for Medicare supplement insurance and, to a lesser extent, a higher average incurred claim cost for hospitalization and limited benefit insurance products, were offset by lower frequency of Medicare supplement insurance claims and, to a lesser extent, lower frequency of hospitalization and limited benefit insurance products. Incurred Losses and LAE on property insurance were $38.9 million in 2012, compared to $43.5 million in 2011. Underlying losses and LAE on property insurance were $33.2 million, or 40.8% of property insurance earned premium, in 2012, compared to $37.0 million, or 43.8% of property insurance earned premium, in 2011. Catastrophe losses and LAE (excluding reserve development) were $6.0 million in 2012, compared to $9.1 million in 2011. Favorable loss and LAE reserve development on property insurance was $0.3 million (including adverse reserve development of $0.1 million on catastrophes) in 2012, compared to favorable reserve development of $2.6 million (including favorable reserve development of $1.5 million on catastrophes) in 2011. Insurance Expenses in the Life and Health Insurance segment increased by $2.2 million in 2012, compared to 2011, due primarily to higher commission and fringe benefit expenses, partially attributable to an increase in the number of career agents employed, and higher amortization of deferred policy acquisition costs.

Segment Net Operating Income in the Life and Health Insurance segment was $90.8 million for the year ended December 31, 2012, compared to $98.9 million in 2011.

45

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS

Net Investment Income

Net Investment Income for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Investment Income:
Interest and Dividends on Fixed Maturities	$	235.5	$	246.1	$	246.6
Dividends on Equity Securities	38.0		25.7		25.2
Equity Method Limited Liability Investments	26.4		9.3		9.6
Short-term Investments	0.1		0.2		0.1
Real Estate	20.8		27.4		26.0
Loans to Policyholders	19.8		18.9		17.7
Other	—		0.1		0.3
Total Investment Income	340.6		327.7		325.5
Investment Expenses:
Real Estate	18.3		26.1		25.9
Other Investment Expenses	7.6		5.7		1.6
Total Investment Expenses	25.9		31.8		27.5
Net Investment Income	$	314.7	$	295.9	$	298.0

2013 Compared with 2012

Net Investment Income increased by $18.8 million for the year ended December 31, 2013, compared to 2012, due primarily to higher income on Equity Method Limited Liability Investments, higher dividends on Equity Securities, higher levels of Fixed Maturities, partially offset by lower yields on Fixed Maturities. Interest income from loans to policyholders increased by $0.9 million in 2013, compared to 2012, due to a higher level of loans outstanding. Net investment income from real estate increased by $1.2 million in 2013, compared to 2012, due primarily to income from the early termination of one tenant’s lease.

2012 Compared with 2011

Net Investment Income decreased by $2.1 million for the year ended December 31, 2012, compared to 2011, due primarily to higher other investment expenses, partially offset by higher interest income from loans to policyholders and higher real estate net investment income. Interest income from loans to policyholders increased by $1.2 million in 2012, compared to 2011, due to a higher level of loans outstanding. Net investment income from real estate increased by $1.2 million in 2012, compared to 2011, due primarily to higher occupancy.

46

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS (Continued)

Net Realized Gains on Sales of Investments

The components of Net Realized Gains on Sales of Investments for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities:
Gains on Sales	$	30.9		$	56.9		$	14.2
Losses on Sales	(0.4		)	(0.1		)	(0.1		)
Equity Securities:
Gains on Sales	21.8			8.3			34.0
Losses on Sales	(0.5		)	(0.2		)	(13.5		)
Equity Method Limited Liability Investments:
Gains on Sales	2.5			—			—
Real Estate:
Gains on Sales	44.2			0.2			0.1
Other Investments:
Gains on Sales	0.1			—			—
Losses on Sales	(0.1		)	—			(0.1		)
Trading Securities Net Gains (Losses)	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7
Gross Gains on Sales	$	99.5		$	65.4		$	48.3
Gross Losses on Sales	(1.0		)	(0.3		)	(13.7		)
Net Gains (Losses) on Trading Securities	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7

Fixed Maturities

In the first quarter of 2013, the Company sold $138.5 million of Corporate Bonds and Notes in conjunction with a comprehensive review of the prospects of each issuer in the Company’s publicly-traded corporate bond portfolio. Realized Gains on Sales of Fixed Maturities for the year endedDecember 31, 2013 include realized gains of $24.8 million from such sales. In the third quarter of 2012, the Company sold $320.1 million of municipal securities to take advantage of attractive pricing for such securities and for tax planning and other portfolio management purposes. Realized Gains on Sales of Fixed Maturities for the year ended December 31, 2012 include realized gains of $44.9 million from such sales.

Equity Securities

In the fourth quarter of 2013, the Company sold $47.9 million of common stocks to accelerate the utilization of net operating loss carryforwards. Realized Gains on Sales of Equity Securities for the year endedDecember 31, 2013 include realized gains of $19.8 million from such sales. Realized Gains on Sales of Equity Securities for the year endedDecember 31, 2012 include realized gains of $7.8 million from the sale of investments in the common stock and preferred stock of fifteen issuers. Realized Gains on Sales of Equity Securities for the year endedDecember 31, 2011 include realized gains of $21.6 million from the sale of investments in the common stock and preferred stock of twelve issuers, realized gains of $8.1 from sales of exchange traded funds and $4.3 million from dispositions of limited liability companies and partnerships included in Other Equity Interests. Realized Losses on Sales of Equity Securities for the year endedDecember 31, 2011 includes a loss of $7.0 million resulting from the contribution of the Company’s investment in the common stock of Intermec, Inc. to the Company’s pension plan and losses of $5.7 million from sales of exchange traded funds.

Real Estate

In the third quarter of 2013, the Company sold the building where Kemper’s corporate offices are headquartered and recognized a realized gain of $43.6 million.

47

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS (Continued)

Net Impairment Losses Recognized in Earnings

The components of Net Impairment Losses Recognized in Earnings reported in the Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities	$	(10.3	)	$	(1.9	)	$	(2.2	)
Equity Securities	(3.6		)	(1.9		)	(1.9		)
Real Estate	—			(3.1		)	(7.2		)
Net Impairment Losses Recognized in Earnings	$	(13.9	)	$	(6.9	)	$	(11.3	)

The Company regularly reviews its investment portfolio for factors that may indicate that a decline in the fair value of an investment is other than temporary. Losses arising from other-than-temporary declines in fair value are reported in the Consolidated Statements of Income in the period that the declines are determined to be other than temporary. Net Impairment Losses recognized in the Consolidated Statement of Income for the years ended December 31, 2013, 2012 and 2011 include other-than-temporary impairment (“OTTI”) losses of $13.9 million, $6.9 million and $11.3 million, respectively. OTTI losses recognized in the Consolidated Statement of Income for the years ended December 31, 2012 and 2011 included pre-tax losses of $3.1 million and $7.2 million, respectively, to write down real estate investments.

Net Impairment Losses Recognized in the Consolidated Statements of Income for the year ended December 31, 2013 include losses of $0.8 million due to the Company’s intent to sell or requirement to sell bonds of two issuers; credit losses of $9.5 million from other-than-temporary declines in the fair values of investments in fixed maturities of three issuers; and losses of $3.6 million from other-than-temporary declines in the fair values of investments in equity securities of eleven issuers.

Net Impairment Losses Recognized in the Consolidated Statements of Income for the year ended December 31, 2012 include losses of $0.4 million due to the Company’s intent to sell bonds of one issuer; credit losses of $1.5 million from other-than-temporary declines in the fair values of investments in fixed maturities of two issuers; and losses of $1.9 million from other-than-temporary declines in the fair values of investments in equity securities of eight issuers. The Company classified certain investments in real estate as held for sale in 2012. In connection with such classification, the Company wrote down five properties to their respective estimated net sales prices and recognized impairment losses of $3.1 million in 2012.

Net Impairment Losses recognized in the Consolidated Statements of Income for the year ended December 31, 2011 include credit losses of $2.2 million from other-than-temporary declines in the fair values of investments in fixed maturities of one issuer and losses of $0.7 million from other-than-temporary declines in the fair values of investments in equity securities of five issuers and $1.2 million to write down the value of one exchange traded fund that the Company intended to sell in the near term. In connection with the Company’s periodic review of the recoverability of its investments in real estate, the Company wrote down four properties to their respective fair values and recognized impairment losses of $7.2 million in 2011.

48

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS (Continued)

Total Comprehensive Investment Gains (Losses)

Total Comprehensive Investment Gains (Losses) are comprised of Net Realized Gains on Sales of Investments and Net Impairment Losses Recognized in Earnings reported in the Consolidated Statements of Income and unrealized investment gains and losses that are not reported in the Consolidated Statements of Income, but rather are reported in the Consolidated Statements of Comprehensive Income. The components of Total Comprehensive Investment Gains (Losses) for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities:
Recognized in Consolidated Statements of Income:
Gains on Sales	$	30.9		$	56.9		$	14.6
Losses on Sales	(0.4		)	(0.1		)	(0.1		)
Net Impairment Losses Recognized in Earnings	(10.3		)	(1.9		)	(2.2		)
Total Recognized in Consolidated Statements of Income	20.2			54.9			12.3
Recognized in Other Comprehensive Income (Loss)	(371.9		)	69.1			272.8
Total Comprehensive Investment Gains (Losses) on Fixed Maturities	(351.7		)	124.0			285.1
Equity Securities:
Recognized in Consolidated Statements of Income:
Gains on Sales	21.8			8.3			34.0
Losses on Sales	(0.5		)	(0.2		)	(13.5		)
Net Impairment Losses Recognized in Earnings	(3.6		)	(1.9		)	(1.9		)
Total Recognized in Consolidated Statements of Income	17.7			6.2			18.6
Recognized in Other Comprehensive Income (Loss)	9.3			29.2			(71.2		)
Total Comprehensive Investment Gains (Losses) on Equity Securities	27.0			35.4			(52.6		)
Equity Method Limited Liability Investments:
Recognized in Consolidated Statements of Income:
Gains on Sales	2.5			—			—
Real Estate:
Recognized in Consolidated Statements of Income:
Gains on Sales	44.2			0.2			0.1
Net Impairment Losses Recognized in Earnings	—			(3.1		)	(7.2		)
Total Recognized in Consolidated Statements of Income	44.2			(2.9		)	(7.1		)
Other Investments:
Recognized in Consolidated Statements of Income:
Gains on Sales	0.1			—			—
Losses on Sales	(0.1		)	—			(0.1		)
Trading Securities Net Gains (Losses)	0.6			0.3			(0.9		)
Total Recognized in Consolidated Statements of Income	0.6			0.3			(1.0		)
Total Comprehensive Investment Gains (Losses)	$	(277.4	)	$	156.8		$	224.4
Recognized in Consolidated Statements of Income	$	85.2		$	58.5		$	22.8
Recognized in Other Comprehensive Income (Loss)	(362.6		)	98.3			201.6
Total Comprehensive Investment Gains (Losses)	$	(277.4	)	$	156.8		$	224.4

49

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT QUALITY AND CONCENTRATIONS

The Company’s fixed maturity investment portfolio is comprised primarily of high-grade municipal, corporate and agency bonds. At December 31, 2013, 93% of the Company’s fixed maturity investment portfolio was rated investment grade, which is defined as a security having a rating of AAA, AA, A or BBB from S&P; a rating of Aaa, Aa, A or Baa from Moody’s; a rating of AAA, AA, A or BBB from Fitch; or a rating from the NAIC of 1 or 2. The following table summarizes the credit quality of the fixed maturity investment portfolio at December 31, 2013 and 2012:

NAIC Rating	S&P Equivalent Rating	Dec 31, 2013				Dec 31, 2012
		Fair Value in Millions		Percentage of Total		Fair Value in Millions		Percentage of Total
1	AAA, AA, A	$	3,128.1	68.4	%	$	3,319.1	68.3	%
2	BBB	1,119.9		24.5		1,199.0		24.7
3-4	BB, B	144.6		3.1		158.9		3.2
5-6	CCC or Lower	182.4		4.0		183.2		3.8
Total Investments in Fixed Maturities		$	4,575.0	100.0	%	$	4,860.2	100.0	%

Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $5.5 million and $4.3 million at December 31, 2013 and 2012, respectively.

At December 31, 2013, the Company had $162.6 million of bonds issued by states and political subdivisions, commonly referred to as “municipal bonds,” that had been pre-refunded with U.S. Government and Government Agencies and Authorities obligations held in trust for the full payment of principal and interest (“Pre-refunded Municipal Bonds”). At December 31, 2013, the Company had $1,198.4 million of investments in municipal bonds that had not been pre-refunded, of which $84.0 million were enhanced with insurance from monoline bond insurers. The Company’s municipal bond investment credit-risk strategy is to focus on the underlying credit rating of the issuer and not to rely on the credit enhancement provided by the monoline bond insurer when making investment decisions. To that end, the underlying rating of over 96% of the Company’s entire municipal bond portfolio that has not been pre-refunded is AA or higher, half of which are direct obligations of states.

The following table summarizes the fair value of the Company’s investments in governmental fixed maturities at December 31, 2013 and 2012:

	Dec 31, 2013				Dec 31, 2012
DOLLARS IN MILLIONS	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
U.S. Government and Government Agencies and Authorities	$	362.2	5.9	%	$	428.9	6.6	%
Pre-refunded Municipal Bonds	162.6		2.6		288.5		4.5
States	629.1		10.2		545.1		8.4
Political Subdivisions	128.1		2.1		122.9		1.9
Revenue Bonds	441.2		7.2		444.9		6.9
Total Investments in Governmental Fixed Maturities	$	1,723.2	28.0	%	$	1,830.3	28.3	%

The Company’s short-term investments primarily consist of overnight repurchase agreements, money market funds and U.S. Treasury bills. At December 31, 2013, the Company had $144.0 million invested in overnight repurchase agreements primarily collateralized by securities issued by the U.S. government, $64.1 million invested in money market funds which primarily invest in U.S. Treasury securities and $48.7 million of U.S. Treasury bills. At the time of borrowing, the repurchase agreements generally require the borrower to provide collateral to the Company at least equal to the amount borrowed from the Company. The Company bears some investment risk in the event that a borrower defaults and the value of collateral falls below the amount borrowed. The Company does not have any investments in sovereign debt securities issued by foreign governments.

50

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT QUALITY AND CONCENTRATIONS (Continued)

The following table summarizes the fair value of the Company’s investments in non-governmental fixed maturities by industry at December 31, 2013 and 2012:

	Dec 31, 2013				Dec 31, 2012
DOLLARS IN MILLIONS	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
Manufacturing	$	1,196.9	19.5	%	$	1,371.1	21.2	%
Finance, Insurance and Real Estate	767.9		12.5		780.8		12.1
Transportation, Communication and Utilities	306.7		5.0		289.2		4.5
Services	277.5		4.5		298.6		4.6
Mining	143.1		2.3		143.4		2.2
Retail Trade	75.6		1.2		66.5		1.0
Wholesale Trade	60.7		1.0		57.8		0.9
Agriculture, Forestry and Fishing	18.8		0.3		19.2		0.3
Other	4.6		0.1		3.3		0.1
Total Investments in Non-governmental Fixed Maturities	$	2,851.8	46.4	%	$	3,029.9	46.9	%

Eighty-one companies comprised over 75% of the Company’s fixed maturity exposure to the Manufacturing industry at December 31, 2013, with the largest single exposure, Merck & Co. Inc., comprising 2.5%, or $29.6 million, of the Company’s fixed maturity exposure to such industry. Forty companies comprised over 75% of the Company’s exposure to the Finance, Insurance and Real Estate industry at December 31, 2013, with the largest single exposure, Wells Fargo & Company, comprising 4.4%, or $33.9 million, of the Company’s exposure to such industry.

The following table summarizes the fair value of the Company’s ten largest exposures, excluding exposures to short term investments and investments in U.S. Government and Government Agencies and Authorities and Pre-refunded Municipal Bonds, at December 31, 2013:

DOLLARS IN MILLIONS	Fair Value		Percentage of Total Investments
Fixed Maturities:
States including their Political Subdivisions:
Texas	$	85.7	1.4	%
Ohio	75.5		1.2
Georgia	64.7		1.0
Colorado	54.5		0.9
Wisconsin	54.2		0.9
Florida	53.1		0.9
Maryland	52.9		0.9
Equity Method Limited Liability Investments:
Tennenbaum Opportunities Fund V, LLC	75.9		1.2
Vintage Fund IV, LP	54.0		0.9
Special Value Opportunities Fund, LLC	50.2		0.8
Total	$	620.7	10.1	%

51

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENTS IN LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS

The Company owns investments in various limited liability companies and limited partnerships that primarily invest in distressed debt, mezzanine debt and secondary transactions. The Company’s investments in these limited liability companies and limited partnerships are reported either as Equity Method Limited Liability Investments, or Other Equity Interests and included in Equity Securities depending on the accounting method used to report the investment. See Note 2, “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial Statements. Additional information pertaining to these investments at December 31, 2013 and 2012 is presented below:

DOLLARS IN MILLIONS	Asset Class	Unfunded Commitment Dec 31, 2013		Reported Value				Stated Fund End Date
				Dec 31, 2013		Dec 31, 2012
Reported as Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings:
Tennenbaum Opportunities Fund V, LLC	Distressed Debt	$	—	$	75.9	$	69.9	10/10/2016
Vintage Fund IV, LP	Secondary Transactions	17.4		54.0		58.9		12/31/2016
Special Value Opportunities Fund, LLC	Distressed Debt	—		50.2		59.4		7/13/2016
BNY Mezzanine - Alcentra Partners III, LP	Mezzanine Debt	15.5		19.0		18.9		2021-2022
BNY Mezzanine Partners, LP	Mezzanine Debt	0.2		9.5		9.2		4/17/2016
Ziegler Meditech Equity Partners, LP	Growth Equity	—		7.8		8.9		1/31/2016
Brightwood Capital Fund III, LP	Mezzanine Debt	—		7.5		—		9/30/2018
Midwest Mezzanine Fund IV, LP	Mezzanine Debt	0.3		6.1		6.3		12/18/2016
NYLIM Mezzanine Partners II, LP	Mezzanine Debt	3.8		5.5		10.3		7/31/2016
Other Funds (7 LLCs and LPs)		13.2		9.6		11.2		Various
Total for Equity Method Limited Liability Investments		50.4		245.1		253.0
Reported as Other Equity Interests at Fair Value:
Highbridge Principal Strategies Mezzanine Partners, LP	Mezzanine Debt	2.2		20.6		22.1		1/23/2018
Vintage Fund V, LP	Secondary Transactions	5.6		12.4		13.7		12/31/2018
Highbridge Principal Strategies Credit Opportunities Fund, LP	Hedge Fund	—		11.9		11.0		None
GS Mezzanine Partners V, LP	Mezzanine Debt	12.4		9.0		9.3		12/31/2021
Other (88 LLCs and LPs)		100.9		120.0		85.2		Various
Total Reported as Other Equity Interests at Fair Value		121.1		173.9		141.3
Total		$	171.5	$	419.0	$	394.3

The Company does not directly participate, as either a lender or borrower of securities, in any securities lending program. The Company does not participate directly in credit default swaps. The Company does not engage directly in hedging activities, including, but not limited to, activities involving interest rate swaps, forward foreign currency contracts, commodities contracts, exchange traded and over-the-counter options or warrants. The Company has limited exposure to such programs and activities by virtue of an investment of $0.6 million at December 31, 2013 included in Other under the heading “Reported as Other Equity Interests at Fair Value” in the preceding table. Such investment consists solely of restricted assets that are being redeemed over several periods.

52

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INTEREST AND OTHER EXPENSES

Interest and Other Expenses was $100.5 million, $85.5 million and $83.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. Interest expense, excluding interest on a mortgage note payable included in real estate investment expense, was $38.1 million, $37.6 million and $36.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. Other Corporate Expenses were $62.4 million, $47.9 million and $47.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. Other Corporate Expenses increased by $14.5 million for the year ended December 31, 2013, compared to 2012, due primarily to higher postretirement benefit costs and salaries. Other Corporate Expenses increased by $0.9 million for the year ended December 31, 2012, compared to 2011, due primarily to higher postretirement benefit costs and salaries.

INCOME TAXES

The Company’s effective income tax rate from continuing operations differs from the Federal statutory income tax rate due primarily to the effects of tax-exempt investment income and dividends received deductions, and the net effects of state income taxes. Tax-exempt investment income and dividends received deductions were $30.1 million, $39.8 million and $50.6 million in 2013, 2012 and 2011, respectively. State income tax expense, net of federal benefit, from continuing operations was $0.2 million, $0.8 million and $1.0 million in 2013, 2012 and 2011, respectively.

The Company’s effective income tax rate from discontinued operations differs from the Federal statutory income tax rate for the years ended December 31, 2012 and 2011 due primarily to the net effects of state income taxes. State income tax, net of federal taxes, from discontinued operations was $0.7 million of expense and $0.3 million of benefit for the years ended December 31, 2012 and 2011, respectively. State income tax includes changes in the state deferred tax asset valuation allowance and is net of a $0.2 million benefit and $2.3 million benefit for the years ended December 31, 2012, and 2011, respectively.

LIQUIDITY AND CAPITAL RESOURCES

On March 7, 2012, Kemper entered into the 2016 Credit Agreement, a new four-year, $325.0 million, unsecured, revolving credit agreement, expiring March 7, 2016, with a group of financial institutions. Effective December 31, 2013, Kemper amended the 2016 Credit Agreement to, among other things, reduce the amount of the aggregate commitments under the 2016 Credit Agreement by $100 million, bringing the aggregate commitments to $225 million, and to increase the amount of indebtedness that may be incurred and outstanding in the aggregate at any time in connection with borrowings from the FHLB or issuances of surplus notes by $150 million, to $250 million, provided that the aggregate indebtedness incurred and outstanding in connection with issuances of surplus notes may not exceed $100 million at any one time. The action resulted from the completion in December 2013 of the process initiated by Kemper’s subsidiaries, United Insurance and Trinity, to become members of the FHLBs of Chicago and Dallas, respectively. The FHLB memberships provide United and Trinity with access to additional sources of liquidity and consequently reduce the need for such liquidity at the parent company level.

The 2016 Credit Agreement replaced Kemper’s $245.0 million, unsecured, revolving credit agreement which was scheduled to expire on October 30, 2012 (the “Former Credit Agreement”) and was terminated on March 7, 2012. There were no borrowings under the Former Credit Agreement at either December 31, 2011 or at its termination. The 2016 Credit Agreement provides for fixed and floating rate advances for periods up to six months at various interest rates. The 2016 Credit Agreement contains various financial covenants, including limits on total debt to total capitalization, consolidated net worth and minimum risk-based capital ratios for Kemper’s largest insurance subsidiaries, United Insurance and Trinity. Proceeds from advances under the 2016 Credit Agreement may be used for general corporate purposes, including repayment of existing indebtedness.

Kemper did not borrow under its credit agreements during 2013 and 2012. Kemper borrowed and repaid $95.0 million under the Former Credit Agreement in 2011. There were no outstanding borrowings under the 2016 Credit Agreement at December 31, 2013, and accordingly, $225.0 million was available for future borrowings. Management estimates that it could borrow the full amount under the 2016 Credit Agreement and still meet the financial covenants therein.

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

In connection with the finalization of their FHLB memberships, United Insurance and Trinity purchased capital stock in the FHLBs of Chicago and Dallas, respectively. In addition, to complete Trinity’s membership in the FHLB of Dallas, which became effective as of December 31, 2013, Trinity and the FHLB of Dallas entered into agreements pursuant to which Trinity may obtain extensions of credit (“FHLB Advances”) from the FHLB of Dallas. The amount of FHLB Advances that may be obtained by Trinity will be determined as of any particular date based on a multiple of the amount of capital stock in the FHLB of Dallas that has been purchased by Trinity as of such date. FHLB Advances are subject to collateral requirements as specified in the agreements. There were no FHLB Advances outstanding at December 31, 2013.

At December 31, 2013, $250 million of Kemper’s 6.00% senior notes due November 30, 2015 (the “2015 Senior Notes”) was outstanding. The 2015 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Interest expense under the 2015 Senior Notes was $15.4 million for each of the years ended December 31, 2013, 2012 and 2011.

At December 31, 2013, $360 million of Kemper’s 6.00% senior notes due May 15, 2017 (the “2017 Senior Notes”) was outstanding. The 2017 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Interest expense under the 2017 Senior Notes was $22.2 million, $22.1 million and $22.0 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Under various state insurance laws, Kemper’s insurance subsidiaries may pay dividends without obtaining prior regulatory approval based upon levels of statutory capital and surplus and/or net income, as defined by the applicable state law. Kemper’s direct insurance subsidiaries paid dividends of $95.0 million, $95.0 million and $70.5 million in cash to Kemper in 2013, 2012 and 2011, respectively. In 2014, Kemper estimates that its direct insurance subsidiaries would be able to pay $217.0 million in dividends to Kemper without prior regulatory approval.

On July 25, 2013, Kemper’s subsidiary, One East Wacker LLC (“One East”), sold the building where Kemper’s corporate offices are headquartered for a gain of $43.6 million before taxes. In connection with the sale, Kemper entered into a long-term operating lease for five floors of the 41-story office building, with naming and signage rights. One East’s proceeds from the sale before taxes, net of repayment of a $45 million mortgage held by Trinity and an advance of $4.0 million from Kemper, and payment of other transaction costs and liabilities, were approximately $50 million. In 2013, One East distributed $48 million of its capital in cash to Kemper. In 2012, Fireside Auto Finance (“FAF”) distributed $20 million of its capital to its then parent company, Fireside Securities Corporation (“FSC”), which then, in turn, distributed the same amount to its parent company, Kemper. In 2011, FAF, which was known as Fireside Bank and regulated by the FDIC at the time, distributed $250 million of its capital to its then parent company, FSC, which then, in turn, distributed the same amount to its parent company, Kemper. The undistributed net assets of One East and FAF were not material at December 31, 2013.

On February 2, 2011, the Board of Directors approved a new share repurchase program under which Kemper is authorized to repurchase up to $300 million of its common stock. During 2013, Kemper repurchased approximately 3.0 million shares of its common stock at an aggregate cost of $100.4 million in open market transactions under the repurchase program. During 2012, Kemper repurchased approximately 2.0 million shares of its common stock at an aggregate cost of $60.7 million in open market transactions under the new repurchase program. During 2011, Kemper repurchased approximately 0.9 million shares of its common stock at an aggregate cost of $27.4 million in open market transactions.

Kemper paid a quarterly dividend to shareholders of $0.24 per common share in each quarter of 2013. Dividends paid were $54.9 million for the year endedDecember 31, 2013.

Kemper directly held cash and investments totaling $156.7 million at December 31, 2013, compared to $190.2 million at December 31, 2012. Sources available for the repayment of indebtedness, repurchases of common stock, future shareholder dividend payments, and the payment of interest on Kemper’s senior notes include cash and investments directly held by Kemper, receipt of dividends from Kemper’s subsidiaries and borrowings under the 2016 Credit Agreement.

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

The primary sources of funds for Kemper’s insurance subsidiaries are premiums, investment income and proceeds from the sales and maturity of investments. The primary uses of funds are the payment of policyholder benefits under life insurance contracts, claims under property and casualty insurance contracts and accident and health insurance contracts, the payment of commissions and general expenses and the purchase of investments. Generally, there is a time lag between when premiums are collected and when policyholder benefits and insurance claims are paid. Changes in the legal environment relative to application of state unclaimed property laws and related insurance claims handling practices could result in changes in the manner in which Kemper’s life insurance companies administer life insurance death benefits and escheat unclaimed benefits to the states, and could have a significant effect on, including decreasing such time lag due to an acceleration of, the payment and/or remittance of such benefits to the states under their unclaimed property laws relative to what is currently contemplated by Kemper. See Item 1A., “Risk Factors,” under the caption “Unclaimed Property Risk Factor” MD&A, “Life and Health Insurance,” and Note 23, “Contingencies,” to the Consolidated Financial Statements for additional information about these matters. During periods of growth, insurance companies typically experience positive operating cash flows and are able to invest a portion of their operating cash flows to fund future policyholder benefits and claims. During periods in which premium revenues decline, insurance companies may experience negative cash flows from operations and may need to sell investments to fund payments to policyholders andclaimants. In addition, if the Company’s property and casualty insurance subsidiaries experience several significant catastrophic events over a relatively short period of time, investments may have to be sold in advance of their maturity dates to fund payments, which could either result in investment gains or losses. Management believes that its property and casualty insurance subsidiaries maintain adequate levels of liquidity in the event that they experience several future catastrophic events over a relatively short period of time.

Net Cash Provided by Operating Activities increased by $56.4 million for the year ended December 31, 2013, compared to 2012. Net Cash Provided by Operating Activities increased by $90.7 million for the year ended December 31, 2012, compared to 2011.

Net Cash Used by Financing Activities increased by $42.3 million for the year endedDecember 31, 2013, compared to 2012. Kemper used $100.4 million of cash during 2013 to repurchase shares of its common stock, compared to $60.7 million of cash used to repurchase shares of its common stock in 2012. Kemper used $54.9 million of cash to pay dividends for the year endedDecember 31, 2013, compared to $56.9 million of cash used to pay dividends in 2012. The quarterly dividend rate was $0.24 per common share for each quarter of 2013 and 2012.

Net Cash Used by Financing Activities decreased by $291.2 million for the year ended December 31, 2012, compared to 2011. The Company did not use cash for the Repayments of Certificates of Deposits for the year ended December 31, 2012, compared to net cash used of $321.8 million in 2011. Kemper used $60.7 million of cash during 2012 to repurchase shares of its common stock, compared to $27.4 million of cash used to repurchase shares of its common stock in 2011. Kemper used $56.9 million of cash to pay dividends for the year ended December 31, 2012, compared to $58.2 million of cash used to pay dividends in 2011. The quarterly dividend rate was $0.24 per common share for each quarter of 2012 and 2011.

Cash available for investment activities in total is dependent on cash flow from Operating Activities and Financing Activities and the level of cash the Company elects to maintain. Net Cash Provided by Investing Activities increased by $111.0 million for the year endedDecember 31, 2013, compared to 2012. Purchases of Fixed Maturities exceeded Sales of Fixed Maturities by $80.1 million for the year endedDecember 31, 2013. Sales of Fixed Maturities exceeded Purchases of Fixed Maturities by $41.8 million in 2012. Purchases of Equity Securities exceeded Sales of Equity Securities by $31.3 million for the year endedDecember 31, 2013. Purchases of Equity Securities exceeded Sales of Equity Securities by $66.9 million for the year endedDecember 31, 2012. Cash provided by the sale of investment real estate was $102.7 million for the year endedDecember 31, 2013 compared to $6.0 million for the year endedDecember 31, 2012. Net cash provided by dispositions of short-term investments was $41.8 million for the year endedDecember 31, 2013, compared to net cash of $80.0 million used by acquisitions of short-term investments in 2012. Net proceeds from the sale of FAF’s inactive loan portfolio provided $16.7 million of cash for the year endedDecember 31, 2012. Receipts from Automobile Loan Receivables provided $2.0 million of cash for the year endedDecember 31, 2012.

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

Net Cash Provided by Investing Activities decreased by $670.8 million for the year endedDecember 31, 2012, compared to 2011. Sales of Fixed Maturities exceeded Purchases of Fixed Maturities by $41.8 million for the year endedDecember 31, 2012. Purchases of Fixed Maturities exceeded Sales of Fixed Maturities by $13.1 million in 2011. Purchases of Equity Securities exceeded Sales of Equity Securities by $66.9 million for the year endedDecember 31, 2012. Sales of Equity Securities exceeded Purchases of Equity Securities by $49.1 million for the year endedDecember 31, 2011. Net cash used by acquisitions of short-term investments was $80.0 million for the year endedDecember 31, 2012, compared to net cash of $155.5 million provided by dispositions of short-term investments in 2011. Net proceeds from the sale of FAF’s inactive portfolio of automobile loan receivables provided $16.7 million of cash for the year endedDecember 31, 2012. Net proceeds from the sale of FAF’s active loan portfolio provided $220.7 million of cash for the year endedDecember 31, 2011. Receipts from Automobile Loan Receivables provided $2.0 million of cash for the year endedDecember 31, 2012, compared to $166.5 million of cash provided in 2011.

OFF–BALANCE SHEET ARRANGEMENTS

The Company has no material obligations under a guarantee contract. The Company has no material retained or contingent interests in assets transferred to an unconsolidated entity. The Company has no material obligations, including contingent obligations, under contracts that would be accounted for as derivative instruments. The Company has no obligations, including contingent obligations, arising out of a variable interest in an unconsolidated entity held by, and material to, the Company, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with the Company. Accordingly, the Company has no material off–balance sheet arrangements.

CONTRACTUAL OBLIGATIONS

Estimated cash disbursements pertaining to the Company’s contractual obligations at December 31, 2013 are as follows:

DOLLARS IN MILLIONS	Jan 1, 2014 To Dec 31, 2014		Jan 1, 2015 To Dec 31, 2016		Jan 1, 2017 To Dec 31, 2018		After Dec 31, 2018		Total
Long Term Debt Obligations	$	—	$	250.0	$	360.0	$	—	$	610.0
Capital Lease Obligations	4.7		4.3		1.6		—		10.6
Operating Lease Obligations	25.1		35.4		24.0		15.3		99.8
Purchase Obligations	1.1		—		—		—		1.1
Life and Health Insurance Policy Benefits	251.0		424.4		412.1		6,195.0		7,282.5
Property and Casualty Insurance Reserves	454.7		248.4		67.7		72.7		843.5
Other Contractual Obligations Reflected in Long Term Liabilities on the Consolidated Balance Sheet under GAAP	37.2		58.8		10.7		—		106.7
Total Contractual Obligations	$	773.8	$	1,021.3	$	876.1	$	6,283.0	$	8,954.2

Amounts included in Life and Health Insurance Policy Benefits within the contractual obligations table above represent the estimated cash payments to be made to policyholders and beneficiaries. Such cash outflows are based on the Company’s current assumptions for mortality, morbidity and policy lapse, but are undiscounted with respect to interest. Policies must remain in force for the policyholder or beneficiary to receive the benefit under the policy. Depending on the terms of a particular policy, future premiums from the policyholder may be required for the policy to remain in force. The Company estimates that future cash inflows would total $4.1 billion using the same assumptions used to estimate the cash outflows. The Company’s Life Insurance Reserves in the Company’s Consolidated Balance Sheets are generally based on the historical assumptions for mortality and policy lapse rates and are on a discounted basis. Accordingly, the sum of the amounts presented above for Life and Health Insurance Policy Benefits significantly exceeds the amount of Life and Health Insurance Reserves reported on the Company’s Consolidated Balance Sheet at December 31, 2013.

In addition to the purchase obligations included above, the Company had certain investment commitments totaling $192.7 million at December 31, 2013. The funding of such investment commitments is dependent on a number of factors, the timing of which is indeterminate. The contractual obligations reported above also exclude the Company’s liability of $6.8 million for unrecognized tax benefits. The Company cannot make a reasonably reliable estimate of the amount and period of related future payments for such liability. Other Contractual Obligations Reflected in Long Term Liabilities on the Consolidated Balance Sheet under GAAP primarily consist of interest obligations related to Long Term Debt Obligations.

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES

Kemper’s subsidiaries conduct their businesses in two industries: property and casualty insurance and life and health insurance. Accordingly, the Company is subject to several industry-specific accounting principles under GAAP. The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The process of estimation is inherently uncertain. Accordingly, actual results could ultimately differ materially from the estimated amounts reported in a company’s financial statements. Different assumptions are likely to result in different estimates of reported amounts. The Company’s critical accounting policies most sensitive to estimates include the valuation of investments, the valuation of property and casualty insurance reserves for losses and LAE, the assessment of recoverability of goodwill and the valuation of pension benefit obligations.

Valuation of Investments

The reported value of the Company’s investments was $6,151.3 million at December 31, 2013, of which $5,178.5 million, or 84%, was reported at fair value, $245.1 million, or 4%, was reported under the equity method of accounting, $275.4 million, or 5%, was reported at unpaid principal balance and $452.3 million, or 7%, was reported at cost or depreciated cost. Investments, in general, are exposed to various risks, such as interest rate risk, credit risk, and overall market volatility risk. Accordingly, it is reasonably possible that changes in the fair values of the Company’s investments reported at fair value will occur in the near term and such changes could materially affect the amounts reported in the financial statements. Also, it is reasonably possible that changes in the carrying values of the Company’s Equity Method Limited Liability Investments will occur in the near term and such changes could materially affect the amounts reported in the financial statements because these issuers follow specialized industry accounting rules which require that they report all of their investments at fair value (See Item 1A., “Risk Factors” entitled “The Company’s investment portfolio is exposed to a variety of risks that may negatively impact net investment income and cause realized and unrealized losses”).

As more fully described under the heading, “Fair Value Measurements,” in Note 2, “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial Statements, the Company uses a hierarchal framework which prioritizes and ranks the market observability used in fair value measurements.

The fair value of the Company’s investments measured and reported at fair value was $5,178.5 million at December 31, 2013, of which $4,551.8 million, or 88%, were investments that were based on quoted market prices or significant value drivers that are observable and $626.7 million, or 12%, were investments where at least one significant value driver was unobservable. Fair value measurements based on readily available, active, quoted market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and a lesser degree of judgment, compared to fair value measurements based on significant unobservable inputs used in measuring fair value. The prices that the Company might realize from actual sales of investments are likely to vary from their respective estimated fair values at December 31, 2013 due to changing market conditions and limitations inherent in the estimation process.

The classification of a company’s investment in a financial instrument may affect its reported results. For investments classified as trading, a company is required to recognize changes in the fair values into income for the period reported. Both the reported and fair value of the Company’s investments classified as trading were $5.0 million at December 31, 2013. For investments in fixed maturities classified as held to maturity, a company is required to carry the investment at amortized cost, with only amortization occurring during the period recognized into income. None of the Company’s investments in fixed maturities were classified as held to maturity at December 31, 2013. Changes in the fair value of investments in fixed maturities classified as available for sale, investments in equity securities classified as available for sale and an insurance entity’s investments in equity securities without readily determinable fair values are not recognized to income during the period, but rather are recognized as a separate component of Accumulated Other Comprehensive Income until realized. All of the Company’s investments in fixed maturities were classified as available for sale at December 31, 2013. Except for investments accounted for under the equity method of accounting or classified as trading, all of the Company’s investments in equity securities at December 31, 2013 are reported at fair value with changes in fair value reported in Accumulated Other Comprehensive Income (“AOCI”) until realized. The Company’s investments accounted for under the equity method of accounting consist of the Company’s investments in Equity Method Limited Liability Investments and are valued at cost plus cumulative undistributed comprehensive earnings or losses, and not at fair value.

Under GAAP, a company may elect to use the fair value option for some or all of its investments in financial instruments. Under the fair value option, a company is required to recognize changes in the fair values into income for the period reported. The Company has not elected the fair value option for any of its investments in financial instruments. Had the Company elected

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

the fair value option for all of its investments in financial instruments, the Company’s reported net income for the year ended December 31, 2013, would have decreased by $233.6 million.

The Company regularly reviews its investments for factors that may indicate that a decline in the fair value of an investment below its cost or amortized cost is other than temporary. Such reviews are inherently uncertain in that the value of the investment may not fully recover or may decline further in future periods.

Some factors considered for fixed maturity and equity securities in evaluating whether or not a decline in fair value is other than temporary include, but are not limited to, the following:

Fixed Maturity Securities

• The financial condition, credit rating and prospects of the issuer;

• The extent to which the fair value has been less than amortized cost;

• The ability of the issuer to make scheduled principal and interest payments;

• The volatility of the investment;

• Opinions of the Company’s external investment managers;

• The Company’s intentions to sell or not to sell the investment; and

• The Company’s determination of whether it will be required to sell the investment before a full recovery in value.

Equity Securities

• The financial condition and prospects of the issuer;

• The length of time and magnitude of the unrealized loss;

• The volatility of the investment;

• Analyst recommendations and near term price targets;

• Opinions of the Company’s external investment managers;

• Market liquidity;

• Debt-like characteristics of perpetual preferred stocks and issuer ratings; and

• The Company’s intentions to sell or ability to hold the investments until recovery.

Changes in these factors from their December 31, 2013 evaluation date could result in the Company determining that a temporary decline in the fair value of an investment held and evaluated at December 31, 2013 is no longer temporary at a subsequent evaluation date. Such determination would result in an impairment loss recognized in earnings in the period such determination is made.

Property and Casualty Insurance Reserves for Losses and Loss Adjustment Expenses

The Company’s Property and Casualty Insurance Reserves are reported using the Company’s estimate of its ultimate liability for losses and LAE for claims that occurred prior to the end of any given accounting period but have not yet been paid. The Company had $843.5 million and $970.6 million of gross loss and LAE reserves at December 31, 2013 and 2012, respectively. Property and Casualty Insurance Reserves for the Company’s business segments at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Business Segments:
Kemper Preferred	$	412.8	$	452.3
Kemper Specialty	196.4		215.9
Kemper Direct	133.4		177.8
Life and Health Insurance	5.3		7.0
Total Business Segments	747.9		853.0
Discontinued Operations	83.0		100.7
Unallocated Reserves	12.6		16.9
Total Property and Casualty Insurance Reserves	$	843.5	$	970.6

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

In estimating the Company’s Property and Casualty Insurance Reserves, the Company’s actuaries exercise professional judgment and must consider, and are influenced by, many variables that are difficult to quantify. Accordingly, the process of estimating and establishing the Company’s Property and Casualty Insurance Reserves is inherently uncertain and the actual ultimate net cost of known and unknown claims may vary materially from the estimated amounts reserved. The reserving process is particularly imprecise for claims involving asbestos, environmental matters, construction defect and other emerging and/or long-tailed exposures which may not be discovered or reported until years after the insurance policy period has ended. Property and Casualty Insurance Reserves related to the Company’s discontinued operations are predominantly long-tailed exposures, $35.2 million of which was related to asbestos, environmental matters and construction defect exposures at December 31, 2013.

The Company’s actuaries generally estimate reserves at least quarterly for most product lines and/or coverage levels using accident quarters or accident months spanning 10 or more years, depending on the size of the product line and/or coverage level or emerging issues relating to them. The Company’s actuaries use a variety of generally accepted actuarial loss reserving estimation methodologies, including, but not limited to, the following:

• Incurred Loss Development Methodology;

• Paid Loss Development Methodology;

• Bornhuetter-Ferguson Incurred Loss Methodology;

• Bornhuetter-Ferguson Paid Loss Methodology; and

• Frequency and Severity Methodology.

The Company’s actuaries generally review the results of at least four of the estimation methodologies, two based on paid data and two based on incurred data, to initially estimate the ultimate losses and LAE for the current accident quarter and re-estimate the ultimate losses and LAE for previous accident quarters to determine if changes in the previous estimates of the ultimate losses and LAE are indicated by the most recent data. In some cases, the methodologies produce a cluster of estimates with a tight band of indicated possible outcomes. In other cases, however, the methodologies produce conflicting results and wider bands of indicated possible outcomes, and the Company’s actuaries perform additional analyses before making their final selections. However, such bands do not necessarily constitute a range of outcomes, nor does the Company’s management or the Company’s actuaries calculate a range of outcomes.

The key assumption in these estimation methodologies is that patterns observed in prior periods are indicative of how losses and LAE are expected to develop in the future and that such historical data can be used to predict and estimate ultimate losses and LAE. However, changes in the Company’s business processes, by their very nature, are likely to affect the development patterns, which generally results in the historical development factors becoming less reliable over time in predicting how losses and LAE will ultimately develop. The ultimate impact of a single change in a business process is difficult to quantify and detect, and even more difficult if several changes to business processes occur over several years. Initially after a change is implemented, there are fewer data points, as compared to the historical data, for the Company’s actuaries to analyze. With fewer data points to analyze, the Company’s actuaries cannot be certain that observed differences from the historical data trends are a result of the change in business process or merely a random fluctuation in the data. As the Company’s actuaries observe more data points following the change in business process, the Company’s actuaries can gain more confidence in whether the change in business process is affecting the development pattern. The challenge for the Company’s actuaries is how much weight to place on the development patterns based on the older historical data and how much weight to place on the development patterns based on more recent data.

At a minimum, the Company’s actuaries analyze 45 product and/or coverage levels for over 40 separate current and prior accident quarters for both losses and LAE using many of the loss reserving estimation methodologies identified above as well as other generally accepted actuarial estimation methodologies. In all, there are over 10,000 combinations of accident quarters, coverage levels, and generally accepted actuarial estimation methodologies used to estimate the Company’s unpaid losses and LAE. In some cases, the Company’s actuaries make adjustments to the loss reserving estimation methodologies identified above or use additional generally accepted actuarial estimation methodologies to estimate ultimate losses and LAE.

For each accident quarter, the point estimate selected by the Company’s actuaries is not necessarily one of the points produced by any particular one of the methodologies utilized, but often is another point selected by the Company’s actuaries, using their professional judgment, that takes into consideration each of the points produced by the several loss reserving estimation methodologies used. In some cases, for a particular product, the current accident quarter may not have enough paid claims data to rely upon, leading the Company’s actuaries to conclude that the incurred loss development methodology provides a better estimate than the paid loss development methodology. Therefore, the Company’s actuaries may give more weight to the

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Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

incurred loss development methodology for that particular accident quarter. As an accident quarter ages for that same product, the actuary may gain more confidence in the paid loss development methodology and begin to give more weight to the paid loss development methodology. The Company’s actuaries’ quarterly selections are summed by product and/or coverage levels to create the actuarial indication of the ultimate losses. More often than not, the actuarial indication for a particular product line and accident quarter is most heavily weighted towards the incurred loss development methodology, particularly for short-tail lines such as personal automobile insurance. Historically, the incurred loss development methodology has been more reliable in predicting ultimate losses for short-tail lines, especially in the more recent accident quarters, compared with the paid loss development methodology. However, in some circumstances changes can occur which impact numerous variables, including, but not limited to, those variables identified below that are difficult to quantify and/or impact the predictive value of prior development patterns relied upon in the incurred loss development methodology and paid loss development methodology. In those circumstances, the Company’s actuaries must make adjustments to these loss reserving estimation methodologies or use additional generally accepted actuarial estimation methodologies. In those circumstances, the Company’s actuaries, using their professional judgment, may place more weight on the adjusted loss reserving estimation methodologies or other generally accepted actuarial estimation methodologies until the newer development patterns fully emerge and the Company’s actuaries can fully rely on the unadjusted loss reserving estimation methodologies. In the event of a wide variation among results generated by the different projection methodologies, the Company’s actuaries further analyze the data using additional techniques.

In estimating reserves, the Company’s actuaries exercise professional judgment and must consider, and are influenced by, many variables that are difficult to quantify, such as:

• Changes in the level of minimum case reserves, and the automatic aging of those minimum case reserves;

• Changes to claims practices, including, but not limited to, changes in the reporting and impact of large losses, timing of reported claims, adequacy of case reserves, implementation of new systems for handling claims, turnover of claims department staffs, timing and depth of the audit review of claims handling procedures;

• Changes in underwriting practices;

• Changes in the mix of business by state, class and policy limit within product line;

• Growth in new lines of business;

• Changes in the attachment points of the Company’s reinsurance programs;

• Medical costs, including, but not limited to, the ability to assess the extent of injuries and the impact of inflation;

• Repair costs, including, but not limited to, the impact of inflation and the availability of labor and materials;

• Changes in the judicial environment, including, but not limited to, the interpretation of policy provisions, the impact of jury awards and changes in case law; and

• Changes in state regulatory requirements.

A change in any one or more of the foregoing factors is likely to result in a projected ultimate net loss and LAE that is different from the previously estimated reserve and/or previous frequency and severity trends. Such changes in estimates may be material.

For example, the Company’s actuaries review frequency (number of claims per policy or exposure), severity (dollars of loss per claim) and average premium (dollars of premium per exposure). Actual frequency and severity experienced will vary depending on changes in mix by class of insured risk. Similarly, the actual frequency and rate of recovery from reinsurance will vary depending on changes in the attachment point for reinsurance. In particular, in periods of high growth or expansion into new markets, there may be additional uncertainty in estimating the ultimate losses and LAE. The contributing factors of this potential risk are changes in the Company’s mix by policy limit and mix of business by state or jurisdiction.

Actuaries use historical experience and trends as predictors of how losses and LAE will emerge over time. However, historical experience may not necessarily be indicative of how actual losses and LAE will emerge. Changes in case reserve adequacy, changes in minimum case reserves and changes in internal claims handling procedures could impact the timing and recognition of incurred claims and produce an estimate that is either too high or too low if not adjusted for by the actuary. For example, if, due to changes in claims handling procedures, actual claims are settled more rapidly than they were settled historically, the estimate produced by the paid loss development methodology would tend to be overstated if the actuary did not identify and adjust for the impact of the changes in claims handling procedures. Similarly, if, due to changes in claims handling procedures, actual claim reserves are set at levels higher than past experience, the estimate produced by the incurred loss development methodology would tend to be overstated if the actuary did not identify and adjust for the impact of the changes in claims handling procedures.

60

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

The final step in the quarterly loss and LAE reserving process involves a comprehensive review of the actuarial indications by the Company’s corporate actuary and corporate management who apply their collective judgment and determine the appropriate estimated level of reserves to record. Numerous factors are considered in this determination process, including, but not limited to, the assessed reliability of key loss trends and assumptions that may be significantly influencing the current actuarial indications, changes in claim handling practices or other changes that affect the timing of payment or development patterns, changes in the mix of business, the maturity of the accident year, pertinent trends observed over the recent past, the level of volatility within a particular line of business, the improvement or deterioration of actuarial indications in the current period as compared to prior periods, and the amount of reserves related to third party pools for which the Company does not have access to the underlying data and, accordingly, relies on calculations provided by such pools.

The Company’s goal is to ensure that its total reserves for property and casualty insurance losses and LAE are adequate to cover all costs, while sustaining minimal variation from the time reserves for losses and LAE are initially estimated until losses and LAE are fully developed. Changes in the Company’s estimates of these losses and LAE over time, also referred to as “development,” will occur and may be material. Favorable development is recognized and reported in the Consolidated Financial Statements when the Company decreases its previous estimate of ultimate losses and LAE and results in an increase in net income in the period recognized, whereas adverse development is recognized and reported in the Consolidated Financial Statements when the Company increases its previous estimate of ultimate losses and LAE and results in a decrease in net income. The Company reported total favorable development of $64.6 million, $31.5 million and $33.1 million before tax for the years ended December 31, 2013, 2012 and 2011, respectively. Development for each of the Company’s continuing business segments and Unitrin Business Insurance for the years ended December 31, 2013, 2012 and 2011, was:

DOLLARS IN MILLIONS	Favorable (Adverse) Development
	2013		2012		2011
Continuing Operations:
Kemper Preferred	$	27.5	$	4.8	$	19.1
Kemper Specialty	4.9		2.3		9.4
Kemper Direct	25.6		17.8		3.9
Life and Health Insurance	1.8		0.3		2.6
Total Favorable Development from Continuing Operations, Net	59.8		25.2		35.0
Discontinued Operations	4.8		6.3		(1.9		)
Total Favorable Development, Net	$	64.6	$	31.5	$	33.1

Development in the Kemper Preferred segment comprised the largest portion of the Company’s development reported in continuing operations in 2013 and 2011. Additional information regarding the Kemper Preferred development is discussed below. Development in the Kemper Direct segment comprised a significant portion of the Company’s development in 2013 and the largest portion of the Company’s development reported in 2012. Kemper Direct’s operations have undergone significant changes, including changes in underwriting, claims handling and mix of business by state and distribution channel, over the last several years. The effect of these and other changes on the historical development factors used to estimate Kemper Direct’s loss and LAE reserves is difficult to quantify and predict. Development in the Life and Health Insurance segment in 2011 is due primarily to development on certain hurricanes. See MD&A, “Life and Health Insurance.”

In 2008, the Company sold its Unitrin Business Insurance operations. The Company retained Property and Casualty Insurance Reserves for unpaid insured losses that occurred prior to June 1, 2008, the effective date of the sale. Development in Unitrin Business Insurance comprised all of the Company’s development reported in discontinued operations.

Estimated Variability of Property and Casualty Insurance Reserves

Although development will emerge in all of the Company’s product lines, development in Kemper Preferred segment’s personal automobile insurance product line could have the most significant impact due to the relative size of its loss and LAE reserves. To further illustrate the sensitivity of Kemper Preferred segment’s reserves for automobile insurance losses and LAE to changes in the cumulative development factors, for each quarterly evaluation point the Company’s actuaries calculated the variability of cumulative development factors observed in the incurred loss development methodology using one standard deviation. The Company believes that one standard deviation of variability is a reasonably likely scenario to measure variability for its loss and LAE reserves under the incurred development method for automobile insurance. Assuming that the Kemper Preferred segment’s automobile insurance loss and LAE reserves were based solely on the incurred loss development methodology and

61

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

the variability in the cumulative development factors occurred within one standard deviation, the Company estimates that Kemper Preferred’s automobile insurance loss and LAE reserves could have varied by $32.4 million in either direction at December 31, 2013 for all accident years combined under this scenario. In addition to the factors described above, other factors may also impact loss reserve development in future periods. These factors include governmental actions, including court decisions interpreting existing laws, regulations or policy provisions, developments related to insurance policy claims and coverage issues, adverse or favorable outcomes in pending claims litigation, the number and severity of insurance claims, the impact of inflation on insurance claims and the impact of required participation in windpools and joint underwriting associations and residual market assessments. Although the Company’s actuaries do not make specific numerical assumptions about these factors, changes in these factors from past patterns will impact historical loss development factors and, in turn, future loss reserve development. Significant favorable changes in one or more factors will lead to favorable future loss reserve development, which could result in the actual loss developing closer to, or even below, the lower end of the Company’s estimated reserve variability. Significant unfavorable changes in one or more factors will lead to unfavorable loss reserve development, which could result in the actual loss developing closer to, or even above, the higher end of the Company’s estimated reserve variability. Accordingly, due to these factors and the other factors enumerated throughout the MD&A and the inherent limitations of the loss reserving estimation methodologies, the estimated and illustrated reserve variability may not necessarily be indicative of the Company’s future reserve variability, which could ultimately be greater than the estimated and illustrated variability. In addition, as previously noted, development will emerge in all of the Company’s product lines over time. Accordingly, the Company’s future reserve variability could ultimately be greater than the illustrated variability.

Additional information pertaining to the estimation of, and development of, the Company’s Property and Casualty Insurance Reserves is contained in Item 1 of Part I of this 2013 Annual Report under the heading “Property and Casualty Loss and Loss Adjustment Expense Reserves.”

Goodwill Recoverability

While the Company believes that none of its reporting units with material Goodwill are at risk of failing step one of the goodwill impairment test, the process of determining whether or not an asset, such as Goodwill, is impaired or recoverable relies on projections of future cash flows, operating results and market conditions. Such projections are inherently uncertain and, accordingly, actual future cash flows may differ materially from projected cash flows. In evaluating the recoverability of Goodwill, the Company performs a discounted cash flow analysis for each of the Company’s reporting units carrying Goodwill. The discounted cash value may be different from the fair value that would result from an actual transaction between a willing buyer and a willing seller. Such analyses are particularly sensitive to changes in discount rates and investment rates. Changes to these rates might result in material changes in the valuation and determination of the recoverability of Goodwill. For example, an increase in the rate used to discount cash flows will decrease the discounted cash value. There is likely to be a similar, but not necessarily as large as, increase in the investment rate used to project the cash flows resulting from investment income earned on the Company’s investments. Accordingly, an increase in the investment rate would increase the discounted cash value.

Pension Benefit Obligations

The process of estimating the Company’s pension benefit obligations and pension benefit costs is inherently uncertain and the actual cost of benefits may vary materially from the estimates recorded. These liabilities are particularly volatile due to their long-term nature and are based on several assumptions. The main assumptions used in the valuation of the Company’s pension benefit obligations are:

• Estimated mortality of the participants and beneficiaries eligible for benefits;

• Estimated expected long-term rates of returns on investments;

• Estimated compensation increases;

• Estimated employee turnover; and

• Estimated rate used to discount the expected benefit payment to a present value.

62

Kemper Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

A change in any one or more of these assumptions is likely to result in present value of expected benefit payments to differ from the actuarial estimate at December 31, 2013. Such changes in estimates may be material. For example, a one–percentage point decrease in the Company’s estimated discount rate would increase the pension benefit obligation at December 31, 2013 by $72.7 million, while a one–percentage point increase in the rate would decrease the pension benefit obligation at December 31, 2013 by $59.1 million. A one–percentage point decrease in the Company’s estimated long-term rate of return on plan assets would increase the pension expense for the year ended December 31, 2013 by $4.2 million, while a one–percentage point increase in the rate would decrease pension expense by $4.2 million for the same period.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification (“ASC”) is the sole source of authoritative GAAP recognized by the Financial Accounting Standards Board (“FASB”) that is applicable to the Company. The FASB issues Accounting Standards Updates (“ASUs”) to amend the authoritative literature in ASC.

Changes in accounting standards that are most critical or relevant to the Company are discussed in Note 2, “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial Statements under the headings “Adoption of New Accounting Standards” and “Accounting Standards Not Yet Adopted.” The accounting changes discussed are as follows:

• ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

• ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.

There were ten other ASUs issued in 2013 that amend the original text of ASC. These ASU’s are not expected to have an impact on the Company. There have been five ASUs issued in 2014 that amend the original text of ASC. These ASU’s are not expected to have an impact on the Company.

63

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

Quantitative Information About Market Risk

The Company’s consolidated balance sheets include three types of financial instruments subject to the material market risk disclosures required by the SEC:

1. Investments in Fixed Maturities;

2. Investments in Equity Securities and;

3. Notes Payable.

Investments in Fixed Maturities and Notes Payable are subject to material interest rate risk. The Company’s Investments in Equity Securities include common and preferred stocks and, accordingly, are subject to material equity price risk and interest rate risk, respectively.

For purposes of this disclosure, market risk sensitive financial instruments are divided into two categories: financial instruments acquired for trading purposes and financial instruments acquired for purposes other than trading. The Company’s market risk sensitive financial instruments are generally classified as held for purposes other than trading. The Company has no significant holdings of financial instruments acquired for trading purposes. The Company has no significant holdings of derivatives.

The Company measures its sensitivity to market risk by evaluating the change in its financial assets and liabilities relative to fluctuations in interest rates and equity prices. The evaluation is made using instantaneous changes in interest rates and equity prices on a static balance sheet to determine the effect such changes would have on the Company’s fair value at risk and the resulting pre-tax effect on Shareholders’ Equity. The changes chosen represent the Company’s view of adverse changes which are reasonably possible over a one-year period. The selection of the changes chosen should not be construed as the Company’s prediction of future market events, but rather an illustration of the impact of such events.

For the interest rate sensitivity analysis presented below, the Company assumed an adverse and instantaneous increase of 100–basis points in the yield curve at both December 31, 2013 and 2012 for Investments in Fixed Maturities. Such 100–basis point increase in the yield curve may not necessarily result in a corresponding 100–basis point increase in the interest rate for all investments in fixed maturities. For example, a 100–basis point increase in the yield curve for risk-free, taxable investments in fixed maturities may not result in a 100–basis point increase for tax-exempt investments in fixed maturities. For Investments in Fixed Maturities, the Company also anticipated changes in cash flows due to changes in the likelihood that investments would be called or prepaid prior to their contractual maturity. All other variables were held constant. For preferred stock equity securities, the Company assumed an adverse and instantaneous increase of 100–basis points in market interest rates from their levels at both December 31, 2013 and 2012. All other variables were held constant. For Notes Payable, the Company assumed an adverse and instantaneous decrease of 100–basis points in market interest rates from their levels at December 31, 2013 and 2012. All other variables were held constant. The Company measured equity price sensitivity assuming an adverse and instantaneous 30% decrease in the Standard and Poor’s Stock Index (the “S&P 500”) from its level at December 31, 2013 and 2012, with all other variables held constant. The Company’s investments in common stock equity securities were correlated with the S&P 500 using the portfolio’s weighted-average beta of 0.94 and 0.91 at December 31, 2013 and 2012, respectively. The portfolio’s weighted-average beta was calculated using each security’s beta for the five-year periods ended December 31, 2013 and 2012, and weighted on the fair value of such securities at December 31, 2013 and 2012, respectively. For equity securities without observable market inputs, the Company assumed a beta of 1.00 at December 31, 2013 and 2012. Beta measures a stock’s relative volatility in relation to the rest of the stock market, with the S&P 500 having a beta coefficient of 1.00.

64

The estimated adverse effects on the fair value of the Company’s financial instruments at December 31, 2013 using these assumptions were:

DOLLARS IN MILLIONS	Fair Value		Pro Forma Increase (Decrease)
			Interest Rate Risk			Equity Price Risk			Total Market Risk
ASSETS
Investments in Fixed Maturities	$	4,575.0	$	(300.0	)	$	—		$	(300.0	)
Investments in Equity Securities	598.5		(13.0		)	(119.7		)	(132.7		)
LIABILITIES
Notes Payable	$	667.1	$	17.4		$	—		$	17.4

The estimated adverse effects on the fair value of the Company’s financial instruments at December 31, 2012 using these assumptions were:

DOLLARS IN MILLIONS	Fair Value		Pro Forma Increase (Decrease)
			Interest Rate Risk			Equity Price Risk			Total Market Risk
ASSETS
Investments in Fixed Maturities	$	4,860.2	$	(334.0	)	$	—		$	(334.0	)
Investments in Equity Securities	521.9		(19.0		)	(82.3		)	(101.3		)
LIABILITIES
Notes Payable	$	675.5	$	23.1		$	—		$	23.1

The market risk sensitivity analysis assumes that the composition of the Company’s interest rate sensitive assets and liabilities, including, but not limited to, credit quality, and the equity price sensitive assets existing at the beginning of the period remains constant over the period being measured. It also assumes that a particular change in interest rates is uniform across the yield curve regardless of the time to maturity. Interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Also, any future correlation, either in the near term or the long term, between the Company’s common stock equity securities portfolio and the S&P 500 may differ from the historical correlation as represented by the weighted-average historical beta of the common stock equity securities portfolio. Accordingly, the market risk sensitivity analysis may not be indicative of, is not intended to provide, and does not provide, a precise forecast of the effect of changes of market rates on the Company’s income or shareholders’ equity. Further, the computations do not contemplate any actions the Company may undertake in response to changes in interest rates or equity prices.

To the extent that any adverse 100–basis point change occurs in increments over a period of time instead of instantaneously, the adverse impact on fair values would be partially mitigated because some of the underlying financial instruments would have matured. For example, proceeds from any maturing assets could be reinvested and any new liabilities would be incurred at the then current interest rates.

Qualitative Information About Market Risk

Market risk is a broad term related to economic losses due to adverse changes in the fair value of a financial instrument and is inherent to all financial instruments. SEC disclosure rules focus on only one element of market risk—price risk. Price risk relates to changes in the level of prices due to changes in interest rates, equity prices, foreign exchange rates or other factors that relate to market volatility of the rate, index, or price underlying the financial instrument. The Company’s primary market risk exposures are to changes in interest rates and equity prices.

The Company manages its interest rate exposures with respect to Investments in Fixed Maturities by investing primarily in investment-grade securities of moderate effective duration.

65

Item 8.    Financial Statements and Supplementary Data.

Index to the Consolidated Financial Statements of

Kemper Corporation and Subsidiaries

Consolidated Balance Sheets at December 31, 2013 and 2012	67
Consolidated Statements of Income for the Years Ended December 31, 2013, 2012 and 2011	68
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2013, 2012 and 2011	69
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011	70
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2013, 2012 and 2011	71
Notes to the Consolidated Financial Statements
Note 1—Basis of Presentation and Significant Estimates	72
Note 2—Summary of Accounting Policies and Accounting Changes	72
Note 3—Investments	76
Note 4—Goodwill	82
Note 5—Property and Casualty Insurance Reserves	83
Note 6—Notes Payable	84
Note 7—Leases	86
Note 8—Shareholders’ Equity	87
Note 9—Long-term Equity-based Compensation	88
Note 10—Restructuring Expenses	92
Note 11—Income from Continuing Operations per Unrestricted Share	93
Note 12—Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income	94
Note 13—Income from Investments	95
Note 14—Insurance Expenses	96
Note 15—Income Taxes	97
Note 16—Pension Benefits	100
Note 17—Postretirement Benefits Other Than Pensions	105
Note 18—Business Segments	107
Note 19—Discontinued Operations	110
Note 20—Catastrophe Reinsurance	111
Note 21—Other Reinsurance	114
Note 22—Fair Value Measurements	115
Note 23—Contingencies	119
Note 24—Related Parties	121
Note 25—Quarterly Financial Information (Unaudited)	122
Report of Independent Registered Public Accounting Firm	124

66

Kemper Corporation and Subsidiaries

Consolidated Balance Sheets

	December 31,
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	2013		2012
Assets:
Investments:
Fixed Maturities at Fair Value (Amortized Cost: 2013 - $4,370.5; 2012 - $4,283.8)	$	4,575.0	$	4,860.2
Equity Securities at Fair Value (Cost: 2013 - $530.0; 2012 - $462.7)	598.5		521.9
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	245.1		253.0
Short-term Investments at Cost which Approximates Fair Value	284.7		327.5
Other Investments	448.0		497.5
Total Investments	6,151.3		6,460.1
Cash	66.5		96.3
Receivables from Policyholders	331.6		369.3
Other Receivables	193.1		206.1
Deferred Policy Acquisition Costs	302.9		303.4
Goodwill	311.8		311.8
Current and Deferred Income Tax Assets	31.8		5.4
Other Assets	267.4		256.7
Total Assets	$	7,656.4	$	8,009.1
Liabilities and Shareholders’ Equity:
Insurance Reserves:
Life and Health	$	3,217.5	$	3,161.6
Property and Casualty	843.5		970.6
Total Insurance Reserves	4,061.0		4,132.2
Unearned Premiums	598.9		650.9
Liabilities for Income Taxes	8.3		21.5
Notes Payable at Amortized Cost (Fair Value: 2013 - $667.1; 2012 - $675.5)	606.9		611.4
Accrued Expenses and Other Liabilities	329.8		431.4
Total Liabilities	5,604.9		5,847.4
Shareholders’ Equity:
Common Stock, $0.10 Par Value Per Share, 100 Million Shares Authorized; 55,653,437 Shares Issued and Outstanding at December 31, 2013 and 58,454,390 Shares Issued and Outstanding at December 31, 2012	5.6		5.8
Paid-in Capital	694.8		725.0
Retained Earnings	1,215.8		1,118.2
Accumulated Other Comprehensive Income	135.3		312.7
Total Shareholders’ Equity	2,051.5		2,161.7
Total Liabilities and Shareholders’ Equity	$	7,656.4	$	8,009.1

The Notes to the Consolidated Financial Statements are an integral part of these financial statements.

67

Kemper Corporation and Subsidiaries

Consolidated Statements of Income

	For The Years Ended December 31,
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	2013			2012			2011
Revenues:
Earned Premiums	$	2,025.8		$	2,107.1		$	2,173.6
Net Investment Income	314.7			295.9			298.0
Other Income	0.8			0.8			1.0
Net Realized Gains on Sales of Investments	99.1			65.4			33.7
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(15.8		)	(7.2		)	(11.4		)
Portion of Losses Recognized in Other Comprehensive Income	1.9			0.3			0.1
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)
Total Revenues	2,426.5			2,462.3			2,495.0
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	1,357.2			1,582.1			1,645.7
Insurance Expenses	654.4			672.3			683.6
Write-off of Intangibles Acquired	—			—			13.5
Interest and Other Expenses	100.5			85.5			83.9
Total Expenses	2,112.1			2,339.9			2,426.7
Income from Continuing Operations before Income Taxes	314.4			122.4			68.3
Income Tax Expense	(99.9		)	(30.6		)	(6.6		)
Income from Continuing Operations	214.5			91.8			61.7
Income from Discontinued Operations	3.2			11.6			12.8
Net Income	$	217.7		$	103.4		$	74.5
Income from Continuing Operations Per Unrestricted Share:
Basic	$	3.75		$	1.55		$	1.02
Diluted	$	3.74		$	1.54		$	1.02
Net Income Per Unrestricted Share:
Basic	$	3.81		$	1.75		$	1.23
Diluted	$	3.80		$	1.74		$	1.23
Dividends Paid to Shareholders Per Share	$	0.96		$	0.96		$	0.96

The Notes to the Consolidated Financial Statements are an integral part of these financial statements.

68

Kemper Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

	For The Years Ended December 31,
DOLLARS IN MILLIONS	2013			2012			2011
Net Income	$	217.7		$	103.4		$	74.5
Other Comprehensive Income (Loss) Before Income Taxes:
Unrealized Holding Gains (Losses)	(362.8		)	96.7			201.2
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Decrease (Increase) in Net Unrecognized Postretirement Benefit Costs	86.6			(13.2		)	(45.2		)
Other Comprehensive Income (Loss) Before Income Taxes	(276.0		)	85.1			156.4
Other Comprehensive Income Tax Benefit (Expense)	98.6			(30.4		)	(55.8		)
Other Comprehensive Income (Loss)	(177.4		)	54.7			100.6
Total Comprehensive Income	$	40.3		$	158.1		$	175.1

The Notes to the Consolidated Financial Statements are an integral part of these financial statements.

69

Kemper Corporation and Subsidiaries

Consolidated Statements of Cash Flows

	For The Years Ended December 31,
DOLLARS IN MILLIONS	2013			2012			2011
Operating Activities:
Net Income	$	217.7		$	103.4		$	74.5
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities:
Decrease (Increase) in Deferred Policy Acquisition Costs	0.5			(9.4		)	(7.8		)
Amortization of Life VIF and P&C Customer Relationships	8.3			8.0			11.4
Impairment of P&C Customer Relationships	—			—			13.5
Equity in Earnings of Equity Method Limited Liability Investments	(26.4		)	(9.3		)	(9.6		)
Distribution of Accumulated Earnings of Equity Method Limited Liability Investments	15.4			15.4			—
Amortization of Investment Securities and Depreciation of Investment Real Estate	16.2			15.2			16.0
Net Realized Gains on Sales of Investments	(99.1		)	(65.4		)	(34.1		)
Net Impairment Losses Recognized in Earnings	13.9			6.9			11.3
Gain on Sale of Portfolio of Automobile Loan Receivables	—			(12.9		)	(4.5		)
Benefit for Loan Losses	—			(2.0		)	(42.0		)
Depreciation of Property and Equipment	17.4			15.3			10.9
Decrease (Increase) in Other Receivables	43.5			13.9			(0.2		)
Decrease in Insurance Reserves	(72.5		)	(1.1		)	(52.1		)
Decrease in Unearned Premiums	(52.0		)	(15.2		)	(12.4		)
Change in Income Taxes	57.9			(14.9		)	17.2
Decrease in Accrued Expenses and Other Liabilities	(54.8		)	(15.6		)	(47.5		)
Other, Net	36.1			33.4			30.4
Net Cash Provided (Used) by Operating Activities	122.1			65.7			(25.0		)
Investing Activities:
Sales, Paydowns and Maturities of Fixed Maturities	664.4			914.4			650.3
Purchases of Fixed Maturities	(744.5		)	(872.6		)	(663.4		)
Sales of Equity Securities	182.1			70.8			248.3
Purchases of Equity Securities	(213.4		)	(137.7		)	(199.2		)
Acquisition and Improvements of Investment Real Estate	(5.4		)	(5.5		)	(6.4		)
Sales of Investment Real Estate	102.7			6.0			0.3
Sales of and Return of Investment of Equity Method Limited Liability Investments	31.3			56.0			57.0
Acquisitions of Equity Method Limited Liability Investments	(20.5		)	(31.0		)	(25.7		)
Decrease (Increase) in Short-term Investments	41.8			(80.0		)	155.5
Receipts from Automobile Loan Receivables	—			2.0			166.5
Net Proceeds from Sale of Portfolio of Automobile Loan Receivables	—			16.7			220.7
Disposition of Business, Net of Cash Disposed	3.8			—			—
Increase in Other Investments	(9.1		)	(12.4		)	(15.6		)
Acquisition of Software	(15.2		)	(26.5		)	(23.2		)
Other, Net	(13.2		)	(6.4		)	(0.5		)
Net Cash Provided (Used) by Investing Activities	4.8			(106.2		)	564.6
Financing Activities:
Repayments of Certificates of Deposits	—			—			(321.8		)
Proceeds from Issuance of Notes Payable	—			—			95.0
Repayments of Notes Payable	(5.5		)	—			(95.0		)
Common Stock Repurchases	(100.4		)	(60.7		)	(27.4		)
Cash Dividends Paid to Shareholders	(54.9		)	(56.9		)	(58.2		)
Cash Exercise of Stock Options	1.7			1.3			0.2
Excess Tax Benefits from Share-based Awards	1.3			0.5			0.2
Other, Net	1.1			1.4			1.4
Net Cash Used by Financing Activities	(156.7		)	(114.4		)	(405.6		)
Increase (Decrease) in Cash	(29.8		)	(154.9		)	134.0
Cash, Beginning of Year	96.3			251.2			117.2
Cash, End of Year	$	66.5		$	96.3		$	251.2

The Notes to the Consolidated Financial Statements are an integral part of these financial statements.

70

Kemper Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE AMOUNTS	For The Years Ended December 31, 2013, 2012 and 2011
	Number of Shares		Common Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
BALANCE, DECEMBER 31, 2010	61.1		$	6.1		$	751.1		$	1,108.5		$	157.4		$	2,023.1
Net Income	—		—			—			74.5			—			74.5
Other Comprehensive Income (note 12)	—		—			—			—			100.6			100.6
Cash Dividends to Shareholders ($0.96 per share)	—		—			—			(58.2		)	—			(58.2		)
Repurchases of Common Stock	(0.9	)	(0.1		)	(11.6		)	(15.7		)	—			(27.4		)
Equity-based Compensation Cost (note 9)	—		—			5.3			—			—			5.3
Equity-based Awards, Net of Shares Exchanged (note 9)	0.1		—			(0.9		)	(0.4		)	—			(1.3		)
BALANCE, DECEMBER 31, 2011	60.3		$	6.0		$	743.9		$	1,108.7		$	258.0		$	2,116.6
Net Income	—		—			—			103.4			—			103.4
Other Comprehensive Income (note 12)	—		—			—			—			54.7			54.7
Cash Dividends to Shareholders ($0.96 per share)	—		—			—			(56.9		)	—			(56.9		)
Repurchases of Common Stock	(2.0	)	(0.2		)	(24.9		)	(35.6		)	—			(60.7		)
Equity-based Compensation Cost (note 9)	—		—			5.8			—			—			5.8
Equity-based Awards, Net of Shares Exchanged (note 9)	0.2		—			0.2			(1.4		)	—			(1.2		)
BALANCE, DECEMBER 31, 2012	58.5		$	5.8		$	725.0		$	1,118.2		$	312.7		$	2,161.7
Net Income	—		—			—			217.7			—			217.7
Other Comprehensive Loss (note 12)	—		—			—			—			(177.4		)	(177.4		)
Cash Dividends to Shareholders ($0.96 per share)	—		—			—			(54.9		)	—			(54.9		)
Repurchases of Common Stock	(3.0	)	(0.2		)	(36.8		)	(63.4		)	—			(100.4		)
Equity-based Compensation Cost (note 9)	—		—			5.5			—			—			5.5
Equity-based Awards, Net of Shares Exchanged (note 9)	0.2		—			1.1			(1.8		)	—			(0.7		)
BALANCE, DECEMBER 31, 2013	55.7		$	5.6		$	694.8		$	1,215.8		$	135.3		$	2,051.5

The Notes to the Consolidated Financial Statements are an integral part of these financial statements.

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Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ESTIMATES

The Consolidated Financial Statements included herein have been prepared on the basis of accounting principles generally accepted in the United States (“GAAP”) and include the accounts of Kemper Corporation (“Kemper”) and its subsidiaries (individually and collectively referred to herein as the “Company”). All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates and assumptions.

The fair values of the Company’s Investments in Fixed Maturities, Investments in Equity Securities, Short-term Investments, Trading Securities and Notes Payable are estimated using a hierarchal framework which prioritizes and ranks market price observability. The carrying amounts reported in the Consolidated Balance Sheets approximate fair value for Cash, Short-term Investments and certain other assets and other liabilities because of their short-term nature. The actual value at which financial instruments could actually be sold or settled with a willing buyer or seller may differ from estimated fair values depending on a number of factors, including, but not limited to, current and future economic conditions, the quantity sold or settled, the presence of an active market and the availability of a willing buyer or seller.

The process of estimating and establishing reserves for losses and LAE for property and casualty insurance is inherently uncertain and the actual ultimate net cost of known and unknown claims may vary materially from the estimated amounts reserved. The reserving process is particularly imprecise for claims involving long-tailed exposures, which may not be discovered or reported until years after the insurance policy period has ended. Management considers a variety of factors, including, but not limited to, past claims experience, current claim trends and relevant legal, economic and social conditions, in estimating reserves. A change in any one or more factors is likely to result in the ultimate net claim costs to differ from the estimated reserve. Changes in such estimates may be material and would be recognized in the Consolidated Financial Statements when such estimates change.

The process of determining whether an asset is impaired or recoverable relies on projections of future cash flows, operating results and market conditions. Projections are inherently uncertain and, accordingly, actual future cash flows may differ materially from projected cash flows. As a result, the Company’s assessment of the impairment of long-lived assets is susceptible to the risk inherent in making such projections.

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES

Investments

Investments in Fixed Maturities include bonds, notes and redeemable preferred stocks. Investments in Fixed Maturities are classified as available for sale and reported at fair value. Net Investment Income, including amortization of purchased premiums and accretion of market discounts, on Investments in Fixed Maturities is recognized as interest earned using the effective yield method.

Investments in Equity Securities include common and non-redeemable preferred stocks and other equity interests and are reported at fair value. Investments in common and non-redeemable preferred stocks with readily determinable fair values are classified as available for sale. Dividend income on investments in common and non-redeemable preferred stocks is recognized on the ex-dividend date. Other equity interests primarily consist of exchange traded funds and interests in limited liability companies and limited partnerships in which the Company’s interests are deemed minor. The Company’s share of distributed earnings from other equity interests is recognized as dividend income when received.

Unrealized appreciation or depreciation, net of applicable deferred income taxes, on fixed maturities and equity securities is reported in AOCI included in Shareholders’ Equity.

Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting.

72

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Short-term Investments include fixed maturities that mature within one year from the date of purchase, U.S. Treasury bills, money market mutual funds and repurchase agreements. Short-term Investments are reported at cost, which approximates fair value.

Other Investments primarily include loans to policyholders and real estate. Loans to policyholders are carried at unpaid principal balance. Real estate is carried at cost, net of accumulated depreciation. Real estate is depreciated over the estimated useful life of the asset using the straight-line method of depreciation. Real estate is evaluated for impairment when events or circumstances indicate the carrying value may not be recoverable. An impairment on real estate is recognized when the carrying value exceeds the sum of undiscounted projected future cash flows.

Gains and losses on sales of investments are computed on the specific identification method and are reported in the Consolidated Statements of Income in the period in which the sales occur. The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. Losses are computed on the specific identification method and reported in the Consolidated Statements of Income in the period that the decline is determined to be other than temporary. The portion of an impairment of an investment in a fixed maturity attributed to a credit loss is reported in Net Impairment Losses Recognized in Earnings in the Consolidated Statement of Income, with the portion of the impairment that is not attributed to a credit loss reported in AOCI.

Fair Value Measurements

The Company uses a hierarchal framework which prioritizes and ranks the market observability of inputs used in fair value measurements. Market price observability is affected by a number of factors, including the type of asset or liability and the characteristics specific to the asset or liability being measured. Assets and liabilities with readily available, active, quoted market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The Company classifies the inputs used to measure fair value into one of three levels as follows:

• Level 1 — Quoted prices in an active market for identical assets or liabilities;

• Level 2 — Observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

• Level 3 — Unobservable inputs for the asset or liability being measured.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant to the entire measurement. Such determination requires significant management judgment. In accordance with GAAP, the Company is not permitted to adjust quoted market prices in an active market.

Deferred Policy Acquisition Costs

Costs directly associated with the successful acquisition of business, principally commissions and certain premium taxes and policy issuance costs, are deferred. Costs deferred on property and casualty insurance contracts and short duration health insurance contracts are amortized over the period in which premiums are earned. Costs deferred on traditional life insurance products and other long-duration insurance contracts are primarily amortized over the anticipated premium-paying period of the related policies in proportion to the ratio of the annual premiums to the total premiums anticipated, which is estimated using the same assumptions used in calculating policy reserves.

Goodwill

The cost of an acquired entity over the fair value of net assets acquired is reported as Goodwill. Goodwill is not amortized, but rather is tested annually for recoverability or when certain triggering events require testing.

73

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Insurance Reserves

Reserves for losses and LAE on property and casualty insurance coverage and health insurance coverage represent the estimated claim cost and loss adjustment expense necessary to cover the ultimate net cost of investigating and settling all losses incurred and unpaid. Such estimates are based on individual case estimates for reported claims and estimates for incurred but not reported losses. These estimates are adjusted in the aggregate for ultimate loss expectations based on historical experience patterns and current economic trends, with any change in the estimated ultimate liabilities being reported in the Consolidated Statements of Income in the period of change. Changes in such estimates may be material.

For traditional life insurance products, the reserves for future policy benefits are estimated on the net level premium method based on rates for expected mortality, lapse rates and interest rates, including provisions for adverse mortality. These assumptions vary by such characteristics as plan, age at issue and policy duration. Mortality assumptions are based on the Company’s historical experience and industry standards. Interest rate assumptions principally range from 3% to 7%. Lapse rate assumptions are based on actual and industry experience.

Other Receivables

Other Receivables primarily include reinsurance recoverables and accrued investment income.

Other Assets

Other Assets primarily include property and equipment, internal use software, insurance licenses acquired in business combinations, the value of other intangible assets acquired and prepaid expenses. Property and equipment is depreciated over the useful lives of the assets, generally using the straight-line or double declining balance methods of depreciation depending on the asset involved. Internal use software is primarily amortized over the useful life of the asset using the straight-line method of amortization. Insurance licenses acquired in business combinations and other indefinite life intangibles are not amortized, but rather tested periodically for recoverability. Insurance Expenses for the year endedDecember 31, 2013 includes a charge of $1.4 million to write down the value of insurance licenses acquired for one of Kemper’s insurance subsidiaries to its estimated fair value.

The Company accounts for the present value of the future profits embedded in life insurance in force acquired (“Life VIF”) based on actuarial estimates of the present value of estimated net cash flows. Life VIF was $41.2 million and $46.4 million at December 31, 2013 and 2012, respectively. Life VIF is amortized using the effective interest method using interest rates consistent with the rates in the underlying insurance contracts. The Company estimates that it will record Life VIF amortization, net of interest, of $4.6 million in 2014, $4.2 million in 2015, $3.7 million in 2016, $3.2 million in 2017 and $2.9 million in 2018. The Company evaluates the Life VIF for recoverability annually.

The Company accounts for the present value of the future profits embedded in Property and Casualty Insurance Customer Relationships Acquired (“P&C Customer Relationships”) based on the present value of estimated future cash flows from the customer relationships acquired. P&C Customer Relationships was $15.8 million and $18.7 million at December 31, 2013 and 2012, respectively. P&C Customer Relationships is amortized using the effective interest method. P&C Customer Relationships is tested for recoverability using undiscounted projections of future cash flows and written down to estimated fair value if the carrying value exceeds the sum of such projections of undiscounted cash flows. The Company recorded a loss of $13.5 million before tax for the year ended December 31, 2011 to write down the carrying value of P&C Customer Relationships related to the acquisition of Direct Response to its estimated fair value.

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities primarily include accrued salaries and commissions, pension benefits, postretirement medical benefits and accrued taxes, licenses and fees.

Recognition of Earned Premiums and Related Expenses

Property and casualty insurance and short duration health insurance premiums are deferred when written and recognized and earned ratably over the periods to which the premiums relate. Unearned Premiums represent the portion of the premiums written related to the unexpired portion of policies in force which has been deferred and is reported as a liability. A premium deficiency reserve is established if the sum of expected claim costs, claim adjustment expenses, unamortized deferred policy acquisition costs and

74

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

maintenance costs exceeds the related unearned premiums. For each business segment, the analysis is performed at a product line level, namely automobile insurance, homeowners insurance and other insurance, which is consistent with the manner in which the Company acquires, services and measures profitability. Anticipated investment income is excluded from such analysis.

Traditional life insurance premiums are recognized as revenue when due. Policyholders’ benefits are associated with related premiums to result in recognition of profits over the periods for which the benefits are provided using the net level premium method.

Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses include provisions for future policy benefits under life and certain accident and health insurance contracts and provisions for reported claims, estimates for claims incurred but not reported and loss adjustment expenses. Benefit payments in excess of policy account balances are expensed.

Reinsurance

In the normal course of business, Kemper’s insurance subsidiaries reinsure certain risks above certain retention levels with other insurance enterprises. These reinsurance agreements do not relieve Kemper’s insurance subsidiaries of their legal obligations to the policyholder. Amounts recoverable from reinsurers are included in Other Receivables.

Gains related to long-duration reinsurance contracts are deferred and amortized over the life of the underlying reinsured policies. Losses related to long-duration reinsurance contracts are recognized immediately. Any gain or loss associated with reinsurance agreements for which Kemper’s insurance subsidiaries have been legally relieved of their obligations to the policyholder is recognized in the period of relief.

Income Taxes

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is maintained for the portion of deferred income tax assets that the Company does not expect to recover. Increases in the valuation allowance for deferred income tax assets are recognized as

income tax expense. Decreases in the valuation allowance for deferred income tax assets are recognized as income tax benefit. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period in which the change is enacted.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

Adoption of New Accounting Standard

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The new standard amends and enhances disclosure requirements by requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in a statement of income. The Company adopted the standard in the first quarter of 2013. Except for the additional disclosure requirements, the initial application of the standard did not have an impact on the Company.

Accounting Standards Not Yet Adopted

The FASB issues ASUs to amend the authoritative literature in ASC. There were twelve ASUs issued in 2013 that amend the original text of the ASC. Except as described in the following paragraph and also under the caption “Adoption of New Accounting Standard” above, the ASUs are not expected to have a material impact on the Company.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The standard is effective for the first interim or annual period beginning on or after December 15, 2013 with early adoption permitted. The standard amends ASC Topic 740, Income Taxes, to provide guidance and reduce diversity in practice on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Except for the changes, if any, in the Company’s presentation, the initial application of the standard will not impact the Company.

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Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 3. INVESTMENTS

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2013 were:

DOLLARS IN MILLIONS	Amortized Cost		Gross Unrealized					Fair Value
			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	351.1	$	22.8	$	(11.7	)	$	362.2
States and Political Subdivisions	1,327.4		53.8		(20.2		)	1,361.0
Corporate Securities:
Bonds and Notes	2,636.4		205.0		(47.7		)	2,793.7
Redeemable Preferred Stocks	6.6		0.8		—			7.4
Mortgage and Asset-backed	49.0		1.8		(0.1		)	50.7
Investments in Fixed Maturities	$	4,370.5	$	284.2	$	(79.7	)	$	4,575.0

Included in the fair value of Mortgage and Asset-backed investments at December 31, 2013 are $44.7 million of collateralized loan obligations, $4.6 million of collateralized debt obligations, $1.2 million of non-governmental residential mortgage-backed securities and $0.2 million of other asset-backed securities.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2012 were:

	Amortized Cost		Gross Unrealized					Fair Value
DOLLARS IN MILLIONS			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	384.0	$	45.1	$	(0.2	)	$	428.9
States and Political Subdivisions	1,251.0		150.5		(0.1		)	1,401.4
Corporate Securities:
Bonds and Notes	2,615.5		385.4		(7.5		)	2,993.4
Redeemable Preferred Stocks	30.1		2.5		—			32.6
Mortgage and Asset-backed	3.2		1.0		(0.3		)	3.9
Investments in Fixed Maturities	$	4,283.8	$	584.5	$	(8.1	)	$	4,860.2

Included in the fair value of Mortgage and Asset-backed investments at December 31, 2012 are $2.3 million of collateralized debt obligations, $1.3 million of non-governmental residential mortgage-backed securities and $0.3 million of other asset-backed securities.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2013 by contractual maturity were:

DOLLARS IN MILLIONS	Amortized Cost		Fair Value
Due in One Year or Less	$	81.3	$	82.9
Due after One Year to Five Years	724.8		766.0
Due after Five Years to Ten Years	1,304.4		1,324.4
Due after Ten Years	2,051.1		2,183.4
Asset-backed Securities Not Due at a Single Maturity Date	208.9		218.3
Investments in Fixed Maturities	$	4,370.5	$	4,575.0

The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments in Asset-backed Securities Not Due at a Single Maturity Date at December 31, 2013 consisted of securities issued by the Government National Mortgage Association with a fair value of $155.9 million, securities issued by the Federal National Mortgage Association with a fair value of $11.3 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $0.4 million and securities of other non-governmental issuers with a fair value of $50.7 million.

76

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 3. INVESTMENTS (Continued)

Other Receivables at December 31, 2013 includes a receivable of $2.5 million primarily from sales of Investments in Fixed Maturities that settled in January 2014. There were no unsettled purchases of Investments in Fixed Maturities at December 31, 2013. Accrued Expenses and Other Liabilities at December 31, 2012 includes a payable of $1.5 million for purchases of Investments in Fixed Maturities that settled in January 2013. There were no unsettled sales of Investments in Fixed Maturities at December 31, 2012.

Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2013 were:

DOLLARS IN MILLIONS	Cost		Gross Unrealized					Fair Value
			Gains		Losses
Preferred Stocks:
Finance, Insurance and Real Estate	$	85.4	$	2.9	$	(2.5	)	$	85.8
Other Industries	20.1		4.4		(0.1		)	24.4
Common Stocks:
Manufacturing	83.4		21.3		(0.1		)	104.6
Other Industries	68.8		17.0		(0.9		)	84.9
Other Equity Interests:
Exchange Traded Funds	122.0		3.9		(1.0		)	124.9
Limited Liability Companies and Limited Partnerships	150.3		25.2		(1.6		)	173.9
Investments in Equity Securities	$	530.0	$	74.7	$	(6.2	)	$	598.5

Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2012 were:

DOLLARS IN MILLIONS			Gross Unrealized
	Cost		Gains		Losses			Fair Value
Preferred Stocks:
Finance, Insurance and Real Estate	$	75.4	$	3.9	$	(0.1	)	$	79.2
Other Industries	18.4		3.8		(0.9		)	21.3
Common Stocks:
Manufacturing	67.0		20.9		(0.4		)	87.5
Other Industries	59.1		8.1		(0.5		)	66.7
Other Equity Interests:
Exchange Traded Funds	119.6		6.3		—			125.9
Limited Liability Companies and Limited Partnerships	123.2		19.5		(1.4		)	141.3
Investments in Equity Securities	$	462.7	$	62.5	$	(3.3	)	$	521.9

77

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 3. INVESTMENTS (Continued)

An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	95.8	$	(10.9	)	$	4.4	$	(0.8	)	$	100.2	$	(11.7	)
States and Political Subdivisions	222.9		(20.1		)	2.0		(0.1		)	224.9		(20.2		)
Corporate Securities:
Bonds and Notes	699.8		(39.4		)	103.2		(8.3		)	803.0		(47.7		)
Mortgage and Asset-backed	13.9		(0.1		)	1.1		—			15.0		(0.1		)
Total Fixed Maturities	1,032.4		(70.5		)	110.7		(9.2		)	1,143.1		(79.7		)
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	22.5		(2.5		)	2.5		—			25.0		(2.5		)
Other Industries	4.3		(0.1		)	0.7		—			5.0		(0.1		)
Common Stocks:
Manufacturing	5.0		(0.1		)	0.2		—			5.2		(0.1		)
Other Industries	14.2		(0.9		)	0.5		—			14.7		(0.9		)
Other Equity Interests:
Exchange Traded Funds	67.6		(1.0		)	—		—			67.6		(1.0		)
Limited Liability Companies and Limited Partnerships	53.1		(0.9		)	5.0		(0.7		)	58.1		(1.6		)
Total Equity Securities	166.7		(5.5		)	8.9		(0.7		)	175.6		(6.2		)
Total	$	1,199.1	$	(76.0	)	$	119.6	$	(9.9	)	$	1,318.7	$	(85.9	)

The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. The credit loss portions of the declines in the fair values of investments that are determined to be other than temporary are reported as losses in the Consolidated Statements of Income in the periods when such determinations are made.

78

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 3. INVESTMENTS (Continued)

Unrealized losses on fixed maturities, which the Company has determined to be temporary at December 31, 2013, were $79.7 million, of which $9.2 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. There were no unrealized losses at December 31, 2013 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “Less Than 12 Months.” Included in the preceding table under the heading “12 Months or Longer” there were unrealized losses of $0.3 million at December 31, 2013 related to securities for which the Company has recognized credit losses in earnings. Investment-grade fixed maturity investments comprised $74.2 million and below-investment-grade fixed maturity investments comprised $5.5 million of the unrealized losses on investments in fixed maturities at December 31, 2013. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was less than 5% of the amortized cost basis of the investment. At December 31, 2013, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2013 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date.

For equity securities, the Company considers various factors when determining whether a decline in the fair value is other than temporary, including, but not limited to:

• The financial condition and prospects of the issuer;

• The length of time and magnitude of the unrealized loss;

• The volatility of the investment;

• Analyst recommendations and near term price targets;

• Opinions of the Company’s external investment managers;

• Market liquidity;

• Debt-like characteristics of perpetual preferred stocks and issuer ratings; and

• The Company’s intentions to sell or ability to hold the investments until recovery.

The Company concluded that the unrealized losses on its investments in preferred and common stocks at December 31, 2013 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability companies and limited liability partnerships that primarily invest in distressed debt, mezzanine debt and secondary transactions. By the nature of their underlying investments, the Company believes that its investments in the limited liability companies and limited liability partnerships also exhibit debt-like characteristics which, among other factors, the Company considers when evaluating these investments for impairment. Based on Company’s evaluations of the factors in the preceding paragraph, the Company concluded that the declines in the fair values of the Company’s investments in equity securities presented in the preceding table were temporary at December 31, 2013.

79

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 3. INVESTMENTS (Continued)

An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	40.8	$	(0.2	)	$	—	$	—		$	40.8	$	(0.2	)
States and Political Subdivisions	6.3		(0.1		)	0.3		—			6.6		(0.1		)
Corporate Securities:
Bonds and Notes	268.5		(5.2		)	38.1		(2.3		)	306.6		(7.5		)
Redeemable Preferred Stocks	—		—			0.4		—			0.4		—
Mortgage and Asset-backed	—		—			1.7		(0.3		)	1.7		(0.3		)
Total Fixed Maturities	315.6		(5.5		)	40.5		(2.6		)	356.1		(8.1		)
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		—			2.4		(0.1		)	2.4		(0.1		)
Other Industries	2.3		(0.8		)	3.7		(0.1		)	6.0		(0.9		)
Common Stocks:
Manufacturing	6.3		(0.4		)	—		—			6.3		(0.4		)
Other Industries	14.2		(0.4		)	1.3		(0.1		)	15.5		(0.5		)
Other Equity Interests:
Limited Liability Companies and Limited Partnerships	5.5		(0.5		)	6.7		(0.9		)	12.2		(1.4		)
Total Equity Securities	28.3		(2.1		)	14.1		(1.2		)	42.4		(3.3		)
Total	$	343.9	$	(7.6	)	$	54.6	$	(3.8	)	$	398.5	$	(11.4	)

Unrealized losses on fixed maturities, which the Company determined to be temporary at December 31, 2012, were $8.1 million, of which $2.6 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. Included in the preceding table under the heading “Less Than 12 Months” there were unrealized losses of $0.3 million at December 31, 2012 related to securities for which the Company has recognized credit losses in earnings. There were no unrealized losses at December 31, 2012 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “12 Months or Longer.” Included in the preceding table under the heading “12 Months or Longer” are unrealized losses of $0.1 million at December 31, 2012 related to securities for which the Company has recognized foreign currency losses in earnings. Investment-grade fixed maturity investments comprised $3.8 million and below-investment-grade fixed maturity investments comprised $4.3 million of the unrealized losses on investments in fixed maturities at December 31, 2012. Unrealized losses for below-investment-grade fixed maturities included unrealized losses totaling $0.1 million for one issuer that the Company recognized foreign currency impairment losses in earnings for the year ended December 31, 2012. For the other remaining below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was less than 3% of the amortized cost basis of the investment. At December 31, 2012, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2012 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date.

The Company concluded that the unrealized losses on its investments in preferred and common stocks at December 31, 2012 were temporary based on the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability partnerships that primarily invest in distressed debt,

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Notes to the Consolidated Financial Statements (Continued)

NOTE 3. INVESTMENTS (Continued)

mezzanine debt and secondary transactions. By the nature of their underlying investments, the Company believes that its investments in the limited liability partnerships also exhibit debt-like characteristics which, among other factors, the Company considers when evaluating these investments for impairment. Based on evaluations of the factors described above that the Company considers when determining whether a decline in the fair value of an investment in equity securities is other than temporary, the Company concluded that the declines in the fair values of the Company’s investments in equity securities presented in the preceding table were temporary at December 31, 2012.

The following table sets forth the pre-tax amount of OTTI credit losses, recognized in Retained Earnings for Investments in Fixed Maturities held by the Company as of December 31, 2013, 2012 and 2011, for which a portion of the OTTI loss has been recognized in Accumulated Other Comprehensive Income, and the corresponding changes in such amounts.

DOLLARS IN MILLIONS	2013			2012			2011
Balance at Beginning of Year	$	4.6		$	3.9		$	2.4
Additions for Previously Unrecognized OTTI Credit Losses	1.8			1.1			2.2
Increases to Previously Recognized OTTI Credit Losses	7.3			—			—
Reductions to Previously Recognized OTTI Credit Losses	—			(0.1		)	(0.7		)
Reductions for Change in Impairment Status:
From Status of Credit Loss to Status of Intent-to-sell or Required-to-sell	(3.2		)	—			—
Reductions for Investments Sold During Period	(0.6		)	(0.3		)	—
Balance at End of Year	$	9.9		$	4.6		$	3.9

Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting. The Company’s investments in Equity Method Limited Liability Investments are generally of a passive nature in that the Company does not take an active role in the management of the investment entity. In 2012, aggregate investment income (losses) from Equity Method Limited Liability Investments exceeded 10% of the Company’s pretax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for its Equity Method Limited Liability Investments. Such aggregated summarized financial data does not represent the Company’s proportionate share of the Equity Method Limited Liability Investment assets or earnings. Aggregate total assets of the Equity Method Limited Liability Investments in which the Company invested totaled $3,392.1 million and $3,643.6 million as of December 31, 2013 and 2012, respectively. Aggregate total liabilities of the Equity Method Limited Liability Investments in which the Company invested totaled $576.3 million and $421.0 million as of December 31, 2013 and 2012, respectively. Aggregate net income of the Equity Method Limited Liability Investments in which the Company invested totaled $181.1 million and $134.6 million for the years ended December 31, 2013 and 2012, respectively. Aggregate net loss of the Equity Method Limited Liability Investments in which the Company invested totaled $13.8 million for the year endedDecember 31, 2011. The aggregate summarized financial data is based on the most recent and sufficiently-timely financial information available to the Company as of the respective reporting dates and periods. The Company’s maximum exposure to loss at December 31, 2013 is limited to the total carrying value of $245.1 million. In addition, the Company had outstanding commitments totaling approximately $50.4 million to fund Equity Method Limited Liability Investments at December 31, 2013.

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Notes to the Consolidated Financial Statements (Continued)

NOTE 3. INVESTMENTS (Continued)

The carrying values of the Company’s Other Investments at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Loans to Policyholders at Unpaid Principal	$	275.4	$	266.3
Real Estate at Depreciated Cost	167.1		226.2
Trading Securities at Fair Value	5.0		4.5
Other	0.5		0.5
Total	$	448.0	$	497.5

In the third quarter of 2013, the Company sold the 41-story office building where Kemper’s corporate offices are headquartered for a gain of $43.6 million before income taxes. Proceeds from the sale, net of transaction costs, were $101.5 million.

NOTE 4. GOODWILL

Goodwill balances by business segment at December 31, 2013 and December 31, 2012 were:

DOLLARS IN MILLIONS	2013		2012
Kemper Preferred	$	49.6	$	49.6
Kemper Specialty	42.8		42.8
Life and Health Insurance	219.4		219.4
Total	$	311.8	$	311.8

The Company tests goodwill for recoverability on an annual basis at the beginning of the first quarter and, if circumstances or events indicate that the fair value of a reporting unit may have declined below its carrying value, such tests are performed at intervening interim periods. The Company principally used projections of discounted future cash flows to estimate the fair values of the reporting units tested. For each reporting unit tested, the estimated fair value exceeded the carrying value of the reporting unit, and the Company concluded that the associated goodwill was recoverable at the aforementioned dates tested.

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Notes to the Consolidated Financial Statements (Continued)

NOTE 5. PROPERTY AND CASUALTY INSURANCE RESERVES

Property and Casualty Insurance Reserve activity for the years endedDecember 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Beginning Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year	$	970.6		$	1,029.1		$	1,118.7
Less Reinsurance Recoverables and Indemnification at Beginning of Year	66.2			74.5			78.1
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at Beginning of Year	904.4			954.6			1,040.6
Incurred Losses and LAE related to:
Current Year:
Continuing Operations	1,056.5			1,253.1			1,338.5
Prior Years:
Continuing Operations	(59.8		)	(25.2		)	(35.0		)
Discontinued Operations	(4.8		)	(6.3		)	1.9
Total Incurred Losses and LAE related to Prior Years	(64.6		)	(31.5		)	(33.1		)
Total Incurred Losses and LAE	991.9			1,221.6			1,305.4
Paid Losses and LAE related to:
Current Year:
Continuing Operations	682.2			801.4			887.7
Prior Years:
Continuing Operations	421.7			451.2			472.9
Discontinued Operations	12.3			19.2			30.8
Total Paid Losses and LAE related to Prior Years	434.0			470.4			503.7
Total Paid Losses and LAE	1,116.2			1,271.8			1,391.4
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at End of Year	780.1			904.4			954.6
Plus Reinsurance and Indemnification Recoverables at End of Year	63.4			66.2			74.5
Property and Casualty Insurance Reserves, Gross of Reinsurance at End of Year	$	843.5		$	970.6		$	1,029.1

Property and Casualty Insurance Reserves are estimated based on historical experience patterns and current economic trends. Actual loss experience and loss trends are likely to differ from these historical experience patterns and economic conditions. Loss experience and loss trends emerge over several years from the dates of loss inception. The Company monitors such emerging loss trends on a quarterly basis. Changes in such estimates are included in the Consolidated Statements of Income in the period of change.

In 2013, the Company reduced its property and casualty insurance reserves by $64.6 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance loss and LAE reserves developed favorably by $56.8 million and commercial lines insurance loss and LAE reserves developed favorably by $7.8 million. Personal automobile insurance loss and LAE reserves developed favorably by $30.1 million, homeowners insurance loss and LAE reserves developed favorably by $20.1 million and other personal lines loss and LAE reserves developed favorably by $6.6 million. The personal lines insurance losses and LAE reserves developed favorably due primarily to the emergence of more favorable loss patterns than expected for the four most recent accident years. Commercial lines insurance loss and LAE reserves included favorable development of $3.0 million from continuing operations and $4.8 million from discontinued operations. Commercial lines insurance losses and LAE reserves developed favorably from continuing operations due primarily to the emergence of more favorable loss patterns than expected for the 2011, 2010 and 2009 accident years, partially offset by less favorable loss patterns than expected for the 2012 accident year.

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Notes to the Consolidated Financial Statements (Continued)

NOTE 5. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

In 2012, the Company reduced its property and casualty insurance reserves by $31.5 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance loss and LAE reserves developed favorably by $12.6 million and commercial lines insurance loss and LAE reserves developed favorably by $18.9 million. Personal automobile insurance loss and LAE reserves developed adversely by $2.2 million, homeowners insurance loss and LAE reserves developed favorably by $11.7 million and other personal lines loss and LAE reserves developed favorably by $3.1 million. Personal automobile loss and LAE reserves developed adversely for the 2011 accident year and developed favorably for the 2010, 2009 and 2008 accident years. Homeowners insurance loss and LAE reserves developed favorably due primarily to the emergence of more favorable loss patterns than expected for the 2011, 2010 and 2009 accident years and favorable development on certain catastrophes. Commercial lines insurance loss and LAE reserves included favorable development of $12.6 million from continuing operations and $6.3 million from discontinued operations. Commercial lines insurance losses and LAE reserves developed favorably from continuing operations due primarily to the emergence of more favorable loss patterns than expected for the four most recent accident years. Commercial lines insurance loss and LAE reserves developed favorably from discontinued operations due primarily to the commutation of certain insurance liabilities that had been previously assumed.

In 2011, the Company reduced its property and casualty insurance reserves by $33.1 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance loss and LAE reserves developed favorably by $29.3 million and commercial lines insurance loss and LAE reserves developed favorably by $3.8 million. Personal lines insurance loss and LAE reserves developed favorably due primarily to the emergence of more favorable loss patterns than expected for the 2010, 2009 and 2008 accident years and favorable development on certain catastrophes.

The Company cannot predict whether loss and LAE reserves will develop favorably or unfavorably from the amounts reported in the Company’s consolidated financial statements. The Company believes that any such development will not have a material effect on the Company’s consolidated financial position, but could have a material effect on the Company’s consolidated financial results for a given period.

Reinsurance and indemnification recoverables on property and casualty insurance reserves were $63.4 million and $66.2 million at December 31, 2013 and 2012, respectively. These recoverables are concentrated with several reinsurers, the vast majority of which are highly rated by one or more of the principal investor and/or insurance company rating agencies. While most of these recoverables were unsecured at December 31, 2013 and 2012, the agreements with the reinsurers generally provide for some form of collateralization upon the occurrence of certain events.

NOTE 6. NOTES PAYABLE

Total amortized cost of debt outstanding at December 31, 2013 and 2012 was:

DOLLARS IN MILLIONS	2013		2012
Senior Notes:
6.00% Senior Notes due May 15, 2017	$	357.9	$	357.3
6.00% Senior Notes due November 30, 2015	249.0		248.6
Mortgage Note Payable due September 1, 2013	—		5.5
Total Notes Payable	$	606.9	$	611.4

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Notes to the Consolidated Financial Statements (Continued)

NOTE 6. NOTES PAYABLE (Continued)

Interest Expense, including facility fees, accretion of discount and write-off of unamortized credit agreement issuance costs for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Notes Payable under Revolving Credit Agreement	$	1.4		$	1.9		$	2.0
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	22.2			22.1			22.0
6.00% Senior Notes due November 30, 2015	15.4			15.4			15.4
Mortgage Note Payable	0.2			0.4			0.4
Interest Expense before Capitalization of Interest	39.2			39.8			39.8
Capitalization of Interest	(0.9		)	(1.8		)	(2.5		)
Total Interest Expense	$	38.3		$	38.0		$	37.3

Interest Paid on Notes Payable, including facility fees, for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Notes Payable under Revolving Credit Agreement	$	0.8	$	2.3	$	1.2
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	21.6		21.6		21.6
6.00% Senior Notes due November 30, 2015	15.0		15.0		15.2
Mortgage Note Payable	0.3		0.4		0.4
Total Interest Paid	$	37.7	$	39.3	$	38.4

On March 7, 2012, Kemper entered into the 2016 Credit Agreement, a four-year, $325.0 million, unsecured, revolving credit agreement, expiring March 7, 2016, with a group of financial institutions. Effective December 31, 2013, Kemper amended the 2016 Credit Agreement to, among other things, reduce the amount of the aggregate commitments under the 2016 Credit Agreement by $100.0 million, bringing the amount of aggregate commitments to $225.0 million, and to increase the amount of indebtedness that may be incurred and outstanding in the aggregate at any time in connection with borrowings from the FHLB or issuances of surplus notes by $150.0 million, to $250.0 million, provided that the aggregate indebtedness incurred and outstanding in connection with issuances of surplus notes may not exceed $100.0 million at any one time. The action resulted from the completion in December 2013 of a process initiated by Kemper’s subsidiaries, United Insurance and Trinity, to become members of the FHLBs of Chicago and Dallas, respectively. The FHLB memberships provide United Insurance and Trinity with access to additional sources of liquidity and consequently reduce the need for such liquidity at the parent company level.

The 2016 Credit Agreement replaced Kemper’s Former Credit Agreement, a $245.0 million, unsecured, revolving credit agreement which was scheduled to expire on October 30, 2012 and was terminated on March 7, 2012. There were no borrowings under the Former Credit Agreement at either December 31, 2011 or at its termination. The 2016 Credit Agreement provides for fixed and floating rate advances for periods up to six months at various interest rates. The 2016 Credit Agreement contains various financial covenants, including limits on total debt to total capitalization, consolidated net worth and minimum risk-based capital ratios for Kemper’s largest insurance subsidiaries, United Insurance and Trinity. Proceeds from advances under the 2016 Credit Agreement may be used for general corporate purposes, including repayment of existing indebtedness. There were no outstanding borrowings under the 2016 Credit Agreement at December 31, 2013, and accordingly, $225.0 million was available for future borrowings.

In connection with the finalization of their FHLB memberships, United Insurance and Trinity purchased capital stock in the FHLBs of Chicago and Dallas, respectively. In addition, to complete Trinity’s membership in the FHLB of Dallas, which became effective as of December 31, 2013, Trinity and the FHLB of Dallas entered into agreements pursuant to which Trinity may obtain advances from the FHLB of Dallas. The specific terms of each advance, including the amount and rate of interest, will be specified in a written or electronic confirmation of advance. The amount of advances that may be obtained by Trinity will be determined as of any particular date based on a multiple of the amount of capital stock in the FHLB of Dallas that has been purchased by Trinity as of such date, as determined in accordance with the policies and procedures for members of the

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NOTE 6. NOTES PAYABLE (Continued)

FHLB of Dallas, subject to any applicable limitations under the 2016 Credit Agreement. Advances are subject to collateral requirements as specified in the agreements. There were no advances from the FHLB of Dallas outstanding at December 31, 2013.

In 2011, Kemper borrowed and repaid $95.0 million under the Former Credit Agreement. Kemper had no outstanding advances under the Former Credit Agreement at December 31, 2011.

In 2010, Kemper issued $250 million of its 6.00% senior notes due November 30, 2015. The 2015 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Kemper issued the 2015 Senior Notes for proceeds of $247.8 million, net of transaction costs, for an effective yield of 6.21%.

In 2007, Kemper issued $360 million of its 6.00% senior notes due May 15, 2017. The 2017 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Kemper issued the 2017 Senior Notes for proceeds of $354.8 million, net of transaction costs, for an effective yield of 6.19%.

NOTE 7. LEASES

The Company leases certain office space under non-cancelable operating leases, with initial terms typically ranging from one to twelve years, along with options that permit renewals for additional periods. The Company also leases certain equipment under non-cancelable operating leases, with initial terms typically ranging from one to five years. Minimum rent is expensed on a straight-line basis over the term of the lease.

Net rental expense for operating leases for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Minimum Rental Expense	$	28.3		$	33.2		$	31.5
Less Sublease Rental Income	(1.8		)	(2.5		)	(2.1		)
Net Rental Expense	$	26.5		$	30.7		$	29.4

Future minimum lease payments under capital and operating leases at December 31, 2013 were:

DOLLARS IN MILLIONS	Capital Leases			Operating Leases
2014	$	4.7		$	25.1
2015	2.2			18.7
2016	2.1			16.7
2017	1.5			15.1
2018	0.1			8.9
2019 and Thereafter	—			15.3
Total Future Payments	$	10.6		$	99.8
Less Imputed Interest	(1.1		)
Present Value of Minimum Capital Lease Payments	$	9.5

The total of minimum rentals to be received in the future under non-cancelable subleases was $5.5 million at December 31, 2013.

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Notes to the Consolidated Financial Statements (Continued)

NOTE 8. SHAREHOLDERS’ EQUITY

Kemper is authorized to issue 20 million shares of $0.10 par value preferred stock and 100 million shares of $0.10 par value common stock. No preferred shares were issued or outstanding at December 31, 2013 and 2012. There were 55,653,437 shares and 58,454,390 shares of common stock outstanding at December 31, 2013 and 2012, respectively. Common stock outstanding included 278,427 shares and 313,424 shares at December 31, 2013 and 2012, respectively, that have been issued, subject to certain vesting and other requirements, in connection with the Company’s long-term equity compensation plans. See Note 9, “Long-Term Equity-based Compensation,” to the Consolidated Financial Statements for a discussion of the restrictions and vesting provisions.

On August 4, 2004, the Board of Directors declared a dividend distribution of one preferred share purchase right for each outstanding share of common stock of Kemper, pursuant to a shareholder rights plan. The rights have a term of 10 years. The description and terms of the rights are set forth in a rights agreement between Kemper and Computershare Trust Company, N.A., as rights agent.

Kemper repurchased and retired 3.0 million shares of its common stock in open market transactions at an aggregate cost of $100.4 million in 2013. Kemper repurchased and retired 2.0 million shares of its common stock in open market transactions at an aggregate cost of $60.7 million in 2012. Kemper repurchased and retired 0.9 million shares of its common stock in open market transactions at an aggregate cost of $27.4 million in 2011.

Various state insurance laws restrict the amount that an insurance subsidiary may pay in the form of dividends, loans or advances without the prior approval of regulatory authorities. Also, that portion of an insurance subsidiary’s net equity which results from differences between statutory insurance accounting practices and GAAP would not be available for cash dividends, loans or advances. Kemper’s insurance subsidiaries paid dividends of $95.0 million in cash to Kemper in 2013. In 2014, Kemper’s insurance subsidiaries would be able to pay $217 million in dividends to Kemper without prior regulatory approval. Kemper’s insurance subsidiaries had net assets of $2.4 billion, determined in accordance with GAAP, that were restricted from payment to Kemper without prior regulatory approval at December 31, 2013.

Kemper’s insurance subsidiaries are required to file financial statements prepared on the basis of statutory insurance accounting practices, a comprehensive basis of accounting other than GAAP. Statutory capital and surplus for the Company’s life and health insurance subsidiaries was $430.2 million and $457.8 million at December 31, 2013 and 2012, respectively. Statutory net income for the Company’s life and health insurance subsidiaries was $81.5 million, $102.0 million and $116.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. Statutory capital and surplus for the Company’s property and casualty insurance subsidiaries was $989.7 million and $844.8 million at December 31, 2013 and 2012, respectively. Statutory net income for the Company’s property and casualty insurance subsidiaries was $138.8 million, $40.6 million and $30.6 million for the years ended December 31, 2013, 2012 and 2011, respectively. Statutory capital and surplus and statutory net income exclude parent company operations.

Kemper’s insurance subsidiaries are also required to hold minimum levels of statutory capital and surplus to satisfy regulatory requirements. The minimum statutory capital and surplus, or company action level RBC, necessary to satisfy regulatory requirements for the Company’s life and health insurance subsidiaries collectively was $123.7 million at December 31, 2013. The minimum statutory capital and surplus necessary to satisfy regulatory requirements for the Company’s property and casualty insurance subsidiaries collectively was $286.4 million at December 31, 2013. Company action level RBC is the level at which a company is required to file a corrective action plan with its regulators and is equal to 200% of the authorized control level RBC.

In 2013, Kemper paid dividends of $54.9 million to its shareholders. Except for certain financial covenants under the 2016 Credit Agreement, there are no restrictions on Kemper’s ability to pay dividends to its shareholders. Certain financial covenants, namely minimum net worth and a maximum debt to total capitalization ratio, under the 2016 Credit Agreement could limit the amount of dividends that Kemper may pay to shareholders at December 31, 2013. Kemper had the ability to pay without restrictions $407 million in dividends to its shareholders and still be in compliance with all financial covenants under the 2016 Credit Agreement at December 31, 2013.

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NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION

On May 4, 2011, Kemper’s shareholders approved the 2011 Omnibus Equity Plan (“Omnibus Plan”). The Omnibus Plan replaced the Company’s previous employee stock option plans, director stock option plan and restricted stock plan (collectively, the “Prior Plans”). Awards previously granted under the Prior Plans remain outstanding in accordance with their original terms. Beginning May 4, 2011, equity-based compensation awards may only be granted under the Omnibus Plan. A maximum number of 10,000,000 shares of Kemper common stock may be issued under the Omnibus Plan (the “Share Authorization”). As of December 31, 2013, there were 8,750,768 common shares available for future grants under the Omnibus Plan, of which 390,486 shares were reserved for future grants based on the achievement of performance goals under the terms of outstanding performance-based restricted stock awards.

The design of the Omnibus Plan provides for fungible use of shares to determine the number of shares available for future grants, with a fungible conversion factor of three to one, such that the Share Authorization will be reduced at two different rates, depending on the type of award granted. Each share of Kemper common stock issuable upon the exercise of stock options or stock appreciation rights will reduce the number of shares available for future grant under the Share Authorization by one share, while each share of Kemper common stock issued pursuant to “full value awards” will reduce the number of shares available for future grant under the Share Authorization by three shares. “Full value awards” are awards, other than stock options or stock appreciation rights, that are settled by the issuance of shares of Kemper common stock and include restricted stock, restricted stock units, performance shares, performance units, if settled with stock, and other stock-based awards.

Outstanding awards under the Omnibus Plan and Prior Plans at December 31, 2013 consisted of tandem stock option and stock appreciation rights (“Tandem Awards”), time-vested restricted stock, performance-based restricted stock and deferred stock units (“DSUs”). Recipients of restricted stock receive full dividend and voting rights on the same basis as all other outstanding shares of Kemper common stock, and all awards are subject to forfeiture until certain restrictions have lapsed.

For equity-based compensation awards with a graded vesting schedule, the Company recognizes compensation expense on a straight-line basis over the requisite service period for each separately-vesting portion of the awards as if each award were, in substance, multiple awards. Compensation expense is recognized only for those awards expected to vest, with forfeitures estimated at the date of grant based on the Company’s historical experience and future expectations. Equity-based compensation expense was $5.5 million, $5.8 million and $5.3 million for the years endedDecember 31, 2013, 2012 and 2011, respectively. Total unamortized compensation expense related to nonvested awards at December 31, 2013 was $5.4 million, which is expected to be recognized over a weighted-average period of 1.4 years.

The Compensation Committee of the Board of Directors, or the Board’s authorized designee, has sole discretion to determine the persons to whom awards under the Omnibus Plan are granted, and the material terms of the awards. For Tandem Awards, material terms include the number of shares covered by such awards and the exercise price, vesting and expiration dates of such awards. Tandem Awards are non-transferable. The exercise price is the fair value of Kemper’s common stock on the date of grant. Employee Tandem Awards generally vest, beginning six months after date of grant, in four equal annual installments over a period of three and one-half years and expire ten years from the date of grant.

Each new member of the Board of Directors who is not employed by the Company (“Non-Employee Director”) receives an initial option to purchase 4,000 shares of Kemper common stock immediately upon becoming a director. Thereafter, on the date of each annual meeting of Kemper’s shareholders, eligible Non-Employee Directors automatically receive annual grants of options to purchase 4,000 shares of common stock. Prior to May 1, 2013, such options granted to Non-Employee Directors were exercisable one year from the date of grant at an exercise price equal to the fair market value of Kemper’s common stock on the date of grant and expire ten years from the date of grant. Effective May 1, 2013, new grants of such options are fully vested and exercisable on the date of grant at an exercise price equal to the fair market value of Kemper’s common stock on the date of grant. In addition to the option awards, effective May 1, 2013, annual awards to each Non-employee Director include 500 DSUs. DSUs give the recipient the right to receive one share of Kemper common stock for each DSU issued. The DSUs granted to Non-Employee Directors are fully vested on the date of grant. Holders of DSUs are entitled to receive dividend equivalents in cash in the amount and at the time that dividends would have been payable if the DSUs were shares of Kemper common stock. Conversion of the DSUs into shares of Kemper’s common stock is deferred until the date a director’s board service terminates. On May 1, 2013, the Company issued 4,000 DSUs at a fair value of $31.50 per DSU.

All of the Company’s prior stock option plans included provisions, subject to certain limitations, to automatically grant restorative, or reload stock options (“Restorative Options”), to replace shares of previously owned Kemper common stock that an exercising option holder surrenders, either actually or constructively, to satisfy the exercise price and/or tax withholding obligations relating to the exercise. The restorative feature was eliminated prospectively for original option awards granted on or after February 3, 2009. Restorative Options may still be granted, subject to certain limitations, in connection with the

88

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

exercise of original options granted before February 3, 2009. Restorative Options are subject to the same terms and conditions as the original options, including the expiration date, except that the exercise price is equal to the fair value of Kemper common stock on the date of grant of a Restorative Option and cannot be exercised until six months after the date of grant. The grant of a Restorative Option does not result in an increase in the total number of shares and options held by an employee, but changes the mix of the two.

The Company uses the Black-Scholes option pricing model to estimate the fair value of each option on the date of grant. The expected terms of options are developed by considering the Company’s historical share option exercise experience, demographic profiles, historical share retention practices of employees and assumptions about their propensity for early exercise in the future. Further, the Company aggregates individual awards into relatively homogenous groups that exhibit similar exercise behavior to obtain a more refined estimate of the expected term of options. Expected volatility is estimated using weekly historical volatility. The Company believes that historical volatility is currently the best estimate of expected volatility. The dividend yield in 2013, 2012 and 2011 was calculated by taking the natural logarithm of the annualized yield divided by the Kemper common stock price on the date of grant. The risk free interest rate was the yield on the grant date of U.S. Treasury zero coupon issues with a maturity comparable to the expected term of the option.

The assumptions used in the Black-Scholes pricing model for options granted during the years endedDecember 31, 2013, 2012 and 2011, were as follows:

	2013					2012					2011
RANGE OF VALUATION ASSUMPTIONS
Expected Volatility	39.10	%	-	48.23	%	29.36	%	-	53.84	%	41.26	%	-	55.16	%
Risk Free Interest Rate	0.62		-	1.38		0.16		-	1.26		1.30		-	2.87
Expected Dividend Yield	2.83		-	3.00		2.92		-	3.26		3.15		-	3.38
WEIGHTED-AVERAGE EXPECTED LIFE IN YEARS
Employee Grants	4		-	7		1		-	7		3.5		-	7
Director Grants	6					6					6

Option and SAR activity for the year endedDecember 31, 2013 is presented below:

	Shares Subject to Options		Weighted- average Exercise Price Per Share ($)		Weighted- average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value ($ In Millions)
Outstanding at Beginning of the Year	3,192,054		$	40.53
Granted	283,750		33.20
Exercised	(364,750	)	25.32
Forfeited or Expired	(567,381	)	42.83
Outstanding at December 31, 2013	2,543,673		41.38		3.57	$	9.3
Vested and Expected to Vest at December 31, 2013	2,512,512		$	41.51	3.51	$	9.0
Exercisable at December 31, 2013	2,226,795		$	42.81	2.87	$	6.3

89

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

The weighted-average grant-date fair values of options granted during 2013, 2012 and 2011 were $10.20, $9.40 and $9.11, respectively. Total intrinsic value of stock options exercised was $4.1 million, $3.0 million and $0.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. Cash received from option exercises was $1.7 million, $1.3 million and $0.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. Total tax benefits realized for tax deductions from option exercises were $1.4 million, $1.0 million and $0.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Information pertaining to options outstanding at December 31, 2013 is presented below:

					Outstanding				Exercisable
Range of Exercise Prices ($)					Shares Subject to Options	Weighted- average Exercise Price Per Share ($)		Weighted- average Remaining Contractual Life (in Years)	Shares Subject to Options	Weighted- average Exercise Price Per Share ($)
$	10.00	-	$	15.00	16,750	$	13.55	5.10	16,750	$	13.55
15.01		-	20.00		8,000	16.48		5.35	8,000	16.48
20.01		-	25.00		38,250	23.43		6.07	38,250	23.43
25.01		-	30.00		404,000	28.87		7.58	250,812	28.77
30.01		-	35.00		255,375	33.19		9.08	91,685	32.72
35.01		-	40.00		314,500	37.22		3.97	314,500	37.22
40.01		-	45.00		311,868	43.57		0.71	311,868	43.57
45.01		-	50.00		958,222	48.64		1.85	958,222	48.64
50.01		-	55.00		236,708	50.51		0.36	236,708	50.51
10.00		-	55.00		2,543,673	41.38		3.57	2,226,795	42.81

The grant-date fair values of time-based restricted stock awards are determined using the closing price of Kemper common stock on the date of grant. Activity related to nonvested time-based restricted stock for the year endedDecember 31, 2013 was as follows:

	Time-based Restricted Shares		Weighted- average Grant-date Fair Value Per Share
Nonvested Balance at Beginning of the Year	126,349		$	26.19
Granted	75,625		33.33
Vested	(59,065	)	24.99
Forfeited	(41,282	)	27.98
Nonvested Balance at End of Period	101,627		$	31.48

Prior to February 3, 2009, only awards of time-vested restricted stock had been granted. Beginning on February 3, 2009, in addition to time-vested restricted stock granted to certain employees and officers, the Company began awarding performance-based restricted stock to certain officers and employees. The initial number of shares awarded to each participant of a performance-based restricted stock award represents the shares that would vest if the performance goals were achieved at the “target” performance level. The final payout of these awards will be determined based on Kemper’s total shareholder return over a three-year performance period relative to a peer group comprised of all the companies in the S&P Supercomposite Insurance Index.

90

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

Performance-based restricted stock awards are earned over a three-year performance period. If, at the end of the performance period, the Company’s relative performance:

• exceeds the “target” performance level, additional shares of stock will be issued to the award recipient;

• is below the “target” performance level, but at or above a “minimum” performance level, only a portion of the shares of performance-based restricted stock originally issued to the award recipient will vest; or

• is below a “minimum” performance level, none of the shares of performance-based restricted stock originally issued to the award recipient will vest.

The grant date fair values of the performance-based restricted stock awards are determined using the Monte Carlo simulation method. The Monte Carlo simulation model produces a risk-neutral simulation of the daily returns on the common stock of Kemper and each of the other companies included in the peer group. Returns generated by the simulation depend on the risk-free interest rate used and the volatilities of, and the correlation between, these stocks. The model simulates stock prices and dividend payouts to the end of the three-year performance period. Total shareholder returns are generated for each of these stocks based on the simulated prices and dividend payouts. The total shareholder returns are then ranked, and Kemper’s simulated ranking is converted to a payout percentage based on the terms of the performance-based restricted stock awards. The payout percentage is applied to the simulated stock price at the end of the performance period, reinvested dividends are added back, and the total is discounted to the valuation date at the risk-free rate. This process is repeated approximately ten thousand times, and the grant date fair value is equal to the average of the results from these trials.

Activity related to nonvested performance-based restricted stock for the year endedDecember 31, 2013 was as follows:

	Performance-based Restricted Shares		Weighted- average- Grant-date Fair Value Per Share
Nonvested Balance at Beginning of the Year	187,075		$	36.70
Granted	70,675		42.12
Vested	(53,118	)	33.14
Forfeited	(27,832	)	39.16
Nonvested Balance at End of Period	176,800		$	39.54

The number of additional shares that would be granted if the Company were to meet or exceed the maximum performance levels related to the outstanding performance-based shares for the 2013 and 2012 three-year performance periods was 60,150 common shares and 59,775 common shares, respectively, (as “full value awards,” the equivalent of 180,450 shares and 179,325 shares, respectively, under the Share Authorization) at December 31, 2013. For the 2011 three-year performance period, the Company exceeded target performance levels with a payout percentage of 118%. Accordingly, an additional 9,014 shares of stock were issued to award recipients on February 1, 2014. For the 2010 three-year performance period, the Company exceeded target performance levels with a payout percentage of 114%. Accordingly, an additional 6,996 shares of stock were issued to award recipients on February 2, 2013 (the “2010 Additional Shares”). For the 2009 three-year performance period, the Company exceeded target performance levels with a payout percentage of 183%. Accordingly, an additional 40,727 shares of stock were issued to award recipients on January 31, 2012 (the “2009 Additional Shares”).

The total fair value of restricted stock, including the 2010 Additional Shares, that vested during the year endedDecember 31, 2013 was $4.1 million and the tax benefits for tax deductions realized from the vesting on such restricted stock was $1.4 million. The total fair value of restricted stock, including the 2009 Additional Shares, that vested during the year endedDecember 31, 2012 was $4.0 million and the tax benefits for tax deductions realized from the vesting on such restricted stock was $1.4 million. The total fair value of restricted stock that vested during the year endedDecember 31, 2011 was $1.4 million and the tax benefits for tax deductions realized from the vesting on such restricted stock was $0.5 million.

91

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 10. RESTRUCTURING EXPENSES

Activity related to restructuring costs from continuing operations for the years ended December 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS	2013		2012		2011
Liability at the Beginning of Year:
Employee Termination Costs	$	2.6	$	0.7	$	0.6
Early Lease Termination Costs	2.3		1.0		0.1
Other Associated Costs	—		—		—
Liability at the Beginning of Year	4.9		1.7		0.7
Expenses Incurred:
Employee Termination Costs	1.8		5.1		2.1
Early Lease Termination Costs	—		2.0		1.4
Other Associated Costs	—		0.1		0.1
Total Expenses Incurred	1.8		7.2		3.6
Payments of:
Employee Termination Costs	2.8		3.2		2.0
Early Lease Termination Costs	1.4		0.7		0.5
Other Associated Costs	—		0.1		0.1
Total Payments	4.2		4.0		2.6
Liability at End of Year:
Employee Termination Costs	1.6		2.6		0.7
Early Lease Termination Costs	0.9		2.3		1.0
Other Associated Costs	—		—		—
Liability at End of Year	$	2.5	$	4.9	$	1.7

92

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 11. INCOME FROM CONTINUING OPERATIONS PER UNRESTRICTED SHARE

The Company’s awards of restricted common stock contain a right to receive non-forfeitable dividends and participate in the undistributed earnings with common shareholders. Accordingly, the Company is required to apply the two-class method of computing basic and diluted earnings per share.

A reconciliation of the numerator and denominator used in the calculation of Basic Income from Continuing Operations Per Unrestricted Share and Diluted Income from Continuing Operations Per Unrestricted Share for the years endedDecember 31, 2013, 2012 and 2011 is as follows:

	2013		2012		2011
DOLLARS IN MILLIONS
Income from Continuing Operations	$	214.5	$	91.8	$	61.7
Less Income from Continuing Operations Attributed to Restricted Shares	1.1		0.5		0.3
Income from Continuing Operations Attributed to Unrestricted Shares	213.4		91.3		61.4
Dilutive Effect on Income of Kemper Equity-based Compensation Equivalent Shares	—		—		—
Diluted Income from Continuing Operations Attributed to Unrestricted Shares	$	213.4	$	91.3	$	61.4
SHARES IN THOUSANDS
Weighted-average Unrestricted Shares Outstanding	56,856.9		58,857.3		60,262.6
Kemper Equity-based Compensation Equivalent Shares	126.7		141.7		103.9
Weighted-Average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution	56,983.6		58,999.0		60,366.5
PER UNRESTRICTED SHARE IN WHOLE DOLLARS
Basic Income from Continuing Operations Per Unrestricted Share	$	3.75	$	1.55	$	1.02
Diluted Income from Continuing Operations Per Unrestricted Share	$	3.74	$	1.54	$	1.02

Options outstanding to purchase 2.1 million, 2.8 million and 3.3 million shares of Kemper common stock were excluded from the computation of Kemper Equity-based Compensation Equivalent Shares and Weighted-average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution for the years endedDecember 31, 2013, 2012 and 2011, respectively, because the exercise price exceeded the average market price.

93

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 12. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of Other Comprehensive Income (Loss) Before Income Taxes for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Other Comprehensive Income (Loss) Before Income Taxes:
Unrealized Holding Gains (Losses) Arising During the Period Year Reclassification Adjustment	$	(324.9	)	$	157.9		$	232.1
Reclassification Adjustment for Amounts Included in Net Income	(37.9		)	(61.2		)	(30.9		)
Unrealized Holding Gains (Losses)	(362.8		)	96.7			201.2
Foreign Currency Translation Adjustments Arising During the Year Before Reclassification Adjustment	0.2			1.6			0.4
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Unrecognized Postretirement Benefit Costs Arising During the Year	61.6			(29.4		)	(53.9		)
Amortization of Unrecognized Postretirement Benefit Costs	25.0			16.2			8.7
Net Unrecognized Postretirement Benefit Costs	86.6			(13.2		)	(45.2		)
Other Comprehensive Income (Loss) Before Income Taxes	$	(276.0	)	$	85.1		$	156.4

The components of Other Comprehensive Income Tax Benefit (Expense) for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year Before Reclassification Adjustment	$	115.9		$	(55.9	)	$	(82.5	)
Reclassification Adjustment for Amounts Included in Net Income	13.2			21.5			10.9
Unrealized Holding Gains and Losses	129.1			(34.4		)	(71.6		)
Foreign Currency Translation Adjustments Arising During the Year Before Reclassification Adjustment	(0.1		)	(0.6		)	(0.1		)
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustment	(0.1		)	(0.6		)	(0.1		)
Unrecognized Postretirement Benefit Costs Arising During the Year	(21.6		)	10.3			19.0
Amortization of Unrecognized Postretirement Benefit Costs	(8.8		)	(5.7		)	(3.1		)
Net Unrecognized Postretirement Benefit Costs	(30.4		)	4.6			15.9
Other Comprehensive Income Tax Benefit (Expense)	$	98.6		$	(30.4	)	$	(55.8	)

The components of AOCI at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013			2012
Unrealized Gains on Investments, Net of Income Taxes:
Available for Sale Fixed Maturities with Portion of OTTI Recognized in Earnings	$	0.3		$	1.4
Other Net Unrealized Gains on Investments	175.5			408.1
Foreign Currency Translation Adjustments, Net of Income Taxes	0.8			0.7
Net Unrecognized Postretirement Benefit Costs, Net of Income Taxes	(41.3		)	(97.5		)
Accumulated Other Comprehensive Income	$	135.3		$	312.7

94

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 12. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

Components of AOCI were reclassified to the following lines of the Consolidated Statements of Income for the years endedDecember 31, 2013, 2012 and 2011:

DOLLARS IN MILLIONS	2013			2012			2011
Reclassification of AOCI from Unrealized Gains and Losses on Available For Sale Securities to:
Net Realized Gains on Sales of Investments	$	51.8		$	65.0		$	35.0
Net Impairment Losses Recognized in Earnings	(13.9		)	(3.8		)	(4.1		)
Total Before Income Taxes	37.9			61.2			30.9
Income Tax Expense	(13.2		)	(21.5		)	(10.9		)
Reclassification from AOCI, Net of Income Taxes	24.7			39.7			20.0
Reclassification of AOCI from Amortization of Unrecognized Postretirement Benefit Costs to:
Interest and Other Expenses	(25.0		)	(16.2		)	(8.7		)
Income Tax Benefit	8.8			5.7			3.1
Reclassification from AOCI, Net of Income Taxes	(16.2		)	(10.5		)	(5.6		)
Total Reclassification from AOCI to Net Income	$	8.5		$	29.2		$	14.4

NOTE 13. INCOME FROM INVESTMENTS

Net Investment Income for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Investment Income:
Interest and Dividends on Fixed Maturities	$	235.5	$	246.1	$	246.6
Dividends on Equity Securities	38.0		25.7		25.2
Equity Method Limited Liability Investments	26.4		9.3		9.6
Short-term Investments	0.1		0.2		0.1
Real Estate	20.8		27.4		26.0
Loans to Policyholders	19.8		18.9		17.7
Other	—		0.1		0.3
Total Investment Income	340.6		327.7		325.5
Investment Expenses:
Real Estate	18.3		26.1		25.9
Other Investment Expenses	7.6		5.7		1.6
Total Investment Expenses	25.9		31.8		27.5
Net Investment Income	$	314.7	$	295.9	$	298.0

Other Receivables includes accrued investment income of $66.7 million and $72.4 million at December 31, 2013 and 2012, respectively.

95

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 13. INCOME FROM INVESTMENTS (Continued)

The components of Net Realized Gains on Sales of Investments for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities:
Gains on Sales	$	30.9		$	56.9		$	14.2
Losses on Sales	(0.4		)	(0.1		)	(0.1		)
Equity Securities:
Gains on Sales	21.8			8.3			34.0
Losses on Sales	(0.5		)	(0.2		)	(13.5		)
Equity Method Limited Liability Investments:
Gains on Sales	2.5			—			—
Real Estate:
Gains on Sales	44.2			0.2			0.1
Other Investments:
Gains on Sales	0.1			—			—
Losses on Sales	(0.1		)	—			(0.1		)
Net Gains (Losses) on Trading Securities	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7
Gross Gains on Sales	$	99.5		$	65.4		$	48.3
Gross Losses on Sales	(1.0		)	(0.3		)	(13.7		)
Net Gains (Losses) on Trading Securities	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7

The components of Net Impairment Losses Recognized in Earnings reported in the Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities	$	(10.3	)	$	(1.9	)	$	(2.2	)
Equity Securities	(3.6		)	(1.9		)	(1.9		)
Real Estate	—			(3.1		)	(7.2		)
Net Impairment Losses Recognized in Earnings	$	(13.9	)	$	(6.9	)	$	(11.3	)

NOTE 14. INSURANCE EXPENSES

Insurance Expenses for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Commissions	$	345.7		$	366.1		$	363.5
General Expenses	257.1			262.9			270.1
Taxes, Licenses and Fees	42.8			44.7			46.4
Total Costs Incurred	645.6			673.7			680.0
Policy Acquisition Costs:
Deferred	(253.4		)	(266.4		)	(268.5		)
Amortized	253.9			257.0			260.7
Net Policy Acquisition Costs Amortized (Deferred)	0.5			(9.4		)	(7.8		)
Life VIF and P&C Customer Relationships Amortized	8.3			8.0			11.4
Insurance Expenses	$	654.4		$	672.3		$	683.6

Commissions for servicing policies are expensed as incurred, rather than deferred and amortized.

96

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 15. INCOME TAXES

Current and Deferred Income Tax Assets at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Current Income Tax Assets	$	—	$	5.4
Deferred Income Tax Assets	31.8		6.6
Valuation Allowance for State Income Taxes	—		(6.6		)
Current and Deferred Income Tax Assets	$	31.8	$	5.4

The components of Liabilities for Income Taxes at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Current Income Tax Liabilities	$	1.5	$	—
Deferred Income Tax Liabilities	—		15.1
Unrecognized Tax Benefits	6.8		6.4
Liabilities for Income Taxes	$	8.3	$	21.5

The tax effects of temporary differences that give rise to significant portions of the Company’s Net Deferred Income Tax Assets and Deferred Income Tax Liabilities at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Deferred Income Tax Assets:
Insurance Reserves	$	76.4	$	79.3
Unearned Premium Reserves	40.2		44.1
Tax Capitalization of Policy Acquisition Costs	73.3		73.6
Payroll and Employee Benefit Accruals	38.8		79.9
Net Operating Loss Carryforwards	53.3		100.7
Other	12.6		10.7
Total Deferred Income Tax Assets	294.6		388.3
Deferred Income Tax Liabilities:
Investments	80.0		208.4
Deferred Policy Acquisition Costs	106.0		104.1
Life VIF and P&C Customer Relationships	20.2		25.2
Goodwill and Licenses	26.8		23.5
Depreciable Assets	26.0		29.3
Other	3.8		6.3
Total Deferred Income Tax Liabilities	262.8		396.8
Valuation Allowance for State Income Taxes	—		6.6
Net Deferred Income Tax Assets (Liabilities)	$	31.8	$	(15.1	)

97

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 15. INCOME TAXES (Continued)

Deferred Income Tax Assets include net operating loss (“NOL”) carryforwards of $53.3 million and $100.7 million at December 31, 2013 and 2012, respectively, which include federal NOL carryforwards of $53.3 million and $94.4 million, respectively, and a state NOL carryforwards of $6.3 million at December 31, 2012. The state NOL carryforwards relate to FAF, the majority of which are scheduled to expire in 2029. Deferred tax asset valuation allowances of $6.6 million were required at December 31, 2012 related to these state NOL carryforwards and other deferred state income tax assets. In 2013, the Company wrote off $6.6 million of deferred state income tax assets that had been previously reserved for in the valuation allowance.

The expiration of the federal net operating loss carryforwards and the related deferred income tax assets is presented below by year of expiration.

DOLLARS IN MILLIONS	NOL Carryforwards		Deferred Tax Asset
Expiring in:
2020	$	19.0	$	6.7
2021 through 2025	32.9		11.5
2026 through 2030	30.0		10.5
2031 through 2032	70.4		24.6
Total All Years	$	152.3	$	53.3

Except for the federal NOL carryforwards scheduled to expire in 2031 through 2032, all of the federal NOL carryforwards were acquired in connection with business acquisitions made in prior years and are subject to annual usage limitations under the Internal Revenue Code. The Company expects to fully utilize these federal NOL carryforwards.

The Company has not provided Federal income taxes on $14.7 million of Mutual Savings Life’s income earned prior to 1984 which is not subject to income taxes under certain circumstances. Federal income taxes of $5.1 million would be paid on such income if it is distributed to shareholders in the future or if it does not continue to meet certain limitations.

A reconciliation of the beginning and ending amount of Unrecognized Tax Benefits for the years ended December 31, 2013, 2012 and 2011 is as follows:

DOLLARS IN MILLIONS	2013		2012		2011
Balance at Beginning of Year	$	6.4	$	6.2	$	7.8
Additions (Reductions) for Tax Positions of Current Period	0.1		—		(1.8		)
Additions for Tax Positions of Prior Years	0.3		0.2		0.2
Balance at End of Year	$	6.8	$	6.4	$	6.2

The statute of limitations related to Kemper and its eligible subsidiaries’ consolidated Federal income tax returns is closed for all tax years up to and including 2006. The expiration of the statute of limitations related to the various state income tax returns that Kemper and its subsidiaries file varies by state.

During the first quarter of 2012, the Internal Revenue Service (“IRS”) began an audit of the Company’s 2009 and 2010 federal income tax returns. The Company reported a capital loss and a net operating loss in its 2009 federal income tax return and a net operating loss in its 2010 federal income tax return. The Company has carried these losses back to earlier tax years. Even though the Company has already received the refunds from carrying these losses back to such earlier tax years, approval by the Joint Committee on Taxation (“JCT”) is still required by law. The JCT has requested that the IRS perform an audit of these years before approving the refunds. During the second quarter of 2013, the Company extended the federal statute of limitations related to its 2007 through 2010 tax years to December 31, 2014. The extension was requested by the IRS to provide additional time for the IRS to finish processing its audit of the Company’s 2009 and 2010 federal income tax returns and related refund claims and for the IRS to prepare the necessary documentation for the JCT’s review required by statute. The Company does not anticipate a material modification to the filed returns or the related refunds that have been received.

98

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 15. INCOME TAXES (Continued)

During 2012, the Illinois Department of Revenue began an audit of the 2009 and 2010 tax years. The Company does not anticipate a material modification to the filed returns.

Unrecognized Tax Benefits at December 31, 2013, 2012 and 2011 include $3.4 million, $3.5 million and $3.7 million, respectively, for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred income tax accounting, other than for interest and penalties, the disallowance of the shorter deductibility period would not affect the effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The liability for Unrecognized Tax Benefits included accrued interest of $3.4 million, $2.9 million and $2.5 million at December 31, 2013, 2012 and 2011, respectively. Tax expense includes interest expense of $0.4 million related to unrecognized tax benefits for each of the years ended December 31, 2013, 2012 and 2011.

The components of Income Tax Expense from Continuing Operations for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Current Income Tax Expense	$	(49.4	)	$	(43.3	)	$	(43.4	)
Deferred Income Tax Benefit (Expense)	(50.1		)	12.9			35.2
Decrease (Increase) Unrecognized Tax Benefits	(0.4		)	(0.2		)	1.6
Income Tax Expense	$	(99.9	)	$	(30.6	)	$	(6.6	)

Net income taxes paid were $42.4 million and $52.2 million in 2013 and 2012, respectively. Income taxes refunded, net of income tax paid of $57.1 million, were $4.1 million in 2011.

A reconciliation of the Statutory Federal Income Tax Expense and Rate to the Company’s Effective Income Tax Expense and Rate from Continuing Operations for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013					2012					2011
	Amount			Rate		Amount			Rate		Amount			Rate
Statutory Federal Income Tax Expense	$	(110.0	)	35.0	%	$	(42.8	)	35.0	%	$	(23.9	)	35.0	%
Tax-exempt Income and Dividends Received Deduction	10.6			(3.4	)	13.9			(11.4	)	17.7			(26.0	)
State Income Taxes	(0.2		)	0.1		(0.8		)	0.7		(1.0		)	1.5
Other, Net	(0.3		)	0.1		(0.9		)	0.7		0.6			(1.0	)
Effective Income Tax Expense from Continuing Operations	$	(99.9	)	31.8	%	$	(30.6	)	25.0	%	$	(6.6	)	9.5	%

Comprehensive Income Tax Expense included in the Consolidated Financial Statements for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Income Tax Expense:
Continuing Operations	$	(99.9	)	$	(30.6	)	$	(6.6	)
Discontinued Operations	(1.7		)	(7.3		)	(6.7		)
Unrealized Depreciation (Appreciation) on Securities	129.1			(34.4		)	(71.6		)
Foreign Currency Translation Adjustments on Investments	(0.1		)	(0.6		)	(0.1		)
Tax Effects from Postretirement Benefit Plans	(30.4		)	4.6			15.9
Tax Effects from Long-Term Equity-based Compensation included in Paid-in Capital	0.2			(0.1		)	(1.0		)
Comprehensive Income Tax Expense	$	(2.8	)	$	(68.4	)	$	(70.1	)

99

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 16. PENSION BENEFITS

The Company sponsors a qualified defined benefit pension plan (the “Pension Plan”). The Pension Plan covers approximately 9,000 participants and beneficiaries, of which 2,400 are active employees. The Pension Plan is generally non-contributory, but participation requires or required some employees to contribute 3% of pay, as defined, per year. Benefits for participants who are or were required to contribute to the Pension Plan are based on compensation during plan participation and the number of years of participation. Benefits for the vast majority of participants who are not required to contribute to the Pension Plan are based on years of service and final average pay, as defined. The Company funds the Pension Plan in accordance with the requirements of ERISA.

Changes in Fair Value of Plan Assets and Changes in Projected Benefit Obligation for the years ended December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS
	2013			2012
Fair Value of Plan Assets at Beginning of Year	$	457.6		$	441.3
Actual Return on Plan Assets	34.5			38.0
Employer Contributions	55.0			—
Benefits Paid	(22.6		)	(21.5		)
Settlement Benefits	—			(0.2		)
Fair Value of Plan Assets at End of Year	524.5			457.6
Projected Benefit Obligation at Beginning of Year	553.9			499.2
Service Cost	10.8			10.8
Interest Cost	22.4			22.4
Benefits Paid	(22.6		)	(21.5		)
Settlement Benefits	—			(0.2		)
Actuarial Losses (Gains)	(49.0		)	43.2
Projected Benefit Obligation at End of Year	515.5			553.9
Funded Status—Plan Assets in Excess (Deficit) of Projected Benefit Obligation	$	9.0		$	(96.3	)
Amount Recognized in Accumulated Other Comprehensive Income:
Accumulated Actuarial Loss	$	(86.3	)	$	(166.4	)
Prior Service Cost	—			0.1
Amount Recognized in Accumulated Other Comprehensive Income	$	(86.3	)	$	(166.3	)
Accumulated Benefit Obligation	$	496.2		$	531.3

The measurement dates of the assets and liabilities at end of year presented in the preceding table under the headings, “2013” and “2012” were December 31, 2013 and December 31, 2012, respectively.

100

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 16. PENSION BENEFITS (Continued)

The weighted-average discount rate and rate of increase in future compensation levels used to estimate the components of the Projected Benefit Obligation at December 31, 2013 and 2012 were:

	2013		2012
Discount Rate	4.90	%	4.05	%
Rate of Increase in Future Compensation Levels	3.05		3.08

Weighted-average asset allocations at December 31, 2013 and 2012 by asset category were:

ASSET CATEGORY	2013		2012
Cash and Short-term Investments	8	%	12	%
Corporate Bonds and Notes	27		33
Common and Preferred Stocks	34		31
Exchange Traded Funds	22		17
Other Assets	9		7
Total	100	%	100	%

The investment objective of the Pension Plan is to produce current income and long-term capital growth through a combination of equity and fixed income investments which, together with appropriate employer contributions and any required employee contributions, is adequate to provide for the payment of the benefit obligations of the Pension Plan. The assets of the Pension Plan may be invested in fixed income and equity investments or any other investment vehicle or financial instrument deemed appropriate. Fixed income investments may include cash and short-term instruments, U.S. Government securities, corporate bonds, mortgages and other fixed income investments. Equity investments may include various types of stock, such as large-cap, mid-cap and small-cap stocks, and may also include investments in investment companies and Kemper common stock (subject to Section 407 and other requirements of ERISA). The Pension Plan has not invested in Kemper common stock.

The trust investment committee for the Pension Plan, along with its third party fiduciary advisor, periodically reviews the performance of the Pension Plan’s investments and asset allocation. Several external investment managers, one of which is Fayez Sarofim & Co. (“FS&C”) (see Note 24, “Related Parties,” to the Consolidated Financial Statements), manage the equity investments of the trust for the Pension Plan. Each manager is allowed to exercise investment discretion, subject to limitations, if any, established by the trust investment committee for the Pension Plan. An independent fiduciary had sole investment discretion with respect to shares of Intermec common stock contributed by the Company to the Pension Plan in 2011 until such shares were fully disposed of in 2012. All other investment decisions are made by the Company, subject to general guidelines as set by the trust investment committee for the Pension Plan.

The Company determines its Expected Long Term Rate of Return on Plan Assets based primarily on the Company’s expectations of future returns, with consideration to historical returns, for the Pension Plan’s investments, based on target allocations of the Pension Plan’s investments.

101

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 16. PENSION BENEFITS (Continued)

Fair value measurements for the Pension Plan’s assets at December 31, 2013 are summarized below:

DOLLARS IN MILLIONS	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	12.1	$	—	$	—	$	12.1
States and Political Subdivisions	—		3.1		—		3.1
Corporate Bonds and Notes	—		127.0		—		127.0
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		4.0		—		4.0
Common Stocks:
Manufacturing	97.5		7.8		—		105.3
Other Industries	67.2		1.8		—		69.0
Other Equity Interests:
Exchange Traded Funds	111.7		—		—		111.7
Limited Liability Companies and Limited Partnerships	—		—		46.9		46.9
Short-term Investments	42.6		—		—		42.6
Receivables and Other	2.3		—		0.5		2.8
Total	$	333.4	$	143.7	$	47.4	$	524.5

Additional information pertaining to the changes in the fair value of the Pension Plan’s assets classified as Level 3 for the year ended December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Other Equity Interests		Receivables and Other			Total
Balance at Beginning of Year	$	26.9	$	0.6		$	27.5
Return on Plan Assets Held	3.5		—			3.5
Purchases, Sales and Settlements, Net	16.5		(0.1		)	16.4
Balance at December 31, 2013	$	46.9	$	0.5		$	47.4

102

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 16. PENSION BENEFITS (Continued)

Fair value measurements for the Pension Plan’s assets at December 31, 2012 are summarized below:

DOLLARS IN MILLIONS	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	6.1	$	—	$	—	$	6.1
States and Political Subdivisions	—		3.3		—		3.3
Corporate Bonds and Notes	—		142.7		—		142.7
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		3.4		—		3.4
Common Stocks:
Manufacturing	82.2		5.6		—		87.8
Other Industries	48.2		0.7		—		48.9
Other Equity Interests:
Exchange Traded Funds	79.6		—		—		79.6
Limited Liability Companies and Limited Partnerships	—		—		26.9		26.9
Short-term Investments	55.8		—		—		55.8
Receivables and Other	2.5		—		0.6		3.1
Total	$	274.4	$	155.7	$	27.5	$	457.6

Additional information pertaining to the changes in the fair value of the Pension Plan’s assets classified as Level 3 for the year ended December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Corporate Bonds			Other Equity Interests			Receivables and Other			Total
Balance at Beginning of Year	$	1.0		$	37.2		$	3.2		$	41.4
Return on Plan Assets Held	—			1.7			0.1			1.8
Purchases, Sales and Settlements, Net	—			(12.0		)	(2.7		)	(14.7		)
Transfers out of Level 3	(1.0		)	—			—			(1.0		)
Balance at December 31, 2012	$	—		$	26.9		$	0.6		$	27.5

The components of Comprehensive Pension (Income) Expense for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Service Cost Earned During the Year	$	10.8		$	10.8		$	10.2
Interest Cost on Projected Benefit Obligation	22.4			22.4			22.9
Expected Return on Plan Assets	(29.7		)	(29.8		)	(24.4		)
Amortization of Actuarial Loss	26.2			18.8			9.4
Settlements	—			0.3			—
Pension Expense Recognized in Consolidated Statements of Income	29.7			22.5			18.1
Unrecognized Pension (Gain) Loss Arising During the Year	(53.8		)	34.8			52.4
Amortization of Accumulated Unrecognized Pension Loss	(26.2		)	(18.8		)	(9.4		)
Comprehensive Pension (Income) Expense	$	(50.3	)	$	38.5		$	61.1

103

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 16. PENSION BENEFITS (Continued)

The Company estimates that Pension Expense for the year ended December 31, 2014 will include expense of $9.2 million resulting from the amortization of the related accumulated actuarial loss included in Accumulated Other Comprehensive Income at December 31, 2013.

Total Pension Expense Recognized in the Consolidated Statements of Income as presented in the preceding table includes service cost benefits earned and reported in discontinued operations of $0.5 million and $0.6 million for the years ended December 31, 2012 and 2011, respectively.

The weighted-average discount rate, rate of increase in future compensation levels and expected long-term rate of return on plan assets used to develop the components of the Pension Expense for the years ended December 31, 2013, 2012 and 2011 were:

	2013		2012		2011
Discount Rate	4.05	%	4.60	%	5.35	%
Rate of Increase in Future Compensation Levels	3.08		3.27		2.47
Expected Long Term Rate of Return on Plan Assets	7.00		7.00		7.00

On September 3, 2013, the Company made a voluntary cash contribution of $55.0 million to its defined benefit pension plan.

The Company does not expect that it will be required to contribute to its Pension Plan in 2014, but could make a voluntary contribution pursuant to the maximum funding limits under ERISA.

On September 14, 2011, the Company made a voluntary contribution of $83.7 million to its defined benefit pension plan. The contribution consisted of $32.2 million in cash and 7,309,764 shares of Intermec common stock with a fair value of $51.5 million on the date of contribution. On May 23, 2011, the Company requested a waiver from the U.S. Department of Labor (“DOL”) related to the prohibited transaction rules under ERISA and the Internal Revenue Code for the one-time in-kind contribution of the shares of Intermec common stock. On January 19, 2012, the DOL granted relief, from the prohibited transaction rules retroactive to September 1, 2011.

The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are expected to be paid:

DOLLARS IN MILLIONS	Years Ending December 31,
	2014		2015		2016		2017		2018		2019-2023
Pension Benefits	$	24.4	$	25.4	$	26.7	$	27.9	$	29.1	$	163.4

The Company also sponsors a non-qualified supplemental defined benefit pension plan (the “Supplemental Plan”). The unfunded liability related to the Supplemental Plan was $23.3 million and $24.0 million at December 31, 2013 and 2012, respectively. Pension expense for the Supplemental Plan was $1.8 million, $1.8 million and $3.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. An actuarial gain of $1.5 million before tax, an actuarial loss of $1.3 million before tax and an actuarial gain of $2.9 million before tax is included Other Comprehensive Income for the years ended December 31, 2013, 2012 and 2011, respectively.

The Company also sponsors several defined contribution benefit plans covering most of its employees. The Company made contributions to those plans of $7.3 million, $7.8 million and $7.3 million in 2013, 2012 and 2011, respectively. Under these plans, the participants have several investment alternatives, including Kemper’s common stock held through the Kemper Employee Stock Ownership Plan (“ESOP”) Fund and the Dreyfus Appreciation Fund. FS&C (see Note 24, “Related Parties,” to the Consolidated Financial Statements) is a sub-investment advisor of the Dreyfus Appreciation Fund. The fair value of participants’ investments in Kemper’s ESOP Fund was $19.3 million, or 5.6% of the total investments in the defined contribution benefit plans at December 31, 2013. The fair value of participants’ investments in the Dreyfus Appreciation Fund was $22.5 million, or 6.5% of the total investments in the defined contribution benefit plans at December 31, 2013.

104

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 17. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company sponsors an other than pension postretirement employee benefit plan (“OPEB”) that provides medical, dental and/or life insurance benefits to approximately 600 retired and 300 active employees (the “OPEB Plan”). The Company generally is self-insured for the benefits under the OPEB Plan. The medical plan generally provides for a limited number of years of medical insurance benefits at retirement based on the participant’s attained age at retirement and number of years of service until specified dates and generally requires participant contributions, with most contributions adjusted annually.

Changes in Fair Value of Plan Assets and Changes in Accumulated Postretirement Benefit Obligation for the years ended December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS
	2013			2012
Fair Value of Plan Assets at Beginning of Year	$	—		$	—
Employer Contributions	2.9			3.0
Plan Participants’ Contributions	1.2			1.0
Benefits Paid	(4.1		)	(4.0		)
Fair Value of Plan Assets at End of Year	—			—
Accumulated Postretirement Benefit Obligation at Beginning of Year	42.8			44.7
Service Cost	0.2			0.2
Interest Cost	1.2			1.6
Plan Participants’ Contributions	1.2			1.0
Benefits Paid	(4.1		)	(4.0		)
Medicare Part D Subsidy Received	—			1.0
Actuarial Gains	(6.2		)	(5.5		)
Obligations Transferred Into Plan	—			3.8
Accumulated Postretirement Benefit Obligation at End of Year	35.1			42.8
Funded Status—Accumulated Postretirement Benefit Obligation in Excess of Plan Assets	$	(35.1	)	$	(42.8	)
Actuarial Gain Recognized in Accumulated Other Comprehensive Income	$	18.4		$	13.4

The measurement dates of the assets and liabilities at end of year in the preceding table under the headings “2013” and “2012” were December 31, 2013 and December 31, 2012, respectively.

The weighted-average discount rate and rate of increase in future compensation levels used to develop the components of the Accumulated Postretirement Benefit Obligation at December 31, 2013 and 2012 were:

	2013		2012
Discount Rate	4.00	%	3.15	%
Rate of Increase in Future Compensation Levels	2.10		2.10

The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at December 31, 2013 was 8.5% for 2014, gradually declining to 5.0% in the year 2021 and remaining at that level thereafter for medical benefits and 8.0% for 2014, gradually declining to 5.0% in the year 2022 and remaining at that level thereafter for prescription drug benefits. The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at December 31, 2012 was 7.0% for 2013, gradually declining to 5.0% in the year 2017 and remaining at that level thereafter for medical benefits and 8.5% for 2013, gradually declining to 5.0% in the year 2020 and remaining at that level thereafter for prescription drug benefits.

A one-percentage point increase in the assumed health care cost trend rate for each year would increase the Accumulated Postretirement Benefit Obligation at December 31, 2013 by $2.1 million and 2013 OPEB expense by $0.1 million. A one-percentage point increase in the assumed health care cost trend rate for each year would increase the Accumulated Postretirement Benefit Obligation at December 31, 2012 by $2.8 million and 2012 OPEB expense by $0.1 million.

105

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 17. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)

The components of Comprehensive OPEB (Income) Expense for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Service Cost Earned During the Year	$	0.2		$	0.2		$	0.1
Interest Cost on Accumulated Postretirement Benefit Obligation	1.2			1.6			1.9
Amortization of Actuarial Gain	(1.2		)	(1.2		)	(0.6		)
OPEB Expense Recognized in Consolidated Statements of Income	0.2			0.6			1.4
Unrecognized OPEB (Gain) Loss Arising During the Year	(6.2		)	(5.5		)	4.4
Amortization of Accumulated Unrecognized OPEB Gain	1.2			1.2			0.6
Comprehensive OPEB (Income) Expense	$	(4.8	)	$	(3.7	)	$	6.4

The Company estimates that OPEB Expense for the year ended December 31, 2014 will include income of $1.5 million resulting from the amortization of the related accumulated actuarial gain included in Accumulated Other Comprehensive Income at December 31, 2013.

The weighted-average discount rate and rate of increase in future compensation levels used to develop OPEB Expense for the years ended December 31, 2013, 2012 and 2011 were:

	2013		2012		2011
Discount Rate	3.15	%	4.25	%	4.40	%
Rate of Increase in Future Compensation Levels	2.10		2.10		1.50

The Company expects to contribute $3.7 million, net of the expected Medicare Part D subsidy, to its OPEB Plan to fund benefit payments in 2014.

The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are expected to be paid:

DOLLARS IN MILLIONS	Years Ending December 31,
	2014			2015			2016			2017			2018			2019-2023
Benefit Payments:
Excluding Medicare Part D Subsidy	$	4.1		$	4.2		$	4.2		$	4.1		$	3.9		$	16.4
Expected Medicare Part D Subsidy	(0.4		)	(0.4		)	(0.4		)	(0.4		)	(0.4		)	(2.0		)
Net Benefit Payments	$	3.7		$	3.8		$	3.8		$	3.7		$	3.5		$	14.4

106

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 18. 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 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.

It is 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 $39.7 million, $31.7 million and $33.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. The Company does not allocate Net Realized Gains on Sales of Investments, Net Impairment Losses Recognized in Earnings, interest expense on debt or postretirement benefit plans, and actuarial gains and losses on its postretirement benefit plans to its operating segments.

Segment Assets at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
SEGMENT ASSETS
Kemper Preferred	$	1,600.9	$	1,562.0
Kemper Specialty	655.4		684.6
Kemper Direct	392.3		453.3
Life and Health Insurance	4,545.6		4,781.8
Corporate and Other, Net	462.2		527.4
Total Assets	$	7,656.4	$	8,009.1

107

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 18. BUSINESS SEGMENTS (Continued)

Segment Revenues for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
REVENUES
Kemper Preferred:
Earned Premiums	$	876.7		$	879.4		$	859.8
Net Investment Income	55.7			45.0			48.8
Other Income	0.2			0.4			0.3
Total Kemper Preferred	932.6			924.8			908.9
Kemper Specialty:
Earned Premiums	392.8			419.8			445.2
Net Investment Income	21.8			19.0			22.8
Other Income	0.3			0.3			0.5
Total Kemper Specialty	414.9			439.1			468.5
Kemper Direct:
Earned Premiums	123.4			168.0			222.7
Net Investment Income	13.4			13.9			17.4
Other Income	—			—			0.1
Total Kemper Direct	136.8			181.9			240.2
Life and Health Insurance:
Earned Premiums	632.9			639.9			645.9
Net Investment Income	209.9			204.3			200.5
Other Income	0.2			0.1			0.1
Total Life and Health Insurance	843.0			844.3			846.5
Total Segment Revenues	2,327.3			2,390.1			2,464.1
Net Realized Gains on the Sales of Investments	99.1			65.4			33.7
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)
Other	14.0			13.7			8.5
Total Revenues	$	2,426.5		$	2,462.3		$	2,495.0

108

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 18. BUSINESS SEGMENTS (Continued)

Segment Operating Profit for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
SEGMENT OPERATING PROFIT (LOSS)
Kemper Preferred	$	87.7		$	(28.0	)	$	(40.6	)
Kemper Specialty	12.3			(2.8		)	24.2
Kemper Direct	39.6			(4.8		)	(47.2		)
Life and Health Insurance	136.9			140.4			152.3
Total Segment Operating Profit	276.5			104.8			88.7
Corporate and Other Operating Loss	(47.3		)	(40.9		)	(42.8		)
Total Operating Profit	229.2			63.9			45.9
Net Realized Gains on Sales of Investments	99.1			65.4			33.7
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)
Income from Continuing Operations before Income Taxes	$	314.4		$	122.4		$	68.3

Segment Net Operating Income for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
SEGMENT NET OPERATING INCOME (LOSS)
Kemper Preferred	$	63.1		$	(11.2	)	$	(17.6	)
Kemper Specialty	10.4			1.2			19.8
Kemper Direct	27.1			(0.9		)	(27.5		)
Life and Health Insurance	89.3			90.8			98.9
Total Segment Net Operating Income	189.9			79.9			73.6
Unallocated Net Operating Loss	(30.7		)	(26.1		)	(26.5		)
Consolidated Net Operating Income	159.2			53.8			47.1
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	64.4			42.5			21.9
Net Impairment Losses Recognized in Earnings	(9.1		)	(4.5		)	(7.3		)
Income from Continuing Operations	$	214.5		$	91.8		$	61.7

Amortization of Deferred Policy Acquisition Costs by Operating Segment for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	148.3	$	147.8	$	144.4
Kemper Specialty	54.3		58.7		62.6
Kemper Direct	4.6		6.1		8.8
Life and Health Insurance	46.7		44.4		44.9
Total Amortization	$	253.9	$	257.0	$	260.7

109

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 18. BUSINESS SEGMENTS (Continued)

Earned Premiums by product line for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013		2012		2011
EARNED PREMIUMS
Life	$	392.7	$	393.4	$	395.1
Accident and Health	161.4		165.2		166.3
Property and Casualty:
Personal Lines:
Automobile	959.1		1,050.1		1,129.4
Homeowners	326.2		318.0		304.1
Other Personal	134.1		136.9		138.7
Total Personal Lines	1,419.4		1,505.0		1,572.2
Commercial Automobile	52.3		43.5		40.0
Total Earned Premiums	$	2,025.8	$	2,107.1	$	2,173.6

NOTE 19. DISCONTINUED OPERATIONS

The Company accounts for Kemper’s subsidiary, FAF, and the Company’s former Unitrin Business Insurance operations as discontinued operations.

Summary financial information included in Income from Discontinued Operations for the years endedDecember 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	2013			2012			2011
Interest, Loan Fees and Earned Discounts	$	—		$	—		$	31.8
Other Automobile Finance Revenues	—			—			1.4
Gain on Sale of Loan Portfolios	—			12.9			4.5
Total Automobile Finance Revenues	—			12.9			37.7
Net Investment Income	—			—			0.5
Net Realized Gains on Sales of Investments	—			—			0.4
Total Revenues Included in Discontinued Operations	$	—		$	12.9		$	38.6
Income (Loss) from Discontinued Operations before Income Taxes:
Results of Operations	$	—		$	(0.2	)	$	18.7
Gain on Sale of Loan Portfolios	—			12.9			4.5
Change in Estimate of Retained Liabilities Arising from Discontinued Operations	4.9			6.2			(3.7		)
Income from Discontinued Operations before Income Taxes	4.9			18.9			19.5
Income Tax Expense	(1.7		)	(7.3		)	(6.7		)
Income from Discontinued Operations	$	3.2		$	11.6		$	12.8
Income from Discontinued Operations Per Unrestricted Share:
Basic	$	0.06		$	0.20		$	0.21
Diluted	$	0.06		$	0.20		$	0.21

110

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 19. DISCONTINUED OPERATIONS (Continued)

During 2011, FAF sold its active portfolio of automobile loan receivables at a gain of $4.5 million, net of transaction and other costs, while retaining its inactive portfolio of loans that had been previously charged-off (the “Inactive Portfolio”). The Inactive Portfolio was not carried on the Company’s Consolidated Balance Sheet. During 2012, FAF sold $283 million of loans in the Inactive Portfolio at a gain of $12.9 million, net of transaction, shutdown and other costs of $13.3 million, of which $1.0 million was unpaid at December 31, 2013.

In 2008, the Company sold its Unitrin Business Insurance operations. The Company retained Property and Casualty Insurance Reserves for unpaid insured losses that occurred prior to the date of the sale. Property and Casualty Insurance Reserves reported in the Company’s Consolidated Balance Sheets include $82.0 million and $99.2 million at December 31, 2013 and 2012, respectively, for the retained liabilities. In accordance with GAAP, changes in the Company’s estimate of such retained liabilities after the sale are reported as a separate component of the results of discontinued operations. See Note 5, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements.

NOTE 20. CATASTROPHE REINSURANCE

Catastrophes and natural disasters are inherent risks of the property and casualty insurance business. These catastrophic events and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and winter storms. Such events result in insured losses that are, and will continue to be, a material factor in the results of operations and financial position of the Company’s property and casualty insurance companies. Further, because the level of these insured losses occurring in any one year cannot be accurately predicted, these losses may contribute to material year-to-year fluctuations in the results of operations and financial position of these companies. Specific types of catastrophic events are more likely to occur at certain times within the year than others. This factor adds an element of seasonality to property and casualty insurance claims. The Company has adopted the industry-wide catastrophe classifications of storms and other events promulgated by ISO to track and report losses related to catastrophes. ISO classifies a disaster as a catastrophe when the event causes $25.0 million or more in direct insured losses to property and affects a significant number of policyholders and insurers. ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry. The discussions that follow utilize ISO’s definition of catastrophes.

The Company manages its exposure to catastrophes and other natural disasters through a combination of geographical diversification, restrictions on the amount and location of new business production in certain regions, and reinsurance. To limit its exposures to catastrophic events, the Company maintains various catastrophe reinsurance programs for its property and casualty insurance businesses.

Coverage for each catastrophe reinsurance program effective January 1, 2013 to December 31, 2013 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred, Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
4th Layer of Coverage	350.0		450.0		50.0

The catastrophe reinsurance program for the Kemper Preferred segment in 2013 also included reinsurance coverage, under a policy that expired on June 1, 2013, for catastrophe losses in North Carolina at retentions lower than those presented in the preceding table. The catastrophe reinsurance program for the Life and Health Insurance and Kemper Direct segments in 2013 also included reinsurance coverage from the FHCF for hurricane losses in Florida at retentions lower than those described above.

111

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 20. CATASTROPHE REINSURANCE (Continued)

Coverage for each catastrophe reinsurance program effective January 1, 2012 to December 31, 2012 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred, Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
4th Layer of Coverage	350.0		450.0		50.0
Life and Health Segment—Property Insurance Operations:
Retained	$	—	$	8.0	—	%
1st Layer of Coverage	8.0		15.0		70.0
2nd Layer of Coverage	15.0		40.0		70.0

The catastrophe reinsurance program for the Kemper Preferred segment in 2012 also included reinsurance coverage for catastrophe losses in North Carolina at retentions lower than those presented in the preceding table. The catastrophe reinsurance program for the Life and Health Insurance and Kemper Direct segments in 2012 also included reinsurance coverage from the FHCF for hurricane losses in Florida at retentions lower than those described above.

Coverage for each catastrophe reinsurance program effective January 1, 2011 to December 31, 2011 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred Segment:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	3.0	—	%
1st Layer of Coverage	3.0		16.0		100.0
Life and Health Segment—Property Insurance Operations:
Retained	$	—	$	8.0	—	%
1st Layer of Coverage	8.0		15.0		70.0
2nd Layer of Coverage	15.0		40.0		100.0

The catastrophe reinsurance program for the Kemper Preferred segment in 2011 also included reinsurance coverage for catastrophe losses in North Carolina at retentions lower than those presented in the preceding table. The catastrophe reinsurance program for the Life and Health Insurance and Kemper Direct segments in 2011 also included reinsurance coverage from the FHCF for hurricane losses in Florida at retentions lower than those described above.

In the event that the Company’s incurred catastrophe losses and LAE covered by any of its catastrophe reinsurance programs presented in the three preceding tables exceed the retention for that particular layer, each of the programs required one reinstatement of such coverage. In such an instance, the Company is required to pay a reinstatement premium to the reinsurers to reinstate the full amount of reinsurance available under such layer. The reinstatement premium is a percentage of the original premium based on the ratio of the losses in excess of the Company’s retention to the reinsurers’ coverage limit.

112

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 20. CATASTROPHE REINSURANCE (Continued)

Reinsurance premiums for the Company’s primary catastrophe reinsurance programs, the Kemper Preferred NC Program and the FHCF Program reduced earned premiums for the years ended December 31, 2013, 2012 and 2011 by the following:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	23.2	$	24.6	$	20.0
Kemper Specialty	0.1		0.1		0.1
Kemper Direct	0.3		0.4		0.8
Life and Health Insurance	—		2.0		2.3
Total Ceded Catastrophe Reinsurance Premiums	$	23.6	$	27.1	$	23.2

Catastrophe losses and LAE (including reserve development), net of reinsurance recoveries, for the years ended December 31, 2013, 2012 and 2011 by business segment are presented below.

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	29.2	$	99.2	$	138.7
Kemper Specialty	3.7		4.9		3.9
Kemper Direct	1.7		8.0		7.2
Life and Health Insurance	1.6		6.1		7.6
Total Catastrophe Losses and LAE	$	36.2	$	118.2	$	157.4

Total Catastrophe loss and LAE reserves, net of reinsurance recoverables, developed favorably by $14.5 million, $6.3 million and $6.4 million in 2013, 2012 and 2011, respectively. The Kemper Preferred segment reported favorable catastrophe reserve development of $11.9 million, $6.2 million and $5.5 million in 2013, 2012 and 2011, respectively. The Life and Health Insurance segment reported favorable catastrophe reserve development of $2.0 million and $1.5 million in 2013 and 2011, respectively, and adverse catastrophe reserve development of $0.1 million in 2012.

In late October 2012, Superstorm Sandy, at one point a level two hurricane while over the Atlantic Ocean, caused a significant amount of damage in several northeastern states. Catastrophe losses and LAE for the year ended December 31, 2012 include $48.5 million related to Superstorm Sandy, of which $44.0 million is included in the Kemper Preferred segment.

In the second quarter of 2011, the United States experienced a high volume of spring storms, including a record level of tornadoes in April. In the third quarter of 2011, the Company incurred claims related to Hurricane Irene. Catastrophe losses and LAE for the year ended December 31, 2011 include $23.0 million related to Hurricane Irene, of which $22.1 million is included in the Kemper Preferred segment.

The process of estimating and establishing reserves for catastrophe losses is inherently uncertain and the actual ultimate cost of a claim, net of actual reinsurance recoveries, may vary materially from the estimated amount reserved. The Company’s estimates of direct catastrophe losses are generally based on inspections by claims adjusters and historical loss development experience for areas that have not been inspected or for claims that have not yet been reported. The Company’s estimates of direct catastrophe losses are based on the coverages provided by its insurance policies. The Company’s homeowners and dwelling insurance policies do not provide coverage for losses caused by floods, but generally provide coverage for physical damage caused by wind or wind driven rain. Accordingly, the Company’s estimates of direct losses for homeowners and dwelling insurance do not include losses caused by flood. Depending on the policy, automobile insurance may provide coverage for losses caused by flood. Estimates of the number and severity of claims ultimately reported are influenced by many variables, including, but not limited to, repair or reconstruction costs and determination of cause of loss that are difficult to quantify and will influence the final amount of claim settlements. All these factors, coupled with the impact of the availability of labor and material on costs, require significant judgment in the reserve setting process. A change in any one or more of these factors is likely to result in an ultimate net claim cost different from the estimated reserve. The Company’s estimates of indirect losses from wind pools and joint underwriting associations are based on a variety of factors, including, but not limited to, actual or estimated assessments provided by or received from such entities, insurance industry estimates of losses, and estimates of the Company’s market share in the assessable states. Actual assessments may differ materially from these estimated amounts.

113

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 21. OTHER REINSURANCE

In addition to the reinsurance programs described in Note 20, “Catastrophe Reinsurance,” to the Consolidated Financial Statements, Kemper’s insurance subsidiaries utilize other reinsurance arrangements to limit their maximum loss, provide greater diversification of risk and to minimize exposures on larger risks. The ceding of insurance does not discharge the primary liability of the original insurer. Accordingly, insurance reserve liabilities are reported gross of any estimated recovery from reinsurers in the Consolidated Balance Sheets. Amounts recoverable from reinsurers are estimated in a manner consistent with the insurance reserve liability and are included in Other Receivables in the Consolidated Balance Sheets.

Earned Premiums ceded on long-duration and short-duration policies were $33.9 million, $42.5 million and $40.7 million for the years ended December 31, 2013, 2012 and 2011, respectively. Certain insurance subsidiaries assume business from other insurance companies and involuntary pools. Earned Premiums assumed on long-duration and short-duration policies were $52.7 million, $44.0 million and $43.7 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Trinity and Capitol are parties to a quota share reinsurance agreement whereby Trinity assumes 100% of the business written by Capitol. Earned Premiums assumed by Trinity from Capitol were $22.4 million, $25.0 million and $27.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. Capitol is a mutual insurance company and, accordingly, is owned by its policyholders. In the second quarter of 2012, Capitol requested regulatory approval to amend such agreement with Trinity, effective April 1, 2012, whereby ceded losses for dwelling coverage were capped. In the third quarter of 2012, Capitol received such regulatory approval. Incurred losses and LAE assumed by Trinity were reduced by $2.6 million in the third quarter of 2012 in conjunction with such amendment. Trinity and ORCC, a subsidiary of Capitol, are also parties to a quota share reinsurance agreement whereby prior to 2013, Trinity assumed 100% of the business written by ORCC. Earned Premiums assumed by Trinity from ORCC were $7.2 million, $8.2 million and $9.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. In the second quarter of 2013, ORCC received regulatory approval to amend its agreement with Trinity, effective January 1, 2013, whereby Trinity continues to assume 100% of the business written by ORCC, subject to a cap for ceded losses for dwelling coverage.

Five employees of the Company serve as directors of Capitol’s five member board of directors. Nine employees of the Company also serve as directors of ORCC’s nine member board of directors. Kemper’s subsidiary, United Insurance, provides claims and administrative services to Capitol and ORCC. In addition, agents appointed by Kemper’s subsidiary, The Reliable Life Insurance Company, and who are employed by United Insurance, are also appointed by Capitol and ORCC to sell property insurance products for the Company’s Life and Health Insurance segment. The Company also provides certain investment services to Capitol and ORCC.

114

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 22. FAIR VALUE MEASUREMENTS

The Company classifies its Investments in Fixed Maturities and Equity Securities as available for sale and reports these investments at fair value. The Company classifies certain investments in mutual funds included in Other Investments as trading securities and reports these investments at fair value. The Company has no material liabilities that are measured and reported at fair value.

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheet at December 31, 2013 is summarized below:

DOLLARS IN MILLIONS	Fair Value Measurements						Fair Value
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	121.2	$	241.0	$	—	$	362.2
States and Political Subdivisions	—		1,361.0		—		1,361.0
Corporate Securities:
Bonds and Notes	—		2,429.6		364.1		2,793.7
Redeemable Preferred Stocks	—		—		7.4		7.4
Mortgage and Asset-backed	—		1.5		49.2		50.7
Total Investments in Fixed Maturities	121.2		4,033.1		420.7		4,575.0
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		80.8		5.0		85.8
Other Industries	—		10.5		13.9		24.4
Common Stocks:
Manufacturing	95.1		7.3		2.2		104.6
Other Industries	71.7		2.2		11.0		84.9
Other Equity Interests:
Exchange Traded Funds	124.9		—		—		124.9
Limited Liability Companies and Limited Partnerships	—		—		173.9		173.9
Total Investments in Equity Securities	291.7		100.8		206.0		598.5
Other Investments:
Trading Securities	5.0		—		—		5.0
Total	$	417.9	$	4,133.9	$	626.7	$	5,178.5

At December 31, 2013, the Company had unfunded commitments to invest an additional $121.1 million in certain limited liability companies and limited partnerships that are reportable as Other Equity Interests.

115

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheet at December 31, 2012 is summarized below:

DOLLARS IN MILLIONS	Fair Value Measurements						Fair Value
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	135.8	$	293.1	$	—	$	428.9
States and Political Subdivisions	—		1,401.4		—		1,401.4
Corporate Securities:
Bonds and Notes	—		2,632.4		361.0		2,993.4
Redeemable Preferred Stocks	—		27.9		4.7		32.6
Mortgage and Asset-backed	—		3.8		0.1		3.9
Total Investments in Fixed Maturities	135.8		4,358.6		365.8		4,860.2
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		79.2		—		79.2
Other Industries	—		15.3		6.0		21.3
Common Stocks:
Manufacturing	79.6		6.0		1.9		87.5
Other Industries	60.1		1.2		5.4		66.7
Other Equity Interests:
Exchange Traded Funds	125.9		—		—		125.9
Limited Liability Companies and Limited Partnerships	—		—		141.3		141.3
Total Investments in Equity Securities	265.6		101.7		154.6		521.9
Other Investments:
Trading Securities	4.5		—		—		4.5
Total	$	405.9	$	4,460.3	$	520.4	$	5,386.6

The Company’s investments in Fixed Maturities that are classified as Level 1 in the two preceding tables primarily consist of U.S. Treasury Bonds and Notes. The Company’s investments in Equity Securities that are classified as Level 1 in the two preceding tables consist of either investments in publicly-traded common stocks or exchange traded funds. The Company’s investments in Fixed Maturities that are classified as Level 2 in the two preceding tables primarily consist of investments in corporate bonds and redeemable preferred stocks, states and political subdivisions, and bonds and mortgage-backed securities of U.S. government agencies. The Company’s investments in Equity Securities that are classified as Level 2 in the two preceding tables primarily consist of investments in preferred stocks. The Company uses a leading, nationally recognized provider of market data and analytics to price the vast majority of the Company’s Level 2 measurements. The provider utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information. Because many fixed maturity securities do not trade on a daily basis, the provider’s evaluated pricing applications apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing to prepare evaluations. In addition, the provider uses model processes to develop prepayment and interest rate scenarios. The pricing provider’s models and processes also take into account market convention. For each asset class, teams of its evaluators gather information from market sources and integrate relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models. The Company generally validates the measurements obtained from its primary pricing provider by comparing them with measurements obtained from one additional pricing provider that provides either prices from recent market transactions or quotes in inactive markets or evaluations based on its own proprietary models.

116

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

The Company investigates significant differences related to the values provided. On completion of its investigation, management exercises judgment to determine the price selected and whether adjustments, if any, to the price obtained from the Company’s primary pricing provider would warrant classification of the price as Level 3. In instances where a measurement cannot be obtained from either pricing provider, the Company generally will evaluate bid prices from one or more binding quotes obtained from market makers to value investments in inactive markets and classified by the Company as Level 2. The Company generally classifies securities when it receives non-binding quotes or indications as Level 3 securities unless the Company can validate the quote or indication against recent transactions in the market. For securities classified as Level 3, the Company either uses valuations provided by third party fund managers, third party appraisers, the Company’s own internal valuations or net asset values provided for Limited Liability Companies and Limited Partnerships. These valuations typically employ various valuation techniques, including earnings multiples based on comparable public securities, comparable market yields as well as industry specific non-earnings based multiples or discounted cash flow models. Valuations classified as Level 3 by the Company generally consist of investments in various private placement securities of non-rated entities. In rare cases, if the private placement security has only been outstanding for a short amount of time, the Company, after considering the initial assumptions used in acquiring an investment, considers the original purchase price as representative of the fair value.

The majority of Investments in Fixed Maturities that are classified as Level 3 are priced using a market yield approach. A market yield approach uses a risk-free rate plus a credit spread depending on the underlying credit profile of the security. For floating rate securities, the risk free rate used in the market yield is the contractual floating rate of the security. For each individual security, the Company or the Company’s third party appraiser gathers information from market sources, relevant credit information, perceived market movements and sector news and determines an appropriate market yield for each security. The market yield selected is then used to discount the estimated future cash flows of the security to determine the fair value. The Company separately evaluates market yields based upon asset class to assess the reasonableness of the recorded fair value. For Investments in Fixed Maturities, corporate bonds and notes makes up the majority of the Company’s investments classified as Level 3. For corporate bonds and notes, the primary asset classes are investment grade private placements, non-investment grade senior debt, non-investment grade junior debt and other debt. Non-investment grade senior debt includes those securities that receive first priority in a liquidation and non-investment grade junior debt includes any fixed maturity security with other than first priority in a liquidation.

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in determining fair values for investments in corporate bonds and notes classified as Level 3 at December 31, 2013.

DOLLARS IN MILLIONS	Unobservable Input	Total Fair Value		Range of Unobservable Inputs					Weighted Average Yield
Investment Grade	Market Yield	$	108.5	1.0	%	-	6.0	%	4.3	%
Non-investment Grade:
Senior Debt	Market Yield	93.9		4.2		-	15.6		8.6
Junior Debt	Market Yield	153.5		8.8		-	26.6		14.2
Other Debt	Various	8.2
Bonds and Notes Classified as Level 3		$	364.1

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in determining fair values for investments in corporate bonds and notes classified as Level 3 at December 31, 2012.

DOLLARS IN MILLIONS	Unobservable Input	Total Fair Value		Range of Unobservable Inputs					Weighted Average Yield
Investment Grade	Market Yield	$	94.6	1.3	%	-	6.3	%	4.0	%
Non-investment Grade:
Senior Debt	Market Yield	77.7		5.7		-	18.0		9.1
Junior Debt	Market Yield	173.2		8.8		-	21.4		14.8
Other Debt	Various	15.5
Bonds and Notes Classified as Level 3		$	361.0

117

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

For an investment in a fixed maturity security, an increase in the yield used to determine the fair value of the security will decrease the fair value of the security. A decrease in the yield used to determine fair value will increase the fair value of the security, but the fair value increase is generally limited to par if the security is currently callable.

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the year ended December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Fixed Maturities									Equity Securities
	Corporate Bonds and Notes			Redeemable Preferred Stocks			Mortgage and Asset- backed			Preferred and Common Stocks			Other Equity Interests			Total
Balance at Beginning of Year	$	361.0		$	4.7		$	0.1		$	13.3		$	141.3		$	520.4
Total Gains (Losses):
Included in Consolidated Statement of Income	(7.9		)	0.2			0.3			(1.0		)	(1.6		)	(10.0		)
Included in Other Comprehensive Income	(7.8		)	(1.3		)	(0.1		)	4.6			5.6			1.0
Purchases	145.1			5.1			48.6			15.9			55.4			270.1
Settlements	(123.2		)	(1.3		)	(0.1		)	—			(26.8		)	(151.4		)
Sales	(0.1		)	—			(2.0		)	(0.7		)	—			(2.8		)
Transfers into Level 3	5.8			—			2.4			—			—			8.2
Transfers out of Level 3	(8.8		)	—			—			—			—			(8.8		)
Balance at End of Year	$	364.1		$	7.4		$	49.2		$	32.1		$	173.9		$	626.7

The Company’s policy is to recognize transfers between levels as of the end of the reporting period. There were no transfers between Levels 1 and 2 or Levels 1 and 3 for the year ended December 31, 2013. The transfers into Level 3 and out of Level 3 for the year ended December 31, 2013 were due to changes in the availability of market observable inputs.

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the year ended December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Fixed Maturities									Equity Securities						Total
	Corporate Bonds and Notes			Redeemable Preferred Stocks			Mortgage and Asset- backed			Preferred and Common Stocks			Other Equity Interests
Balance at Beginning of Year	$	235.1		$	6.1		$	0.3		$	13.5		$	93.1		$	348.1
Total Gains (Losses):
Included in Consolidated Statement of Income	4.0			(0.4		)	—			3.2			—			6.8
Included in Other Comprehensive Income	1.4			0.5			—			(1.3		)	8.3			8.9
Purchases	199.7			0.1			—			1.6			52.0			253.4
Settlements	(73.1		)	(1.6		)	(0.2		)	—			(12.1		)	(87.0		)
Sales	(0.9		)	—			—			(3.7		)	—			(4.6		)
Transfers into Level 3	0.9			—			—			—			—			0.9
Transfers out of Level 3	(6.1		)	—			—			—			—			(6.1		)
Balance at End of Year	$	361.0		$	4.7		$	0.1		$	13.3		$	141.3		$	520.4

The Company’s policy is to recognize transfers between levels as of the end of the reporting period. There were no transfers between Levels 1 and 2 or Levels 1 and 3 for the year ended December 31, 2012. The transfers into Level 3 and out of Level 3 for the year ended December 31, 2012 were due to changes in the availability of market observable inputs.

118

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

The fair value of Notes Payable is estimated using quoted prices in markets that are not active. The inputs used in the valuation are considered Level 2 measurements. The fair value of Short-term Investments is estimated using inputs that are considered Level 1 or Level 2 measurements.

NOTE 23. CONTINGENCIES

In the ordinary course of its businesses, the Company is involved in legal proceedings, including lawsuits, regulatory examinations and inquiries. Except with regard to the matters discussed below, based on currently available information, the Company does not believe that it is reasonably possible that any of its pending legal proceedings will have a material effect on the Company’s consolidated financial statements.

Over the last several years, certain state insurance regulators, legislators, treasurers/controllers, and their respective agents have been involved in an array of initiatives that seek, in various ways, to impose new duties on life insurance companies to proactively search for deaths of their insureds and contact the insureds’ beneficiaries even though such beneficiaries may not have submitted claims, including due proof of death, as required under the terms of state-approved life insurance policy forms.

Legislation has been enacted in Kentucky, Maryland, Montana, Nevada, New York, North Dakota and Vermont, with varying effective dates (the “DMF Statutes”), that requires life insurance companies to compare on a regular basis their records for all in-force policies (including those policies issued prior to the effective dates of the legislation) against the database of reported deaths maintained by the Social Security Administration or a comparable database (a “Death Master File”). In contrast, New Mexico has enacted legislation that also requires such comparisons, but exempts life insurance companies, like Kemper’s life insurance subsidiaries (the “Life Companies”), that have not previously utilized a Death Master File, and instead only requires that such companies conduct Death Master File comparisons for life insurance policies issued and delivered in New Mexico after the legislation’s effective date. Likewise, Alabama has enacted a statute that requires such comparisons, but only with respect to policies issued on or after January 1, 2016.

In November 2012, certain of the Life Companies filed a declaratory judgment action in state court in Kentucky asking the court to construe the Kentucky DMF Statute to apply only prospectively - i.e., only with respect to those life insurance policies issued in Kentucky on or after the effective date of the Kentucky DMF Statute - consistent with what the Life Companies believe are the requirements of applicable Kentucky statutory law and Kentucky and federal constitutional provisions. On April 1, 2013, the trial court denied the subject Life Companies’ motion for summary judgment and held that the requirements of the Kentucky DMF Statute apply to life insurance policies issued before the statute’s January 1, 2013 effective date. The subject Life Companies believe that the court did not correctly apply governing law and have appealed the trial court’s decision to the Kentucky Court of Appeals, which issued a stay of enforcement of the Kentucky DMF Statute against the subject Life Companies pending the appeal. A decision by the Court of Appeals is unlikely before the second half of 2014.

In July 2013, certain of the Life Companies filed a declaratory judgment action in state court in Maryland, asking the court to construe the Maryland DMF Statute to apply only to policies issued in Maryland after the effective date of the statute for essentially the same reasons asserted in the Kentucky proceeding. The State of Maryland defendants filed a motion to dismiss the action, contending that the subject Life Companies did not exhaust their administrative remedies before filing their action in the trial court. A hearing on the state’s motion to dismiss is scheduled in March 2014.

The Life Companies are the subject of an unclaimed property compliance audit (the “Treasurers’ Audit”) being conducted by a private audit firm retained by the treasurers/controllers of thirty-eight states (the “Audit Firm”). In July 2013, the California State Controller (the “CA Controller”) filed a complaint for injunctive relief against the Life Companies in state court in California, seeking an order requiring the Life Companies to produce all of their in-force policy records to the Audit Firm to enable the firm to perform a comparison of such records against a Death Master File and to ascertain whether any of the insureds under such policies may be deceased. As described below, the Life Companies have filed a counterclaim in this case against the CA Controller.

The Life Companies are the subject of a multi-state market conduct examination by six state insurance regulators that is focused on the Life Companies’ claim settlement and policy administration practices, and specifically their compliance with state unclaimed property statutes (the “Multi-State Exam”). The Multi-State Exam was originated in June 2012 as a single-state examination by the Illinois Insurance Director. Insurance regulators from five additional states - California, Florida, Pennsylvania, New Hampshire and

119

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 23. CONTINGENCIES (Continued)

North Dakota - joined the examination in May 2013. In July 2013, the Life Companies received requests from the Illinois Department of Insurance, as the managing lead state for the Multi-State Exam, for a significant volume of additional information, including their records of in-force policies and other information of the type previously requested by the Audit Firm as part of the Treasurers’ Audit and which is the subject of the CA Controller’s complaint.

In September 2013, certain of the Life Companies filed declaratory judgment actions against the insurance regulators in the states of California, Florida, Illinois and Pennsylvania, asking the courts in those states to declare that applicable law does not require life insurers to search a Death Master File to ascertain whether insureds are deceased. The subject Life Companies are also asking the courts to declare that regulators in those states do not have the legal authority to (i) obtain life insurers’ policy records for the purpose of comparing those records against a Death Master File, and (ii) impose payment obligations on life insurers before a claim and due proof of death have been submitted. The declaratory judgment action in California was filed as a counterclaim to the CA Controller’s complaint, joining the California Insurance Commissioner and the Audit Firm as parties to the counterclaim. These cases are in various stages procedurally and a decision in any of them is unlikely before the second quarter of 2014.

The results of the Treasurers’ Audit, Multi-State Exam and the various litigation described above cannot currently be predicted. The Life Companies continue to maintain that states lack the legal authority to establish new requirements that have the effect of changing the terms of existing life insurance contracts with regard to basic claims handling obligations and processes. If these state officials are able to apply such new requirements retroactively to the Life Companies’ existing life insurance policies, it will fundamentally alter the nature and timing of their responsibilities under such policies by effectively eliminating contractual terms that condition claim settlement and payment on the receipt of a claim, including “due proof of death” of an insured. The outcome of the various state initiatives and related litigation could have a significant effect on, including acceleration of, the Life Companies’ payment and/or escheatment of policy benefits, and significantly increase their claims handling costs. Kemper cannot reasonably estimate the amount of loss that it would recognize if the Life Companies were subjected to such requirements on a retroactive basis.

120

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 24. RELATED PARTIES

Mr. Fayez Sarofim, who served as a director of Kemper until May 1, 2013, is the Chairman of the Board, Chief Executive Officer and the majority shareholder of FS&C, a registered investment advisory firm. Mr. Christopher B. Sarofim, who currently is a director of Kemper and was elected as a director of Kemper on May 1, 2013, is Vice Chairman of FS&C. Kemper’s subsidiary, Trinity, is party to an agreement with FS&C whereby FS&C provides investment management services with respect to certain assets of Trinity for a fee based on the fair market value of the assets under management. Such agreement is terminable by either party at any time upon 30 days advance written notice. Trinity had $154.7 million, $125.2 million and $115.2 million in assets managed by FS&C at December 31, 2013, 2012 and 2011, respectively. Investment Expenses incurred in connection with such agreement were $0.4 million, $0.3 million and $0.3 million for the years ended December 31, 2013, 2012 and 2011, respectively.

FS&C also provides investment management services with respect to certain funds of the Company’s Pension Plan. The Company’s Pension Plan had $148.6 million, $120.7 million and $107.1 million in assets managed by FS&C at December 31, 2013, 2012 and 2011, respectively. The Company’s Pension Plan incurred, in the aggregate, expenses of $0.3 million, $0.3 million and $0.3 million to FS&C for the years ended December 31, 2013, 2012 and 2011, respectively.

With respect to the Company’s defined contribution plans, one of the alternative investment choices afforded to participating employees is the Dreyfus Appreciation Fund, an open-end, diversified managed investment fund. FS&C provides investment management services to the Dreyfus Appreciation Fund as a sub-investment advisor. According to published reports filed by FS&C with the SEC, the Dreyfus Appreciation Fund pays monthly fees to FS&C according to a graduated schedule computed at an annual rate based on the value of the Dreyfus Appreciation Fund’s average daily net assets. The Company does not compensate FS&C for services provided to the Dreyfus Appreciation Fund. Participants in the Company’s defined contribution plans had allocated $22.8 million, $20.4 million and $19.3 million for investment in the Dreyfus Appreciation Fund at December 31, 2013, 2012 and 2011, respectively, representing 6%, 7% and 7% of the total amount invested in the Company’s defined contribution plans at such dates.

The Company believes that the transactions described above have been provided on terms no less favorable to the Company than could have been negotiated with non-affiliated third parties.

As described in Note 21, “Other Reinsurance,” to the Consolidated Financial Statements, the Company also has certain relationships with Capitol, a mutual insurance company which is owned by its policyholders, and its subsidiary, ORCC.

121

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 25. QUARTERLY FINANCIAL INFORMATION (Unaudited)

	Three Months Ended (Unaudited)												Year Ended
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	Mar 31, 2013			Jun 30, 2013			Sep 30, 2013			Dec 31, 2013			Dec 31, 2013
Revenues:
Earned Premiums	$	509.9		$	512.8		$	507.5		$	495.6		$	2,025.8
Net Investment Income	80.8			74.6			82.4			76.9			314.7
Other Income	0.2			0.2			0.1			0.3			0.8
Net Realized Gains on Sales of Investments	26.9			2.3			49.1			20.8			99.1
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(2.4		)	(2.3		)	(3.5		)	(7.6		)	(15.8		)
Portion of Losses Recognized in Other Comprehensive Income	0.5			1.3			0.1			—			1.9
Net Impairment Losses Recognized in Earnings	(1.9		)	(1.0		)	(3.4		)	(7.6		)	(13.9		)
Total Revenues	615.9			588.9			635.7			586.0			2,426.5
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	349.2			354.2			338.3			315.5			1,357.2
Insurance Expenses	158.3			163.1			170.1			162.9			654.4
Interest and Other Expenses	23.8			25.2			25.3			26.2			100.5
Total Expenses	531.3			542.5			533.7			504.6			2,112.1
Income from Continuing Operations before Income Taxes	84.6			46.4			102.0			81.4			314.4
Income Tax Expense	(26.0		)	(13.9		)	(33.4		)	(26.6		)	(99.9		)
Income from Continuing Operations	58.6			32.5			68.6			54.8			214.5
Income (Loss) from Discontinued Operations	(0.2		)	1.5			1.5			0.4			3.2
Net Income	$	58.4		$	34.0		$	70.1		$	55.2		$	217.7
Income from Continuing Operations Per Unrestricted Share:
Basic	$	1.00		$	0.56		$	1.21		$	0.98		$	3.75
Diluted	$	1.00		$	0.56		$	1.21		$	0.98		$	3.74
Net Income Per Unrestricted Share:
Basic	$	1.00		$	0.59		$	1.24		$	0.99		$	3.81
Diluted	$	1.00		$	0.59		$	1.23		$	0.99		$	3.80
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.96

The sum of quarterly per share amounts does not equal per share amounts for the year due to differences in weighted-average shares and/or equivalent shares outstanding for each of the periods presented.

122

Kemper Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 25. QUARTERLY FINANCIAL INFORMATION (Unaudited) (Continued)

	Three Months Ended (Unaudited)												Year Ended
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	Mar 31, 2012			Jun 30, 2012			Sep 30, 2012			Dec 31, 2012			Dec 31, 2012
Revenues:
Earned Premiums	$	529.2		$	529.8		$	527.3		$	520.8		$	2,107.1
Net Investment Income	77.4			75.2			70.4			72.9			295.9
Other Income	0.2			0.2			0.2			0.2			0.8
Net Realized Gains on Sales of Investments	4.9			4.1			50.9			5.5			65.4
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(0.5		)	(0.4		)	(3.2		)	(3.1		)	(7.2		)
Portion of Losses Recognized in Other Comprehensive Income	—			—			—			0.3			0.3
Net Impairment Losses Recognized in Earnings	(0.5		)	(0.4		)	(3.2		)	(2.8		)	(6.9		)
Total Revenues	611.2			608.9			645.6			596.6			2,462.3
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	376.6			423.8			368.7			413.0			1,582.1
Insurance Expenses	162.4			167.7			172.7			169.5			672.3
Interest and Other Expenses	21.8			20.9			22.7			20.1			85.5
Total Expenses	560.8			612.4			564.1			602.6			2,339.9
Income (Loss) from Continuing Operations before Income Taxes	50.4			(3.5		)	81.5			(6.0		)	122.4
Income Tax Benefit (Expense)	(14.1		)	5.1			(25.9		)	4.3			(30.6		)
Income (Loss) from Continuing Operations	36.3			1.6			55.6			(1.7		)	91.8
Income from Discontinued Operations	7.3			0.7			—			3.6			11.6
Net Income	$	43.6		$	2.3		$	55.6		$	1.9		$	103.4
Income (Loss) from Continuing Operations Per Unrestricted Share:
Basic	$	0.61		$	0.03		$	0.95		$	(0.03	)	$	1.55
Diluted	$	0.60		$	0.03		$	0.95		$	(0.03	)	$	1.54
Net Income Per Unrestricted Share:
Basic	$	0.73		$	0.04		$	0.95		$	0.03		$	1.75
Diluted	$	0.72		$	0.04		$	0.95		$	0.03		$	1.74
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.96

The sum of quarterly per share amounts does not equal per share amounts for the year due to differences in weighted-average shares and/or equivalent shares outstanding for each of the periods presented.

123

Report of Independent Registered

Public Accounting Firm

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF KEMPER CORPORATION

We have audited the accompanying consolidated balance sheets of Kemper Corporation and subsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedules listed in Item 15. We also have audited the Company’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedules and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kemper Corporation and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth herein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ Deloitte & Touche LLP

Chicago, Illinois

February 14, 2014

124

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not Applicable

Item 9A.    Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, with participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC’s rules and forms, and accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management Report on Internal Control Over Financial Reporting

We, as management of the Company, are responsible for establishing and maintaining adequate internal control over financial reporting. Pursuant to the rules and regulations of the SEC, internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Management has evaluated the effectiveness of its internal control over financial reporting as of December 31, 2013, based on the control criteria established in a report entitled Internal Control—Integrated Framework, issued in 1992 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that the Company’s internal control over financial reporting is effective as of December 31, 2013.

The independent registered public accounting firm of Deloitte & Touche LLP, as auditors of Kemper’s consolidated financial statements, has issued an attestation report on the effectiveness of management’s internal control over financial reporting based on criteria established in Internal Control—Integrated Framework, issued in 1992 by the Committee of Sponsoring Organizations of the Treadway Commission.

/S/    DONALD G. SOUTHWELL	/S/    FRANK J. SODARO
Donald G. Southwell	Frank J. Sodaro
Chairman, President and Chief Executive Officer	Senior Vice President and Chief Financial Officer

February 14, 2014

125

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

The attestation report of the independent registered public accounting firm, Deloitte & Touche LLP, on the Company’s internal control over financial reporting is included in Item 8 under the heading “Report of Independent Registered Public Accounting Firm,” and is incorporated herein by reference.

Item 9B.    Other Information.

None

126

PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated herein by reference to the sections captioned “Election of Directors,” “Executive Officers,” “Ownership of Kemper Common Stock” and “Corporate Governance” in the Proxy Statement for Kemper’s 2014 Annual Meeting of Shareholders. Kemper plans to file such proxy statement within 120 days after December 31, 2013, the end of Kemper’s fiscal year.

Kemper’s code of ethics applicable to its chief executive officer, chief financial officer and principal accounting officer (“Code of Ethics for Senior Financial Executives”) is posted in the “Governance” section of Kemper’s website, kemper.com. Kemper also intends to disclose any future amendments to, and any waivers from (though none are anticipated), the Code of Ethics for Senior Financial Executives in the “Governance” section of its website.

Item 11.    Executive Compensation.

The information required by this Item is incorporated herein by reference to the sections captioned “Executive Compensation,” “Executive Officer Compensation and Benefits,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in the Proxy Statement for Kemper’s 2014 Annual Meeting of Shareholders. The Compensation Committee Report to be included in such Proxy Statement shall be deemed to be furnished in this report and shall not be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act as a result of such furnishing in this Item 11.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is set forth in the table below and incorporated herein by reference to the section captioned “Ownership of Kemper Common Stock” in the Proxy Statement for Kemper’s 2014 Annual Meeting of Shareholders.

Equity Compensation Plan Information

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans or Programs (1)
Equity Compensation Plans Approved by Security Holders	2,543,673	$	41.38	8,750,768
Equity Compensation Plans Not Approved by Security Holders	—	—		—
Total	2,543,673	$	41.38	8,750,768

(1) Includes 390,486 shares reserved for future grants based on the achievement of performance goals under the terms of outstanding performance-based restricted stock awards.

Kemper’s Omnibus Plan permits various stock-based awards including, but not limited to, stock options, stock appreciation rights, time-vested restricted stock and performance-based restricted stock.

The design of the Omnibus Plan provides for fungible use of shares to determine the number of shares available for future grants, with a fungible conversion factor of three to one, such that the Share Authorization will be reduced at two different rates, depending on the type of award granted. Each share of Kemper common stock issuable upon the exercise of stock options or stock appreciation rights will reduce the number of shares available for future grant under the Share Authorization by one share, while each share of Kemper common stock issued pursuant to “full value awards” will reduce the number of shares available for future grant under the Share Authorization by three shares. “Full value awards” are awards, other than stock options or stock appreciation rights, that are settled by the issuance of shares of Kemper common stock and include restricted stock, restricted stock units, performance shares, performance units, if settled with stock, and other stock-based awards.

127

Item 13.    Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated herein by reference to the sections captioned “Related Person Transactions” and “Director Independence” in the Proxy Statement for Kemper’s 2014 Annual Meeting of Shareholders.

Item 14.    Principal Accounting Fees and Services.

The information required by this Item is incorporated by reference to the section captioned “Independent Registered Public Accountant” in the Proxy Statement for Kemper’s 2014 Annual Meeting of Shareholders.

128

PART IV

Item 15.    Exhibits, Financial Statement Schedules.

(a) Documents filed as part of this Report

1. Financial Statements. The consolidated balance sheets of Kemper and subsidiaries as of December 31, 2013 and 2012, and the consolidated statements of income, comprehensive income, cash flows and shareholders’ equity for the years ended December 31, 2013, 2012 and 2011, together with the notes thereto and the report of Deloitte & Touche LLP thereon appearing in Item 8 are included in this 2013 Annual Report.

2. Financial Statement Schedules. The following four financial statement schedules are included on the pages immediately following the signature pages hereof. Schedules not listed here have been omitted because they are not applicable or not material or the required information is included in the Consolidated Financial Statements.

Schedule I Investments Other Than Investments in Related Parties

Schedule II Parent Company Financial Statements

Schedule III Supplementary Insurance Information

Schedule IV Reinsurance Schedule

The Report of Independent Registered Public Accounting Firm, Deloitte & Touche LLP, with regards to the Financial Statement Schedules listed above, is incorporated by reference to the Report of Independent Registered Public Accountant included in Item 8.

3. Exhibits. An Exhibit Index has been filed as part of this report on pages E-1 through E-4.

(b) Exhibits. Included in Item 15(a)3 above

(c) Financial Statement Schedules. Included in Item 15(a)2 above

129

POWER OF ATTORNEY

Each person whose signature appears below on the following page hereby appoints each of Donald G. Southwell, Chairman, President and Chief Executive Officer, Frank J. Sodaro, Senior Vice President and Chief Financial Officer, and Scott Renwick, Senior Vice President and General Counsel, so long as such individual remains an executive officer of Kemper Corporation, his true and lawful attorney-in-fact with authority together or individually to execute in the name of each such signatory, and with authority to file with the SEC, any and all amendments to this 2013 Annual Report of Kemper Corporation, together with any and all exhibits thereto and other documents therewith, necessary or advisable to enable Kemper Corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations, and requirements of the SEC in respect thereof, which amendments may make such other changes in the 2013 Annual Report as the aforesaid attorney-in-fact executing the same deems appropriate.

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, Kemper Corporation has duly caused this 2013 Annual Report on Form 10-K for the fiscal year ended December 31, 2013 to be signed on its behalf by the undersigned, thereunto duly authorized, on February 14, 2014.

KEMPER CORPORATION (Registrant)
By:	/S/    DONALD G. SOUTHWELL
	Donald G. Southwell
	Chairman, President, Chief Executive Officer and Director

130

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Kemper Corporation in the capacities indicated on February 14, 2014.

Signature	Title
/S/    DONALD G. SOUTHWELL	Chairman, President, Chief Executive Officer and Director (principal executive officer)
Donald G. Southwell
/S/    FRANK J. SODARO	Senior Vice President and Chief Financial Officer (principal financial officer)
Frank J. Sodaro
/S/    RICHARD ROESKE	Vice President and Chief Accounting Officer (principal accounting officer)
Richard Roeske
/S/    JAMES E. ANNABLE	Director
James E. Annable
/S/    DOUGLAS G. GEOGA	Director
Douglas G. Geoga
/S/    JULIE M. HOWARD	Director
Julie M. Howard
/S/    ROBERT J. JOYCE	Director
Robert J. Joyce
/S/    WAYNE KAUTH	Director
Wayne Kauth
/S/    CHRISTOPHER B. SAROFIM	Director
Christopher B. Sarofim
/S/    DAVID P. STORCH	Director
David P. Storch
/S/    RICHARD C. VIE	Director
Richard C. Vie

131

SCHEDULE I

KEMPER CORPORATION AND SUBSIDIARIES

INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES

DECEMBER 31, 2013

(Dollars in Millions)

	Amortized Cost		Fair Value		Amount Carried in Balance Sheet
Fixed Maturities:
Bonds and Notes:
United States Government and Government Agencies and Authorities	$	351.1	$	362.2	$	362.2
States and Political Subdivisions	1,327.4		1,361.0		1,361.0
Corporate Securities:
Other Bonds and Notes	2,685.4		2,844.4		2,844.4
Redeemable Preferred Stocks	6.6		7.4		7.4
Total Investments in Fixed Maturities	4,370.5		4,575.0		4,575.0
Equity Securities:
Preferred Stocks	105.5		110.2		110.2
Common Stocks	152.2		189.5		189.5
Other Equity Interests	272.3		298.8		298.8
Total Investments in Equity Securities	530.0		598.5		598.5
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	245.1		XXX.X		245.1
Loans, Real Estate and Other Investments	448.0		XXX.X		448.0
Short-term Investments	284.7		XXX.X		284.7
Total Investments	$	5,878.3			$	6,151.3

See Accompanying Report of Independent Registered Public Accounting Firm.

SCH I-1

SCHEDULE II

KEMPER CORPORATION

PARENT COMPANY BALANCE SHEETS

(Dollars in Millions)

	December 31,
	2013		2012
ASSETS
Investments in Subsidiaries	$	2,614.0	$	2,744.0
Equity Securities at Fair Value (Cost: 2013 – $4.7; 2012 – $4.9)	5.0		4.5
Short-term Investments	130.8		183.5
Cash	20.8		2.2
Other Receivables	4.9		7.2
Deferred Income Taxes	35.0		75.4
Other Assets	7.3		6.3
Total Assets	$	2,817.8	$	3,023.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Senior Notes Payable, 6.00% due 2017 (Fair Value: 2013 – $395.5; 2012 – $393.7)	$	357.9	$	357.3
Senior Notes Payable, 6.00% due 2015 (Fair Value: 2013 – $271.6; 2012 – $276.3)	249.0		248.6
Liabilities for Income Taxes	90.5		77.6
Liabilities for Benefit Plans	63.9		172.8
Accrued Expenses and Other Liabilities	5.0		5.1
Total Liabilities	766.3		861.4
Shareholders’ Equity:
Common Stock	5.6		5.8
Additional Paid-in Capital	694.8		725.0
Retained Earnings	1,215.8		1,118.2
Accumulated Other Comprehensive Income	135.3		312.7
Total Shareholders’ Equity	2,051.5		2,161.7
Total Liabilities and Shareholders’ Equity	$	2,817.8	$	3,023.1

See Accompanying Report of Independent Registered Public Accounting Firm.

SCH II-1

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF INCOME

(Dollars in Millions)

	For The Years Ended December 31,
	2013			2012			2011
Net Investment Income	$	0.2		$	0.2		$	0.4
Net Realized Gains (Losses) on Sales of Investments	0.6			0.3			(0.2		)
Total Revenues	0.8			0.5			0.2
Interest Expense	39.0			39.5			39.4
Other Operating Expenses	21.6			13.6			10.3
Total Operating Expenses	60.6			53.1			49.7
Loss before Income Taxes and Equity in Net Income of Subsidiaries	(59.8		)	(52.6		)	(49.5		)
Income Tax Benefit	20.8			18.2			18.6
Loss before Equity in Net Income of Subsidiaries	(39.0		)	(34.4		)	(30.9		)
Equity in Net Income of Subsidiaries	256.7			137.8			105.4
Net Income	$	217.7		$	103.4		$	74.5

See Accompanying Report of Independent Registered Public Accounting Firm.

SCH II-2

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Millions)

	For The Years Ended December 31,
	2013			2012			2011
Net Income	$	217.7		$	103.4		$	74.5
Other Comprehensive Income (Loss):
Unrealized Holding Gains (Losses) Arising During the Year:
Securities Held by Subsidiaries	(324.9		)	157.9			231.5
Securities Held by Parent	—			—			0.6
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	(37.9		)	(61.2		)	(30.2		)
Securities Held by Parent	—			—			(0.7		)
Unrealized Holding Gains (Losses)	(362.8		)	96.7			201.2
Unrecognized Postretirement Benefit Costs Arising During the Year	61.6			(29.4		)	(53.9		)
Amortization of Unrecognized Postretirement Benefit Costs	25.0			16.2			8.7
Net Unrecognized Postretirement Benefit Costs	86.6			(13.2		)	(45.2		)
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Other Comprehensive Income (Loss) before Income Taxes	(276.0		)	85.1			156.4
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year:
Securities Held by Subsidiaries	115.9			(55.9		)	(82.3		)
Securities Held by Parent	—			—			(0.2		)
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	13.2			21.5			10.7
Securities Held by Parent	—			—			0.2
Unrealized Holding Gains and Losses	129.1			(34.4		)	(71.6		)
Unrecognized Postretirement Benefit Costs Arising During the Year	(21.6		)	10.3			19.0
Amortization of Unrecognized Postretirement Benefit Costs	(8.8		)	(5.7		)	(3.1		)
Net Unrecognized Postretirement Benefit Costs	(30.4		)	4.6			15.9
Foreign Currency Translation Adjustments	(0.1		)	(0.6		)	(0.1		)
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	(0.1		)	(0.6		)	(0.1		)
Income Tax Benefit (Expense)	98.6			(30.4		)	(55.8		)
Other Comprehensive Income (Loss)	(177.4		)	54.7			100.6
Total Comprehensive Income	$	40.3		$	158.1		$	175.1

See Accompanying Report of Independent Registered Public Accounting Firm.

SCH II-3

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF CASH FLOWS

(Dollars in Millions)

	For The Years Ended December 31,
	2013			2012			2011
Operating Activities:
Net Income	$	217.7		$	103.4		$	74.5
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
Equity in Net Income of Subsidiaries	(256.7		)	(137.8		)	(105.4		)
Cash Dividends from Subsidiaries	95.0			95.0			70.8
Cash Contribution to Defined Benefit Plan	(55.0		)	—			(32.2		)
Net Realized (Gains) Losses on Sales of Investments	(0.6		)	(0.3		)	0.2
Other, Net	67.3			8.5			35.5
Net Cash Provided by Operating Activities	67.7			68.8			43.4
Investing Activities:
Capital Distribution from Subsidiary	50.5			20.0			250.0
Sales, Paydowns and Maturities of Fixed Maturities	—			13.1			—
Purchases of Common Stocks from Subsidiary	—			—			(50.8		)
Change in Short-term Investments	52.7			(106.3		)	(35.4		)
Net Cash Provided (Used) by Investing Activities	103.2			(73.2		)	163.8
Financing Activities:
Notes Payable Proceeds:
Revolving Credit Agreement	—			—			95.0
Notes Payable Payments:
Revolving Credit Agreement	—			—			(95.0		)
Cash Dividends Paid	(54.9		)	(56.9		)	(58.2		)
Common Stock Repurchases	(100.4		)	(60.7		)	(27.4		)
Cash Exercise of Stock Options	1.7			1.3			0.2
Excess Tax Benefits on Share Based Awards	1.3			0.5			0.2
Net Cash Used by Financing Activities	(152.3		)	(115.8		)	(85.2		)
Increase (Decrease) in Cash	18.6			(120.2		)	122.0
Cash, Beginning of Year	2.2			122.4			0.4
Cash, End of Year	$	20.8		$	2.2		$	122.4

See Accompanying Report of Independent Registered Public Accounting Firm.

SCH II-4

SCHEDULE III

KEMPER CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION

(Dollars in Millions)

	Year Ended December 31,															December 31,
	Premiums		Premiums Written		Other Income		Net Investment Income		Insurance Claims and Policy- holders’ Benefits		Amortization Of Deferred Policy Acquisition Costs		Other Insurance Expenses			Deferred Policy Acquisition Costs		Insurance Reserves		Unearned Premiums
2013
Kemper Preferred	$	876.7	$	847.8	$	0.2	$	55.7	$	592.4	$	148.3	$	104.2		$	68.0	$	412.8	$	418.6
Kemper Specialty	392.8		383.1		0.3		21.8		314.4		54.3		33.9			16.5		196.4		119.6
Kemper Direct	123.4		111.3		—		13.4		62.5		4.6		30.1			1.2		133.4		32.1
Life and Health (1)	632.9		N/A		0.2		209.9		387.9		46.7		271.5			217.2		3,222.8		28.6
Other	—		N/A		0.1		13.9		—		—		(39.2		)	—		95.6		—
Total	$	2,025.8	N/A		$	0.8	$	314.7	$	1,357.2	$	253.9	$	400.5		$	302.9	$	4,061.0	$	598.9
2012
Kemper Preferred	$	879.4	$	891.7	$	0.4	$	45.0	$	709.0	$	147.8	$	96.0		$	72.7	$	452.3	$	447.6
Kemper Specialty	419.8		415.1		0.3		19.0		350.4		58.7		32.8			17.9		215.9		129.4
Kemper Direct	168.0		147.3		—		13.9		129.5		6.1		51.1			1.5		177.8		44.3
Life and Health (1)	639.9		N/A		0.1		204.3		393.1		44.4		266.4			211.3		3,168.6		29.6
Other	—		N/A		—		13.7		—		—		(31.0		)	—		117.6		—
Total	$	2,107.1	N/A		$	0.8	$	295.9	$	1,582.0	$	257.0	$	415.3		$	303.4	$	4,132.2	$	650.9
2011
Kemper Preferred	$	859.8	$	868.8	$	0.3	$	48.8	$	709.6	$	144.4	$	95.4
Kemper Specialty	445.2		438.2		0.5		22.8		352.8		62.6		28.9
Kemper Direct	222.7		209.0		0.1		17.4		197.6		8.8		67.5
Life and Health (1)	645.9		N/A		0.1		200.5		385.7		44.9		263.7
Other	—		N/A		—		8.5		—		—		(32.6		)
Total	$	2,173.6	N/A		$	1.0	$	298.0	$	1,645.7	$	260.7	$	422.9

(1) The Company’s Life and Health Insurance employee-agents also market certain property and casualty insurance products under common management. Accordingly, the Company includes the results of these property and casualty insurance products in its Life and Health Insurance segment.

See Accompanying Report of Independent Registered Public Accounting Firm.

SCH III-1

SCHEDULE IV

KEMPER CORPORATION

REINSURANCE SCHEDULE

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

(Dollars in Millions)

	Gross Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount		Percentage of Amount Assumed to Net
Year Ended December 31, 2013
Life Insurance in Force	$	21,006.0	$	576.4	$	229.5	$	20,659.1	1.1	%
Premiums:
Life Insurance	$	392.4	$	1.5	$	1.8	$	392.7	0.5	%
Accident and Health Insurance	161.9		0.6		0.1		161.4		0.1	%
Property and Liability Insurance	1,452.7		31.8		50.8		1,471.7		3.5	%
Total Premiums	$	2,007.0	$	33.9	$	52.7	$	2,025.8	2.6	%
Year Ended December 31, 2012
Life Insurance in Force	$	21,340.4	$	610.4	$	242.9	$	20,972.9	1.2	%
Premiums:
Life Insurance	$	392.8	$	1.4	$	2.0	$	393.4	0.5	%
Accident and Health Insurance	165.5		0.4		0.1		165.2		0.1	%
Property and Liability Insurance	1,547.3		40.7		41.9		1,548.5		2.7	%
Total Premiums	$	2,105.6	$	42.5	$	44.0	$	2,107.1	2.1	%
Year Ended December 31, 2011
Life Insurance in Force	$	21,627.8	$	662.0	$	256.9	$	21,222.7	1.2	%
Premiums:
Life Insurance	$	394.3	$	1.5	$	2.3	$	395.1	0.6	%
Accident and Health Insurance	166.5		0.3		0.1		166.3		0.1	%
Property and Liability Insurance	1,609.8		38.9		41.3		1,612.2		2.6	%
Total Premiums	$	2,170.6	$	40.7	$	43.7	$	2,173.6	2.0	%

See Accompanying Report of Independent Registered Public Accounting Firm.

SCH IV-1

Exhibit Index

The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers followed by an asterisk (*) indicate exhibits that are management contracts or compensatory plans or arrangements.

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith
3.1	Restated Certificate of Incorporation	10-Q	001-18298	3.1	October 31, 2013
3.2	Amended and Restated Bylaws of Kemper Corporation	10-Q	001-18298	3.1	May 2, 2013
4.1	Rights Agreement between Kemper and Computershare Trust Company, N.A. as successor Rights Agent, including the Form of Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, the Form of Rights Certificate and the Summary of Rights to Purchase Preferred Stock, dated as of August 4, 2004 and amended May 4, 2006 and October 9, 2006	10-Q	001-18298	4.1	August 3, 2009
4.2	Indenture dated as of June 26, 2002, by and between Kemper and The Bank of New York Trust Company, N.A., as successor trustee to BNY Midwest Trust Company, as Trustee	8-K	001-18298	4.1	May 14, 2012
4.3	Officers’ Certificate, including form of Senior Note with respect to Kemper’s 6.00% Senior Notes due May 15, 2017	10-Q	001-18298	4.3	May 7, 2012
4.4	Officers’ Certificate, including the form of Senior Note with respect to Kemper’s 6.00% Senior Notes due November 30, 2015	8-K	001-18298	4.2	November 24, 2010
10.1	Credit Agreement, dated as of March 7, 2012, by and among Kemper, the lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, swing line lender and issuing bank, and Wells Fargo Bank, National Association and Fifth Third Bank, as co-syndication agents, as amended by Amendment No. 1 to Credit Agreement effective as of December 31, 2013					X
10.2	Advances and Security Agreement and Addendum to Advances and Security Agreement, effective as of December 31, 2013, between Trinity Universal Insurance Company and the Federal Home Loan Bank of Dallas					X
10.3*	Kemper Pension Equalization Plan, as amended and restated effective August 25, 2011, as amended by Amendment No. 2 effective September 16, 2013					X
10.4*	Kemper Defined Contribution Supplemental Retirement Plan, as amended and restated effective August 25, 2011	10-Q	001-18298	10.15	November 2, 2011
10.5*	Kemper Non-Qualified Deferred Compensation Plan, as amended and restated effective January 1, 2014					X
10.6*	Kemper Severance Plan, as amended and restated effective August 25, 2011	10-Q	001-18298	10.18	November 2, 2011
10.7*	Kemper 1995 Non-Employee Director Stock Option Plan, as amended and restated effective February 3, 2009	10-K	001-18298	10.2	February 4, 2009

E-1

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith
10.8*	Form of Stock Option Agreement under the Kemper 1995 Non-Employee Director Stock Option Plan, as of February 1, 2006	10-Q	001-18298	10.6	May 4, 2011
10.9*	Form of Stock Option Agreement under the Kemper 1995 Non-Employee Director Stock Option Plan, as of February 3, 2009	10-K	001-18298	10.7	February 4, 2009
10.10*	Kemper 1997 Stock Option Plan, as amended and restated effective February 1, 2006	10-Q	001-18298	10.2	May 4, 2011
10.11*	Form of Stock Option and SAR Agreement under the Kemper 1997 Stock Option Plan, as of February 1, 2006	10-Q	001-18298	10.8	May 4, 2011
10.12*	Kemper 2002 Stock Option Plan, as amended and restated effective February 3, 2009	10-K	001-18298	10.4	February 4, 2009
10.13*	Form of Stock Option and SAR Agreement under the Kemper 2002 Stock Option Plan, as of February 1, 2006	10-Q	001-18298	10.9	May 4, 2011
10.14*	Form of Stock Option Agreement (including stock appreciation rights) under the Kemper 2002 Stock Option Plan, as of February 1, 2011	10-K	001-18298	10.9	February 3, 2011
10.15*	Kemper 2005 Restricted Stock and Restricted Stock Unit Plan, as amended and restated effective February 3, 2009	10-K	001-18298	10.5	February 4, 2009
10.16*	Form of Time-Vested Restricted Stock Award Agreement under the Kemper 2005 Restricted Stock and Restricted Stock Unit Plan, as of February 1, 2011	10-K	001-18298	10.10	February 3, 2011
10.17*	Form of Performance-Based Restricted Stock Award Agreement under the Kemper 2005 Restricted Stock and Restricted Stock Unit Plan, as of February 1, 2011	10-K	001-18298	10.11	February 3, 2011
10.18*	Kemper 2011 Omnibus Equity Plan, as amended and restated effective October 30, 2013	10-Q	001-18298	10.1	October 31, 2013
10.19*	Form of Stock Option and SAR Agreement for Non-Employee Directors under the Kemper 2011 Omnibus Equity Plan, as of August 25, 2011	10-K	001-18298	10.13	February 17, 2012
10.20*	Form of Time-Vested Restricted Stock Award Agreement under the Kemper 2011 Omnibus Equity Plan, as of February 4, 2013	10-K	001-18298	10.24	February 15, 2013
10.21*	Form of Performance-Based Restricted Stock Award Agreement under the Kemper 2011 Omnibus Equity Plan, as of February 4, 2013	10-K	001-18298	10.25	February 15, 2013
10.22*	Form of Stock Option and SAR Agreement for Non-Employee Directors under the Kemper 2011 Omnibus Equity Plan, as of May 1, 2013	10-Q	001-18298	10.1	May 2, 2013
10.23*	Form of Deferred Stock Unit Agreement for Non-Employee Directors under the Kemper 2011 Omnibus Equity Plan, as of May 1, 2013	10-Q	001-18298	10.2	May 2, 2013
10.24*	Form of Stock Option and SAR Agreement - Installment-Vesting form under the Kemper 2011 Omnibus Equity Plan, as of February 4, 2014					X

E-2

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith
10.25*	Form of Stock Option and SAR Agreement - Cliff-Vesting Form under the Kemper 2011 Omnibus Equity Plan as of February 4, 2014					X
10.26*	Form of Time-Vested Restricted Stock Unit Award Agreement - Installment-Vesting Form under the Kemper 2011 Omnibus Equity Plan as of February 4, 2014					X
10.27*	Form of Time-Vested Restricted Stock Unit Award Agreement - Cliff- Vesting Form under the Kemper 2011 Omnibus Equity Plan as of February 4, 2014					X
10.28*	Form of Performance-Based Restricted Stock Unit Award Agreement under the Kemper 2011 Omnibus Equity Plan, as of February 4, 2014					X
10.29*	Kemper 2009 Performance Incentive Plan, as amended and restated effective October 29, 2013 (for awards through February 3, 2014)	10-Q	001-18298	10.2	October 31, 2013
10.30*	Form of Annual Incentive Award Agreement under the Kemper 2009 Performance Incentive Plan, as of February 4, 2013	10-K	001-18298	10.20	February 15, 2013
10.31*	Form of Multi-Year Incentive Award Agreement under the Kemper 2009 Performance Incentive Plan, as of February 4, 2013	10-K	001-18298	10.21	February 15, 2013
10.32*	Kemper 2009 Performance Incentive Plan, as amended and restated effective February 4, 2014					X
10.33*	Form of Annual Incentive Award Agreement under the Kemper 2009 Performance Incentive Plan, as of February 4, 2014					X
10.34*	Form of Multi-Year Incentive Award Agreement under the Kemper 2009 Performance Incentive Plan, as of February 4, 2014					X
10.35*	Kemper Executive Performance Plan, effective February 4, 2014					X
10.36*	Kemper is a party to individual Indemnification and Expense Advancement Agreements with each of its directors, as amended and restated effective February 1, 2012	8-K	001-18298	10.25	February 6, 2012

E-3

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith
10.37*	Kemper is a party to individual severance agreements with the following officers:	10-Q	001-18298	10.17	November 2, 2011
	Donald G. Southwell (Chairman, President and Chief Executive Officer)
	John M. Boschelli (Vice President and Chief Investment Officer)
	Diana J. Hickert-Hill (Vice President, Investor Relations and Corporate Identity)
	Shekar G. Jannah (Vice President, Chief Risk Officer)
	Lisa M. King (Vice President, Human Resources)
	Edward J. Konar (Vice President)
	Denise I. Lynch (Vice President)
	Christopher L. Moses (Vice President and Treasurer)
	Scott Renwick (Senior Vice President and General Counsel)
	Richard Roeske (Vice President and Chief Accounting Officer)
	Dennis J. Sandelski (Vice President, Tax and Corporate Development)
	Frank J. Sodaro (Senior Vice President and Chief Financial Officer)
	Each of the foregoing agreements is identical except that the severance compensation multiple is 3.0 for Mr. Southwell and 2.0 for the other officers.
10.38*	Agreement dated March 18, 2013, with Dennis R. Vigneau, former Senior Vice President and Chief Financial Officer	10-Q	001-18298	10.3	May 2, 2013
12	Ratios of Earnings to Fixed Charges					X
21	Subsidiaries of Kemper Corporation					X
23	Consent of Deloitte & Touche LLP					X
24	Power of Attorney (included on the signature page hereof)					X
31.1	Certification of Chief Executive Officer Pursuant to SEC Rule 13a-14(a)					X
31.2	Certification of Chief Financial Officer Pursuant to SEC Rule 13a-14(a)					X
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32) of Regulation S-K)					X
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32) of Regulation S-K)					X

E-4

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith
101.1	XBRL Instance					X
101.2	XBRL Taxonomy Extension Schema Document					X
101.3	XBRL Taxonomy Extension Calculation Linkbase Document					X
101.4	XBRL Taxonomy Extension Label Linkbase Document					X
101.5	XBRL Taxonomy Extension Presentation Linkbase Document					X
101.6	XBRL Taxonomy Extension Definition Linkbase Document					X

E-5

EX-10.1

Exhibit 10.1

CREDIT AGREEMENT

dated as of

March 7, 2012

among

KEMPER CORPORATION,

The Lenders Party Hereto,

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,

WELLS FARGO BANK, NATIONAL ASSOCIATION

and

FIFTH THIRD BANK,

as Co-Syndication Agents

__________________________

J.P. MORGAN SECURITIES LLC

and

WELLS FARGO SECURITIES, LLC,
as Joint Bookrunners and Joint Lead Arrangers

TABLE OF CONTENTS

Page

ARTICLE I Definitions    1

SECTION 1.01. Defined Terms    1

SECTION 1.02. Classification of Loans and Borrowings    18

SECTION 1.03. Terms Generally    18

SECTION 1.04. Accounting Terms; GAAP    19

ARTICLE II The Credits    20

SECTION 2.01. Commitments    20

SECTION 2.02. Loans and Borrowings    20

SECTION 2.03. Requests for Revolving Borrowings    20

SECTION 2.04. Swingline Loans    21

SECTION 2.05. Letters of Credit    22

SECTION 2.06. Funding of Borrowings    27

SECTION 2.07. Interest Elections    27

SECTION 2.08. Termination and Reduction of Commitments; Increase in Commitments    29

SECTION 2.09. Repayment of Loans; Evidence of Debt    30

SECTION 2.10. Prepayment of Loans    31

SECTION 2.11. Fees    31

SECTION 2.12. Interest    32

SECTION 2.13. Alternate Rate of Interest    33

SECTION 2.14. Increased Costs    34

SECTION 2.15. Break Funding Payments    35

SECTION 2.16. Taxes    36

SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs    39

SECTION 2.18. Mitigation Obligations; Replacement of Lenders.    41

SECTION 2.19. Defaulting Lenders.    42

ARTICLE III Representations and Warranties    44

SECTION 3.01. Organization; Power; Qualification    44

SECTION 3.02. Authorization; Enforceability    44

SECTION 3.03. Subsidiaries    44

SECTION 3.04. Compliance with Laws    45

SECTION 3.05. Necessary Authorizations    45

SECTION 3.06. Title to Properties    45

SECTION 3.07. Taxes    45

SECTION 3.08. Financial Statements    45

SECTION 3.09. No Material Adverse Change    45

SECTION 3.10. Guaranties    46

SECTION 3.11. Litigation    46

SECTION 3.12. ERISA    46

SECTION 3.13. Compliance with Law    46

SECTION 3.14. Accuracy and Completeness of Information    46

SECTION 3.15. Compliance with Regulations T, U and X    46

SECTION 3.16. Broker's or Finder's Commissions    46

SECTION 3.17. Investment Company Act    46

SECTION 3.18. Insurance Licenses    46

SECTION 3.19. Foreign Assets Control Regulations, etc.    46

ARTICLE IV Conditions    47

SECTION 4.01. Effective Date    47

SECTION 4.02. Each Credit Event    49

ARTICLE V Affirmative Covenants    50

SECTION 5.01. Preservation of Existence and Similar Matters    50

SECTION 5.02. Compliance with Applicable Law    50

SECTION 5.03. Maintenance of Properties    50

SECTION 5.04. Accounting Methods and Financial Records    50

SECTION 5.05. Payment of Taxes and Claims    51

SECTION 5.06. Visits and Inspections    51

SECTION 5.07. Use of Proceeds    51

SECTION 5.08. Further Assurances    51

SECTION 5.09. Quarterly Financial Statements of the Borrower    51

SECTION 5.10. Annual Financial Statements of the Borrower    51

SECTION 5.11. Additional Reporting Requirements    51

SECTION 5.12. Performance Certificates    51

SECTION 5.13. Copies of Other Reports    51

SECTION 5.14. Notice of Litigation and Other Matters    51

ARTICLE VI Negative Covenants    55

SECTION 6.01. Restricted Payments and Restricted Purchases    55

SECTION 6.02. Limitations on Indebtedness of Subsidiaries of Borrower    55

SECTION 6.03. Limitation on Liens.    55

SECTION 6.04. Amendment and Waiver    55

SECTION 6.05. Liquidation; Merger; Disposition of Assets    56

SECTION 6.06. Borrower’s Maximum Leverage    56

SECTION 6.07. Borrower’s Minimum Consolidated Net Worth    56

SECTION 6.08. Risk-Based Capital Ratio    57

SECTION 6.09. Affiliate Transactions    57

SECTION 6.10. Other Indebtedness    57

SECTION 6.11. Restrictions on Upstream Dividends by Subsidiaries    57

SECTION 6.12. Business of the Borrower    57

ARTICLE VII Events of Default    58

ARTICLE VIII The Administrative Agent    61

ARTICLE IX Miscellaneous    63

SECTION 9.01. Notices    63

SECTION 9.02. Waivers; Amendments    64

SECTION 9.03. Expenses; Indemnity; Damage Waiver    65

SECTION 9.04. Successors and Assigns    67

SECTION 9.05. Survival    70

SECTION 9.06. Counterparts; Integration; Effectiveness    71

SECTION 9.07. Severability    71

SECTION 9.08. Right of Setoff    71

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process    71

SECTION 9.10. WAIVER OF JURY TRIAL    72

SECTION 9.11. Headings    72

SECTION 9.12. Confidentiality    72

SECTION 9.13. Interest Rate Limitation    73

SECTION 9.14. USA PATRIOT Act    73

SECTION 9.15. No Fiduciary Duty    73

SCHEDULES:

Schedule 1.01 -- Pricing Schedule
Schedule 2.01 – CommitmentsSchedule 3.03 – Subsidiaries

Schedule 6.02 -- Existing Indebtedness

Schedule 6.03 – Existing Liens

EXHIBITS:

Exhibit A -- Form of Assignment and Assumption

Exhibit B – Form of Borrowing Request

Exhibit C – Form of Promissory Note

Exhibit D-1 – U.S. Tax Compliance Certificate (For Non-U.S. Lenders that are not Partnerships for U.S. Federal Income Tax Purposes)

Exhibit D-2 – U.S. Tax Compliance Certificate (For Non-U.S. Lenders that are Partnerships for U.S. Federal Income Tax Purposes)

Exhibit D-3 – U.S. Tax Compliance Certificate (For Non-U.S. Participants that are not Partnerships for U.S. Federal Income Tax Purposes)

Exhibit D-4 – U.S. Tax Compliance Certificate (For Non-U.S. Participants that are Partnerships for U.S. Federal Income Tax Purposes)

CREDIT AGREEMENT dated as of March 7, 2012, among KEMPER CORPORATION, a Delaware corporation, the LENDERS party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent, and FIFTH THIRD BANK, as Co-Syndication Agent.

The parties hereto agree as follows:

ARTICLE IDefinitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“Act” has the meaning set forth in Section 9.14.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise; provided, that for the purposes of Section 6.09 and the definition of “Change in Control,” an “Affiliate” shall mean any Person (other than a Person whose sole relationship with any designated Person is as an employee or director) directly or indirectly controlling, controlled by, or under common control with the designated Person, with the term “control” including, without limitation, (a) the direct or indirect beneficial ownership of more than thirty percent (30%) of the voting securities or voting equity or partnership interests, of such Person or (b) the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise, and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing. Notwithstanding the foregoing, no member of the Singleton Family (other than an entity which is both a member of the Singleton Family and a Disclosed Operating Company) shall be considered an Affiliate of the Borrower so long as the Singleton Family owns collectively (either directly or

1

indirectly) less than 30% of the securities of the Borrower having ordinary voting power for the election of directors of the Borrower.

“Agreement” means this Credit Agreement.

“Alternate Base Rate” means the highest of (i) the Prime Rate, (ii) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (iii) the Adjusted LIBO Rate for a one month interest period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 (or on any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

“Annual Statement” means the annual statutory financial statement of each of Trinity and United Insurance required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by the applicable jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith.

“Applicable Law” means, with respect to any Person, all provisions of constitutions, statutes, rules, regulations and orders of governmental bodies or regulatory agencies applicable to such Person and its properties, including, without limiting the foregoing, all orders and decrees of all courts and arbitrators binding on such Person in Proceedings or actions to which the Person in question is a party.

“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment; provided that in the case of Section 2.19 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.

“Applicable Rate” means, for any day, with respect to any Eurodollar Loan or ABR Loan or with respect to the facility fees payable hereunder, the applicable rate per annum set forth on Schedule 1.01 under the caption “Eurodollar Rate”, “ABR Rate” or “Facility Fee Rate”, as the case may be, based upon the Leverage Ratio.

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the

2

ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Government Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Government Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Basel III” means, collectively, those certain Consultative Documents issued by the Basel Committee of Banking Supervisors of the Bank for International Settlements entitled “Strengthening the Resilience of the Banking Sector” issued December 17, 2009, “International Framework for Liquidity Risk Measurement, Standards and Monitoring” issued December 17, 2009, “Countercyclical Capital Buffer Proposal” issued July 16, 2010 and “Capitalization of Bank Exposures to Central Counterparties” issued December 20, 2010.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” means Kemper Corporation, a Delaware corporation.

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect or (b) a Swingline Loan.

“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall

3

also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“Capitalized Lease” of a Person means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.

“Capitalized Lease Obligations” means that portion of any obligation of a Person as lessee under a lease which at the time would be required to be capitalized on the balance sheet of such lessee in accordance with GAAP.

“Change in Control” means (a) the direct or indirect ownership by any Person, on a combined basis with any Affiliates of such Person, of 40% or more of the existing voting stock of the Borrower; or (b) the failure of the Borrower to own, free and clear of Liens or other encumbrances (other than Liens specified in clauses (a), (b)(ii), (e) and (h) of the definition of Permitted Liens), 100% of the outstanding shares of voting stock of Trinity and United Insurance on a fully diluted basis.

“Change in Law” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rules, guideline, requirement or directive (whether or not having the force of law) by any Governmental Authority; provided however, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law” regardless of the date enacted, adopted, issued or implemented.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders’ Commitments is $325,000,000.

4

“Company Action Level” means the designation given by either the National Association of Insurance Commissioners or the state department of insurance of the state of domicile of the insurance company in question of a level or range of levels of Risk-Based Capital Ratios as the Risk-Based Capital Ratio or Ratios, as applicable, of an insurance company which permit a state insurance department or commission (or other governmental entity) to require such insurance company (or which otherwise cause such insurance company to be required) to file a financial plan identifying problem conditions and a proposal of corrective or remedial actions with any state insurance department or commission (or other governmental entity) pursuant to rules, regulations or guidelines adopted by the National Association of Insurance Commissioners or any applicable state department of insurance. In the event there is no such designation given by the National Association of Insurance Commissioners or any applicable state department of insurance pursuant to such rules, regulations or guidelines, “Company Action Level” shall be deemed to mean any level or range of levels of Risk-Based Capital Ratios of an insurance company which permit a state insurance department or commission (or other governmental entity) to take any corrective or remedial actions with respect to such insurance company pursuant to such rules, regulations or guidelines.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“Consolidated Net Income” means, for any computation period, with respect to the Borrower on a consolidated basis with its Subsidiaries, cumulative net income earned during such period as determined in accordance with GAAP.

“Consolidated Net Worth” means, at any date of determination, the consolidated shareholders' equity of the Borrower and its Subsidiaries (excluding treasury shares), determined as of such date in accordance with GAAP; provided, however, that the effect of the unrealized gain or loss on fixed maturities, as determined pursuant to ASC 320, shall be excluded when computing Consolidated Net Worth.    

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Credit Documents” means this Agreement and, after the execution and delivery thereof pursuant to the terms of this Agreement, each promissory note, if any, delivered pursuant to Section 2.09(e), the Letters of Credit, each amendment or waiver hereof or hereunder and each other document or agreement executed and delivered from time to time by the Borrower in connection with or pursuant to the terms of this Agreement or any other Credit Document.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

5

“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swingline Loans or (iii) pay over to any Lender Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Lender Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Lender Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Lender Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

“Disclosed Operating Company” means any Person which (a) is required to publicly disclose its ownership (beneficial or otherwise) of shares of the Borrower pursuant to Rules 13(d) or 13(g) of the General Rules and Regulations under the Securities Exchange Act of 1934 and (b) owns or operates any business or is a Person whose sole asset is the equity securities of another Person which owns or operates any business.

“dollars” or “$” refers to lawful money of the United States of America.

“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Government Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law, (ii) in connection with any Hazardous Materials or any actual or alleged Hazardous Materials Activity or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all current or future statutes, ordinances, orders, rules, regulations, guidance documents, judgments, Governmental Authorizations, or any other requirements of any Government Authority relating to (i) environmental matters, including those relating to any Hazardous Materials Activity, (ii) the generation, use, storage, transportation or disposal of Hazardous Materials or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to the Borrower or any of its Subsidiaries or any of their respective properties.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

“ERISA Affiliate” means any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Borrower, or is under common control (within the meaning of Section 414(c) of the Code) with the Borrower.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.18(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.16, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.16(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA.

“Existing Credit Agreement” means that certain Credit Agreement dated as of October 30, 2009 by and among the Borrower, the Subsidiaries thereof party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received

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by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Financial Officer” means the chief financial officer, principal accounting officer or treasurer of the Borrower.

“Fireside” means Fireside Securities Corporation, a California corporation and a Wholly-Owned Subsidiary of the Borrower.

“Fireside Bank” means Fireside Bank, a California corporation and a Wholly-Owned Subsidiary of the Borrower.

“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender, with respect to such Borrower, that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender, with respect to such Borrower, that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.

“GAAP” means generally accepted accounting principles in the United States of America.

“Government Authority” means the government of the United States or any other nation, or any state, regional or local political subdivision or department thereof, and any other governmental or regulatory agency, authority, body, commission, central bank, board, bureau, organ, court, instrumentality or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, in each case whether federal, state, local or foreign (including supra-national bodies such as the European Union or the European Central Bank).

“Governmental Authorization” means any permit, license, registration, authorization, plan, directive, accreditation, consent, order or consent decree of or from, or notice to, any Government Authority.

“Hazardous Materials” means (i) any chemical, material or substance at any time defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous waste”, “acutely hazardous waste”, “radioactive waste”, “biohazardous waste”, “pollutant”, “toxic pollutant”, “contaminant”, “restricted hazardous waste”, “infectious waste”, “toxic substances”, or any other term or expression intended to define, list or classify substances by reason of properties harmful to health, safety or the indoor or outdoor environment (including harmful properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, “TCLP toxicity” or “EP toxicity” or words of similar import under any applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (iv) any flammable substances or explosives; (v) any radioactive materials; (vi) any asbestos-containing materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which contains any oil or dielectric fluid containing polychlorinated biphenyls; (ix) pesticides; and (x) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Government Authority or which may or could pose a

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hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any facility of the Borrower or any of its Subsidiaries or to the indoor or outdoor environment.

“Hazardous Materials Activity” means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, release, threatened release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

“Indebtedness” means, with respect to any Person, without duplication, the obligations of such Person of the types described in clauses (a) through (f) in the definition of Total Debt.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Credit Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Ineligible Institution” means (a) the Borrower or any of its Affiliates, (b) a natural person or (c) a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof; provided that, such holding company, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Loans or Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consists of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business.

“Insurance Subsidiary” means any Subsidiary which is engaged in the insurance business.

“Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.07.

“Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next

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succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“IRS” means the United States Internal Revenue Service.

“Issuing Bank” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

“Lender Party” means the Administrative Agent, the Issuing Bank, the Swingline Lender and each other Lender.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to (i) an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption, and (ii) Section 2.08(d). Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

“Leverage Ratio” has the meaning set forth in Section 6.06.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on the Reuters BBA Libor Rates Page 3750 (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such

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Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

“License” means any license, certificate of authenticity, permit or other authorization which is required to be obtained from a Government Authority in connection with the operation, ownership or transaction of insurance business.

“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Margin Stock” has the meaning set forth in Section 3.15.

“Material Portion” means the amount of property or other assets owned, leased or operated by the Borrower and its Subsidiaries which represents more than 10% of the consolidated assets of the Borrower and its Subsidiaries as would be shown in the most recent publicly filed consolidated financial statements of the Borrower and its Subsidiaries.

“Materially Adverse Effect” means a material adverse effect on (a) the business, properties or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its material obligations under the Credit Documents, or (c) the validity or enforceability of any of the Credit Documents or the rights or remedies of the Administrative Agent or the Lenders thereunder.

“Maturity Date” means March 7, 2016.

“Maximum Rate” has the meaning set forth in Section 9.13.

“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been made by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.

“Necessary Authorizations” means all authorizations, consents, permits, approvals, licenses, and exemptions from, and all filings and registrations with, and all reports to, any governmental or other regulatory authority whether federal, state, or local, and all agencies thereof, necessary for the conduct of the businesses and the ownership (or lease) of the properties and assets of the Borrower or any of its Subsidiaries.

“One East Wacker Note” means that certain Secured Promissory Note, dated as of December 29, 2003, in the original principal amount of $45,000,000, made by One East Wacker LLC, held by and payable to the order of Trinity as of the date hereof, as such note may

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be amended, modified, supplemented or restated from time to time and as such note may be (a) endorsed, assigned or otherwise delivered from time to time to any Wholly-Owned Subsidiary of the Borrower or (b) refinanced by another note made by the Borrower or a domestic Wholly-Owned Subsidiary thereof.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Taxes (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.18).

“Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

“Participant” has the meaning set forth in Section 9.04.

“Participant Register” has the meaning set forth in Section 9.04(c).

“Permitted Lien” means, as applied to any Person:

(a)    Any Lien in favor of the Administrative Agent and the Lenders given to secure the Obligations;

(b)    (i) Liens on real estate for real estate taxes not yet delinquent and (ii) Liens for taxes, assessments, governmental charges, levies, or claims not yet delinquent or the non payment of which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been set aside on such Person’s books, but only so long as no foreclosure, distraint, sale, or similar Proceedings have been commenced with respect thereto and remain unstayed for a period of thirty (30) days after their commencement;

(c)    (i) Statutory Liens of landlords and (ii) Liens of carriers, warehousemen, mechanics, laborers, and materialmen incurred in the ordinary course of business for sums which are not overdue for a period of more than 60 days or are being diligently contested in good faith, if such reserve or appropriate provision, if any, as shall be required by GAAP shall have been made therefor;

(d)    Liens incurred and deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other types of social security benefits or to secure the performance of bids, tenders, sales, contracts (other than for the

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repayment of borrowed money), leases and surety, appeal, customs or performance bonds and deposits to secure letters of credit issued to support or otherwise provided in connection with such matters;

(e)    Limitations on the transfer of assets imposed by any federal, state or local statute, regulation or ordinance applicable to such Person;

(f)    Easements, rights-of-way, restrictions, and other similar encumbrances on the use of real property which do not interfere with the ordinary conduct of the business of such Person, or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness or other extensions of credit and which do not in the aggregate materially detract from the value of such properties or materially impair their use in the operation of the business of such Person;

(g)    Liens securing Indebtedness of Subsidiaries of the Borrower in an aggregate principal amount not to exceed the amount permitted pursuant to subsection 6.02 hereof;

(h)    Judgment Liens against assets of the Borrower and its Subsidiaries arising in connection with judicial Proceedings which do not secure an amount in excess of $75,000,000;

(i)    Liens securing Indebtedness of the Borrower to the extent that such Indebtedness is ratably secured with the Obligations and ranks pari passu at all times with the Obligations;

(j)    Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection;

(k)    Normal and customary rights of setoff upon deposits of cash in favor of banks or other depositary institutions;

(l)    Liens of sellers of goods to the Borrower or any of its Subsidiaries arising under Article 2 of the Uniform Commercial Code or similar provisions of applicable law in the ordinary course of business;

(m)    Liens in favor of the Borrower granted by a Subsidiary of the Borrower;

(n)    Liens on assets acquired after the date hereof securing Indebtedness incurred to finance the acquisition, construction or improvement of such assets (or, in the case of improvements, constructed) by the Borrower or any Subsidiary thereof (including Liens with respect to warranty claims, indemnity rights or other contractual rights under the purchase agreements relating thereto and all proceeds of the foregoing); provided that (i) such Liens only secure Indebtedness not prohibited by Section 6.02 hereof, (ii) such Liens are incurred, and the Indebtedness secured thereby is created, within 180 days after such acquisition, construction or improvement is completed, (iii) the Indebtedness secured thereby does not exceed the cost of such assets at the time of such acquisition, construction or improvement, and (iv) such Liens do not apply to any other property or assets of the Borrower or any Subsidiary thereof;

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(o)    Liens against the assets of the Borrower or its Subsidiaries subject to the terms of securities lending transactions in the ordinary course of business;

(p)    Liens granted in connection with a Permitted Securitization; provided, that such Liens do not encumber any property other than the Margin Stock, receivables or other insurance company assets made subject to such transaction and the proceeds thereof;

(q)    Capitalized Lease Obligations of the Borrower in an aggregate amount outstanding from time to time not to exceed $25,000,000;

(r)    Liens on the assets of Borrower’s Subsidiaries as described on Schedule 6.03 hereto;

(s)    Liens on Margin Stock;

(t)    Liens on the facility located at One East Wacker Drive, Chicago, Illinois securing the Indebtedness evidenced by the One East Wacker Note; and

(u)    other Liens on real or personal property (other than Liens on any equity securities issued by Trinity or United Insurance) of the Borrower or any Subsidiary of the Borrower securing obligations of the Borrower or any Subsidiary of the Borrower so long as the aggregate amount of the obligations secured thereby does not exceed, in the aggregate, $25,000,000 at any one time outstanding; provided, that the obligations of Subsidiaries of the Borrower secured by Liens permitted by this clause (u) shall not exceed $5,000,000 in the aggregate at any one time outstanding.

“Permitted Securitization” means the securitization or similar non-recourse financing of receivables, insurance policies or other assets, in each case by the Borrower or any of its Subsidiaries through a transfer, sale or other disposition (including the granting of a security interest) thereof by the Borrower or such Subsidiary to one or more direct or indirect special purpose Subsidiaries of the Borrower.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Government Authority or other entity.

“Plan” means an employee benefit plan within the meaning of Section 3(3) of ERISA maintained by the Borrower or any ERISA Affiliate for employees of the Borrower or any ERISA Affiliate and with respect to which the Borrower could reasonably be expected to have any liability.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its office located at 270 Park Avenue, New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Proceedings” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration.

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“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender and (c) the Issuing Bank.

“Register” has the meaning set forth in Section 9.04.

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Reportable Event” is defined in Section 4043(c) of ERISA.

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 66-2/3% of the sum of the total Revolving Credit Exposures and unused Commitments at such time.

“Reserve National” means Reserve National Insurance Company, an Oklahoma corporation and a Wholly-Owned Subsidiary of the Borrower.

“Restricted Payment” means any direct or indirect distribution, dividend or other payment to any Person on account of any capital stock or other equity securities of the Borrower, or in connection with any tax sharing agreement (other than tax sharing agreements having the Borrower or one of its Subsidiaries as the tax paying entity under such agreement).

“Restricted Purchase” means any payment on account of the purchase, redemption or other acquisition or retirement of any capital stock or other securities of, the Borrower.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and Swingline Exposure at such time.

“Revolving Loan” means a Loan made pursuant to Section 2.01.

“Risk-Based Capital Ratio” means the risk-based capital ratio of any applicable Person adopted from time to time by the National Association of Insurance Commissioners or by the state department of insurance of the state of domicile of the insurance company in question. In the event that there is a conflict between the risk-based capital ratio formulae adopted by the National Association of Insurance Commissioners and any applicable state department of insurance, the formula adopted by such state department of insurance shall be the applicable formula for purposes of this Agreement.

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“SAP” means, with respect to any insurance company, statutory accounting practices prescribed or permitted by the National Association of Insurance Commissioners and, as applicable, the state department of insurance of the state of domicile of such insurance company for the preparation of financial statements and reports by insurance companies of the same type as such insurance company.

“Singleton Family” means (a) Christina Singleton Mednick and William W. Singleton (as identified in that certain Schedule 13D/A filed with the United States Securities and Exchange Commission on July 14, 2010 with respect to the Borrower by the Singleton Group LLC (the “Singletons”)), (b) all descendants of the Singletons and the spouse of any such descendant (the “Singleton Descendants”), (c) the holders of record from time to time of membership interests in Singleton Group, LLC and the spouse of any such holder (the “Singleton Group Members”), (d) all descendants of the Singleton Group Members and the spouse of any such descendant (the “Singleton Group Descendants” and, together with the Singletons, the Singleton Descendants and the Singleton Group Members, the “Singleton Persons”), (e) all trusts of which a Singleton Person is a beneficiary or trustee and the trustees of any such trust, (f) the estate of any Singleton Person, (g) all partnerships, limited liability companies and other entities in which any one or more of the class consisting of the Persons listed in the preceding clauses (a) through (f) shall have in excess of fifty percent (50%) of the total voting power and the managers of any such entities (in their capacity as such), and (h) the Affiliates and Associates of the Persons identified in the foregoing clauses (a) through (g). For purposes of this definition, a Person shall be treated as holding voting power or an equity interest to the extent such power or interest is held directly or indirectly through a corporation, partnership, estate, trust or other entity. For purposes of this definition “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentage shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for prorations, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation unless available to all of the Lenders. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than

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50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower.

“Surplus Notes” means unsecured notes or debentures or contribution certificates issued by an insurance company that (i) are subordinated to policyholders and senior indebtedness of such insurance company, (ii) are subordinated to the indebtedness under this Agreement, on terms and conditions reasonably satisfactory to the Administrative Agent, (iii) require the prior approval of the insurance department of the issuer’s state of domicile for the payment of principal or interest, and (iv) receive equity treatment for all or a portion of the principal amount thereof under SAP.

“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

“Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans hereunder.

“Swingline Loan” means a Loan made pursuant to Section 2.04.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Total Capitalization” means as of any date, the sum of (a) the Borrower’s Consolidated Net Worth and (b) without duplication, Total Debt.

“Total Debt” means, with respect to the Borrower and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP, (a) indebtedness created, issued or incurred by any such Person for borrowed money (whether by loan or the issuance and sale of debt securities), but excluding customer deposits, investment accounts and certificates and non-recourse indebtedness incurred in connection with Permitted Securitizations; (b) obligations of any such Person to pay the deferred purchase or acquisition price of property or services, other than (i) trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business, (ii) earn-out obligations contingent upon performance of an acquired business, except to the extent such obligations would be required to be reflected on a consolidated balance sheet of Borrower prepared in accordance with GAAP, (iii) accruals for payroll and other liabilities accrued in the ordinary course of business and (iv) accruals in respect of obligations arising under deferred compensation plans; (c) indebtedness of others secured by a Lien on the property of any such Person, whether or not the respective indebtedness so secured has been assumed by any such Person; (d) reimbursement obligations of any such Person in respect of amounts drawn on any letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of any such Person; (e) Capitalized Lease Obligations of any such Person; and (f) indebtedness of others of the types described in clauses (a), (b), (d) and (e) of this definition of Total Debt guaranteed by any such

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Person, or obligations incurred by direct or indirect special purpose Subsidiaries of the Borrower in connection with any Permitted Securitization guaranteed by any such Person.

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

“Trinity” means Trinity Universal Insurance Company, a Texas corporation and a Wholly-Owned Subsidiary of the Borrower.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“United Insurance” means United Insurance Company of America, an Illinois corporation and a Wholly-Owned Subsidiary of the Borrower.

“Unitrin Direct” means the business of the Borrower or its Subsidiaries which markets policies in respect of automobile and homeowners insurance directly to consumers primarily through direct mail, websites and web insurance portals, "click- throughs," radio advertising and employee-sponsored voluntary benefit programs.

“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.16(f)(ii)(B)(3).

“Wholly-Owned Subsidiary” of a Person means (a) any subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (b) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled (other than in the case of Foreign Subsidiaries, directors’ qualifying shares and/or other nominal amounts of shares required to be held by Persons other than the Borrower and its Subsidiaries under applicable law).

SECTION 1.02.Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

SECTION 1.03.Terms Generally. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The

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words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, and (f) whenever any deadline for the delivery of any notice, report or document falls on a day other than a Business Day, such deadline shall be extended to the next succeeding Business Day.

SECTION 1.04.Accounting Terms; GAAP and SAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP or SAP, as applicable, in each case as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or SAP, as applicable, or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or SAP, as applicable, or in the application thereof, then the parties hereto shall negotiate in good faith to amend such provision in order to preserve the original intent thereof and until then such provision shall be interpreted on the basis of GAAP or SAP, as applicable, as in effect and applied immediately before such change shall have become effective (during which time the Borrower shall provide reconciliation statements together with its financial statements to the extent applicable) until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or update having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein, or (ii) any changes in accounting for leases pursuant to SAP or GAAP (including from the implementation of proposed Accounting Standards Update Leases (Topic 840) issued August 17, 2010, or any successor or related proposal); provided that following the occurrence of any changes described in clause (ii) above, to the extent applicable, the Borrower shall deliver to the Administrative Agent, together with each certificate delivered pursuant to Section 5.12 hereof, a schedule describing the effect of clause (ii) on the leases of the Borrower and its Subsidiaries.

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ARTICLE II

The Credits

SECTION 2.01.Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the sum of the total Revolving Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

SECTION 2.02.Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b)Subject to Section 2.13, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Subject to Section 2.18(a), to the extent applicable, each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c)At the commencement of each Interest Period for any Eurodollar Revolving Borrowing (other than conversions or continuations of existing Borrowings), such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR Revolving Borrowing is made (other than conversions or continuations of existing Borrowings), such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $500,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of seven Eurodollar Revolving Borrowings outstanding.

(d)Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

SECTION 2.03.Requests for Revolving Borrowings. To request a Revolving Borrowing (other than a Swingline Loan), the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,

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New York City time, three Business Days (such three Business Days to include the date of notice) before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or electronic mail to the Administrative Agent of a written Borrowing Request in the form of Exhibit B attached hereto and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i)the aggregate amount of the requested Borrowing;

(ii)the date of such Borrowing, which shall be a Business Day;

(iii)whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv)in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

(v)the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.

If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04.Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $20,000,000 or (ii) the sum of the total Revolving Credit Exposures exceeding the total Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

(b)To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by electronic mail), not later than 1:00 p.m., New York City time, on the day of a requested Swingline Loan funding. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the

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reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.

(c)The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatismutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

SECTION 2.05.Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit as the applicant thereof, for the support of its or its Subsidiaries obligations, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b)Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an

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outstanding Letter of Credit (other than an automatic renewal permitted pursuant to paragraph (k) of this Section)), the Borrower shall hand deliver (or transmit by electronic mail) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension, but in any event no less than three Business Days or such lesser period to which the Issuing Bank may consent) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $25,000,000 and (ii) the sum of the total Revolving Credit Exposures shall not exceed the total Commitments.

(c)Expiration Date. Each Letter of Credit shall expire (or be subject to termination by notice from the Issuing Bank to the beneficiary thereof) at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided that any Letter of Credit may expire on a date that is later than the date referred to in clause (ii) subject to paragraphs (j) and (k) of this Section.

(d)Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e)Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the Borrower shall have

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received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then (subject to paragraph (h) below) not later than 12:00 noon, New York City time, on the Business Day immediately following the day that the Borrower receives such notice; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatismutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f)Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent

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permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g)Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by electronic mail) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement.

(h)Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i)Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

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(j)Cash Collateralization. If (i) any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 66-2/3% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus any unpaid interest that accrued through such date in respect of unreimbursed LC Disbursements; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (g) or (h) of Article VII or (ii) any Letter of Credit shall have an expiration date after the Maturity Date, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to 105% of the face amount of such Letter of Credit on the date five Business Days prior to the Maturity Date. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing greater than 66-2/3% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder whether as a result of the occurrence of an Event of Default, pursuant to Section 2.09(f) hereof or otherwise, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default or other conditions giving rise to the cash collateral requirement have been cured or waived.

(k)Evergreen Letters of Credit. If the Borrower so requests in any applicable Letter of Credit application, a Letter of Credit may contain automatic extension provisions; provided that any such Letter of Credit must permit the Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing Bank, the Borrower shall not be required to make a specific request to the Issuing Bank for any such extension. Once such a Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date in accordance with paragraph (c) of this Section; provided, however, that the Issuing Bank shall not permit any such extension if (i) the Issuing Bank has determined that it would not be permitted or would have no obligation at such time to issue such Letter of Credit in its revised form (as extended) under the terms

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hereof, or (ii) it has received notice on or before the day that is five Business Days before the required notice date from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and directing the Issuing Bank not to permit such extension, and the Administrative Agent has determined, in good faith, that such condition or conditions have not, in fact, been satisfied.

SECTION 2.06.Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the Issuing Bank.

(b)Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.07.Interest Elections. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

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(b)To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or electronic mail to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

(c)Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i)the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii)the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv)if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d)Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

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SECTION 2.08.Termination and Reduction of Commitments; Increase in Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.

(b)The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the sum of the Revolving Credit Exposures would exceed the total Commitments.

(c)The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or the consummation of specified transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

(d)On up to five occasions after the Effective Date, the Borrower at its option may, from time to time, seek to increase the total Commitments by up to an aggregate amount of $75,000,000 (resulting in maximum total Commitments of $400,000,000) upon at least three (3) Business Days’ prior written notice to the Administrative Agent, which notice shall specify the amount of any such increase (which shall not be less than $10,000,000) and shall certify that no Default has occurred and is continuing. After delivery of such notice, the Administrative Agent or the Borrower, in consultation with the Administrative Agent, may offer the increase (which may be declined by any Lender in its sole and absolute discretion) in the total Commitments on either a ratable basis to the Lenders or on a non pro-rata basis to one or more lenders and/or to other lenders or entities reasonably acceptable to the Administrative Agent and the Borrower. No increase in the total Commitments shall become effective until the Lenders (whether existing Lenders or new lenders) extending such incremental Commitment amount and the Borrower shall have delivered to the Administrative Agent a document in form and substance reasonably satisfactory to the Administrative Agent pursuant to which (i) any such existing Lender agrees to the amount of its Commitment increase, (ii) any such new Lender agrees to its Commitment amount and agrees to assume and accept the obligations and rights of a Lender hereunder, (iii) the Borrower accepts such incremental Commitments, (iv) the effective date of any increase in the Commitments is specified and (v) the Borrower certifies that on such date the conditions for a new Loan set forth in Section 4.02 are satisfied. Upon the effectiveness of any increase in the total Commitments pursuant hereto, (i) each Lender (new or existing) shall be deemed to have accepted an assignment from the existing Lenders, and the existing Lenders shall be deemed to have made an assignment to each new or existing Lender accepting a new or increased Commitment, of an interest in each then outstanding Revolving Loan (in each case, on

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the terms and conditions set forth in the Assignment and Assumption) and (ii) the Swingline Exposure and LC Exposure of the existing and new Lenders shall be automatically adjusted such that, after giving effect to such assignments and adjustments, all Revolving Credit Exposure hereunder is held ratably by the Lenders in proportion to their respective Commitments. Assignments pursuant to the preceding sentence shall be made in exchange for, and substantially contemporaneously with the payment to the assigning Lenders of, the principal amount assigned plus accrued and unpaid interest and facility and Letter of Credit fees. Payments received by assigning Lenders pursuant to this Section in respect of the principal amount of any Eurodollar Loan shall, for purposes of Section 2.15 be deemed prepayments of such Loan. Any increase of the total Commitments pursuant to this Section shall be subject to receipt by the Administrative Agent from the Borrower of such supplemental opinions, resolutions, certificates and other documents as the Administrative Agent may reasonably request. No consent of any Lender (other than the Lenders agreeing to new or increased Commitments) shall be required for any incremental Commitment provided or Loan made pursuant to this Section 2.08(d).

SECTION 2.09.Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is either the 15th or last day of a calendar month; provided that such date is at least two Business Days after such Swingline Loan is made; providedfurther that on each date that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding.

(b)Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c)The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d)The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be primafacie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(e)Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in the form of note attached hereto as Exhibit C. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be

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represented by one or more promissory notes in such form payable to the payee named therein and its registered assigns.

(f)If at any time the aggregate Revolving Credit Exposure of the Lenders exceeds the aggregate Commitments of the Lenders, the Borrower shall immediately prepay the Revolving Loans in the amount of such excess. To the extent that, after the prepayment of all Revolving Loans an excess of the Revolving Credit Exposure over the aggregate Commitments still exists, the Borrower shall promptly cash collateralize the Letters of Credit in the manner described in Section 2.05(j) in an amount sufficient to eliminate such excess.

SECTION 2.10.Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section.

(b)The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by electronic mail) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.08(c), then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08(c). Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12.

SECTION 2.11.Fees. (a) The Borrower agrees to pay a facility fee to the Administrative Agent for the account of each Lender (other than a Defaulting Lender to the extent provided in Section 2.19), which shall accrue at the Applicable Rate on the daily amount of the Commitment of such Lender (whether used or unused) during the period from and including the Effective Date to but excluding the date on which such Commitment terminates; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then such facility fee shall continue to accrue on the daily amount of such Lender’s Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure. Accrued facility fees shall be payable in arrears on the third Business Day following the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof; provided that any facility fees accruing after the date on which the Commitments terminate shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days

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and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b)The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the Borrower and the Issuing Bank on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c)The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(d)All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances.

SECTION 2.12.Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b)The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

(c)Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as

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well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d)Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan, upon the final maturity thereof and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e)All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.13.Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a)the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or

(b)the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or electronic mail as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist (which notice shall be given by the Administrative Agent promptly upon obtaining knowledge thereof), (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective and such Borrowing shall be continued as an ABR Borrowing and (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.

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If, after the date hereof, the introduction of, or any change in, any applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of Law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any Eurodollar Loan or any ABR Loan as to which the interest rate is determined by reference to the Adjusted LIBO Rate, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders. Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist (which notice shall be given by the Administrative Agent promptly upon obtaining knowledge thereof), (i) the obligations of the Lenders to make Eurodollar Loans or ABR Loans as to which the interest rate is determined by reference to the Adjusted LIBO Rate, and the right of the Borrower to convert any Loan to a Eurodollar Loan or continue any Loan as a Eurodollar Loan or an ABR Loan as to which the interest rate is determined by reference to the Adjusted LIBO Rate shall be suspended and thereafter the Borrower may select only ABR Loans as to which the interest rate is not determined by reference to the Adjusted LIBO Rate hereunder, (ii) all ABR Loans shall cease to be determined by reference to the Adjusted LIBO Rate and (iii) if any of the Lenders may not lawfully continue to maintain a Eurodollar Loan to the end of the then current Interest Period applicable thereto, the applicable Loan shall immediately be converted to an ABR Loan as to which the interest rate is not determined by reference to the Adjusted LIBO Rate for the remainder of such Interest Period.

SECTION 2.14.Increased Costs. (a) If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;

(ii)impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein; or

(iii)subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting into, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, the Issuing Bank or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrower will pay to

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such Lender, the Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, the Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b)If any Lender or the Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

(c)A certificate of a Lender or the Issuing Bank setting forth the reason(s) and the calculation of the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section in reasonable detail shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d)Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; providedfurther that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.15.Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(b) and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event (other than lost profits). In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued

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on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.16.Taxes. (a)Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Credit Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Government Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.16) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b)Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Government Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.

(c)Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Government Authority pursuant to this Section 2.16, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Government Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(d)Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

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(e)Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).

(f)Status of Lenders. (iv) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.16(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii)Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,

(A)any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax;

(B)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the

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reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(1)In the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Credit Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2)executed originals of IRS Form W-8ECI;

(3)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit D-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN; or

(4)to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-4 on behalf of each such direct and indirect partner;

(C)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D)if a payment made to a Lender under any Credit Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those

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contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(iii)Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(g)Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.16 (including by the payment of additional amounts pursuant to this Section 2.16), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.16 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Government Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h)Survival. Each party’s obligations under this Section 2.16 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document.

(i)Issuing Bank. For purposes of this Section 2.16, the term “Lender” includes any Issuing Bank.

SECTION 2.17.Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) The Borrower shall make each payment required to be made by it hereunder (whether of

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principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.

(b)If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c)If any Lender shall, by exercising any right of set off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders without recourse or warranty from the other Lenders except as contemplated by Section 9.04 in respect of assignments to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the

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Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d)Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(e)If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.17(d) or 9.03(c), then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent, the Swingline Lender or the Issuing Bank to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account over which the Administrative Agent shall have exclusive control as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clause (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

SECTION 2.18.Mitigation Obligations; Replacement of Lenders.

(a)If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Government Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Sections 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)If (i) any Lender requests compensation under Section 2.14, (ii) the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Government Authority for the account of any Lender pursuant to Section 2.16, (iii) any Lender becomes a Defaulting Lender, or (iv) any Lender does not consent to a proposed amendment, waiver, discharge or termination with respect to any Credit Document that has been consented to

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by the Required Lenders, but which otherwise required consent of all Lenders or of all Lenders affected thereby, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Sections 2.14 or 2.16) and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and if a Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be withheld, delayed or conditioned, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.19.Defaulting Lenders.

Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)facility fees shall cease to accrue pursuant to Section 2.11(a) on the portion of the Commitment of such Defaulting Lender in excess of the Revolving Credit Exposure of such Defaulting Lender;

(b)the Commitments, LC Exposure and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02), provided that this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender affected thereby;

(c)if any Swingline Exposure or LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

(i)all or any part of such Swingline Exposure and LC Exposure shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent that (x) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the total of all non-Defaulting Lenders’ Commitments and (y) the conditions set forth in Section 4.02 are satisfied at such time;

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(ii)if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within two Business Days following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize for the benefit of the Issuing Bank only the Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.05(j) for so long as such LC Exposure is outstanding;

(iii)if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.11(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

(iv)if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.11(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; or

(v)if all or any portion of such Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Bank or any other Lender hereunder, all facility fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section 2.11(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized and/or reallocated; and

(d)so long as such Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.19(c), and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.19(c)(i) (and such Defaulting Lender shall not participate therein).

If (i) a Bankruptcy Event with respect to a Parent of any Lender shall occur following the date hereof and for so long as such event shall continue or (ii) the Swingline Lender or the Issuing Bank has a reasonable good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, then the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Swingline Lender or the Issuing Bank, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to the Swingline Lender or the Issuing Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.

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In the event that the Administrative Agent, the Borrower, the Swingline Lender and the Issuing Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage (as determined prior to such Lender becoming a Defaulted Lender but after giving effect to any Commitment reductions or increases in accordance with the terms hereof).

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Administrative Agent and the Lenders that:

SECTION 3.01.Organization; Power; Qualification. Each of the Borrower and its Subsidiaries is duly organized, validly existing, and in good standing under the laws of its state of organization, has the power and authority, corporate and otherwise, to own or lease and operate its properties and to carry on its business as now being and hereafter proposed to be conducted. Each such Person is duly qualified and is in good standing as a foreign organization, and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization, except where the failure to so qualify could not reasonably be expected to have a Materially Adverse Effect.

SECTION 3.02.Authorization; Enforceability. The Borrower has the corporate power, and has taken all necessary corporate action to authorize it to execute, deliver, and perform this Agreement and each of the other Credit Documents to which it is a party in accordance with the terms thereof and to consummate the transactions contemplated hereby and thereby. This Agreement and promissory notes delivered hereunder have been duly executed and delivered by the Borrower, and each of this Agreement and the other Credit Documents to which the Borrower is a party is a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to the following qualifications: (a) the discretion of any court in awarding equitable remedies, and (b) bankruptcy, insolvency, liquidation, reorganization, moratorium, reconstruction, and other similar laws or legal or equitable principles affecting enforcement of creditors’ rights generally.

SECTION 3.03.Subsidiaries. Set forth on Schedule 3.03 is a complete and correct list, as of the date hereof, of all Subsidiaries of the Borrower and a corporate structure chart, as of the date hereof, reflecting the ownership of the Subsidiaries of the Borrower. The Borrower owns, free and clear of all Liens (other than (x) in the case of Subsidiaries other than Trinity and United Insurance, Permitted Liens, and (y) in the case of Trinity and United Insurance, Liens specified in clauses (a), (b)(ii), (e) and (h) of the definition of Permitted Liens), all outstanding shares of its direct Subsidiaries and all such shares are validly issued, fully paid and non-assessable.

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SECTION 3.04.Compliance with Laws. The execution, delivery, and performance of this Agreement and each of the other Credit Documents in accordance with the terms and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate any Applicable Law, or (b) conflict with, result in a breach of, or constitute a default under (i) the certificate or articles of incorporation or by-laws of the Borrower or any of its Subsidiaries or (ii) any indenture, agreement, or other instrument to which the Borrower or any of its Subsidiaries is a party or by which any such Person or any of its properties may be bound, except, with respect to clauses (a) and (b)(ii), where such violation, conflict, breach or default could not reasonably be expected to have a Materially Adverse Effect.

SECTION 3.05.Necessary Authorizations. The Borrower has secured all material Necessary Authorizations, and all such Necessary Authorizations are in full force and effect. The Borrower is not required to obtain any additional Governmental Authorizations in connection with the execution, delivery, and performance, in accordance with the terms of this Agreement or any other Credit Document, and the Transactions.

SECTION 3.06.Title to Properties. Each of the Borrower and its Subsidiaries has good title to, or a valid leasehold interest in, or other legal right to use all of the real and personal property necessary for the conduct of its business as currently conducted, subject only to Permitted Liens.

SECTION 3.07.Taxes. All federal, all material state, and all other material tax returns of the Borrower and each of its Subsidiaries required by law to be filed have been duly filed (except as such returns have been extended in accordance with Applicable Law), and all federal, state, and other taxes, assessments, and other governmental charges or levies upon the Borrower and each of its Subsidiaries and any of their respective properties, income, profits, and assets, which are due and payable as shown on such returns, have been paid, except any such payment of which the Borrower or any of its Subsidiaries, as applicable, is diligently contesting in good faith by proper proceedings and against which adequate reserves are being maintained, and as to which no Lien other than a Permitted Lien has attached. The charges, accruals, and reserves on the books of the Borrower and each of its Subsidiaries in respect of taxes are, in the reasonable judgment of the Borrower, adequate.

SECTION 3.08.Financial Statements. The Borrower has furnished, or caused to be furnished, to the Lenders audited financial statements as of December 31, 2011, which were prepared in accordance with GAAP for the Borrower and its Subsidiaries on a consolidated basis which present fairly, in all material respects, the financial position of the Borrower and its Subsidiaries on a consolidated basis as of such date, and the results of operations for the period then ended. Except as disclosed in such financial statements, neither the Borrower nor any of its Subsidiaries had any material liabilities, contingent or otherwise, and there were no material unrealized or anticipated losses of the Borrower or any of its Subsidiaries, which in any such case would be required to be shown on such financial statements.

SECTION 3.09.No Material Adverse Change. On the date of this Agreement, since December 31, 2011, there has occurred no event which has had or which could reasonably be expected to have a Materially Adverse Effect.

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SECTION 3.10.Guaranties. The Borrower has not made guaranties of the indebtedness of any Person, except where the obligations of the Borrower thereunder are pari passu with or junior to the Obligations.

SECTION 3.11.Litigation. There is no litigation, legal or administrative proceeding, investigation, or other action of any nature pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries which upon adjudication could reasonably be expected to have a Materially Adverse Effect.

SECTION 3.12.ERISA. The Borrower and its ERISA Affiliates have materially fulfilled their respective obligations under the minimum funding standards of Section 302 of ERISA and Section 412 of the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the Pension Benefit Guaranty Corporation or any Plan (other than to pay premiums or make contributions in the ordinary course of business) and have not been required to give security under Section 436(c) of the Code as a result of any amendment to a Plan. Neither the Borrower nor any ERISA Affiliate is or ever has been a participant in or obligated to make any payment to a Multiemployer Plan. The Borrower and each ERISA Affiliate have complied in all material respects with all requirements of Sections 601 through 608 of ERISA and Section 4980B of the Code.

SECTION 3.13.Compliance with Law. Each of the Borrower and its Subsidiaries is in material compliance with all Applicable Laws and with all of the provisions of its certificate or articles of incorporation and by-laws or partnership agreement, as the case may be, except for any noncompliance which could not reasonably be expected to have a Materially Adverse Effect.

SECTION 3.14.Accuracy and Completeness of Information. To the knowledge of the Borrower, all written information, reports, and other papers and data relating to the Borrower or any of its Subsidiaries furnished by Borrower to the Lenders in connection with this Agreement do not contain as of the date furnished any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not materially misleading (except for (x) projections and other forward-looking information, which the Borrower represents were prepared in good faith based upon assumptions believed to be reasonable at the time, and (y) information of a general industry or economic nature). The Administrative Agent and the Lenders understand and acknowledge that forecasts, forward-looking statements and projections are as to future events, are not to be viewed as facts and are subject to significant uncertainties and contingencies, many of which are beyond Borrower’s control, such that actual results during the period or periods covered by any such statements or projections may differ significantly from the projected results and such differences may be material.

SECTION 3.15.Compliance with Regulations T, U and X. Neither the Borrower nor any of its Subsidiaries is engaged principally in or has as one of its important activities the business of extending credit for the purpose of purchasing or carrying any “margin security” or “margin stock” as defined in Regulations T, U, and X (12 C.F.R. Parts 221 and 224) of the Board of Governors of the Federal Reserve System (herein called “Margin Stock”). Neither the

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Borrower nor any bank acting on its behalf has taken or will take any action which could reasonably be expected to cause this Agreement or any promissory notes issued hereunder to violate Regulation T, U, or X, or any other regulation of the Board of Governors of the Federal Reserve System with respect to Margin Stock, in each case as now in effect or as the same may hereafter be in effect. If so requested by the Administrative Agent or any Lender, the Borrower will furnish the Administrative Agent and the Lenders with (i) a statement or statements in conformity with the requirements of Federal Reserve Form U-l referred to in Regulation U of said Board of Governors and (ii) other documents evidencing its compliance with the margin regulations. Neither the making of the Loans nor the use of proceeds thereof will violate, or be inconsistent with, the provisions of Regulation T, U, or X of said Board of Governors.

SECTION 3.16.Broker’s or Finder’s Commissions. No broker’s or finder’s fee or commission will be payable with respect to the consummation of the Transactions.

SECTION 3.17.Investment Company Act. Neither the Borrower nor any of its Subsidiaries is required to register under the provisions of the Investment Company Act of 1940, as amended, and neither the entering into or performance by the Borrower of this Agreement nor the issuance of any promissory notes issued hereunder violates any provision of such Act or requires any consent, approval, or authorization of, or registration with, any governmental or public body or authority pursuant to any of the provisions of such Act.

SECTION 3.18.Insurance Licenses. No License held by an Insurance Subsidiary, the loss of which could reasonably be expected to have a Materially Adverse Effect, is the subject of a proceeding that could reasonably be expected to result in the suspension or revocation of such License.

SECTION 3.19.Foreign Assets Control Regulations, etc. Neither the making of the Loans to, or issuance of Letters of Credit on behalf of, the Borrower nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. Without limiting the foregoing, neither the Borrower nor any of its Subsidiaries or, to Borrower’s knowledge, any of its other Affiliates (a) is or will become a Person whose property or interests in property are blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such Person. The Borrower and its Subsidiaries and, to Borrower’s knowledge, its other Affiliates are in compliance, in all material respects, with the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001).

ARTICLE IV

Conditions

SECTION 4.01.Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the

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date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

(a)The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement and any other Credit Document to be executed pursuant hereto, signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include electronic mail transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and any other such Credit Document.

(b)The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Borrower, and Scott Renwick, General Counsel of the Borrower, each in form and substance reasonably satisfactory to the Administrative Agent and covering such matters relating to the Borrower, this Agreement or the Transactions as the Administrative Agent shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion.

(c)The Administrative Agent shall have received (i) copies of the Organizational Documents of Borrower, certified by the Secretary of State of Delaware, together with a good standing certificate from the Secretary of State of each of Illinois and Delaware dated a recent date prior to the date hereof, (ii) resolutions of the Board of Directors of Borrower approving and authorizing the execution, delivery and performance of the Credit Documents, certified as of the date hereof by the secretary or Borrower as being in full force and effect without modification or amendment and (iii) signature and incumbency certificates of the President, any applicable Vice President and any applicable Financial Officer of the Borrower.

(d)The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming (i) compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02, (ii) that Borrower is not in violation of any of the covenants contained in this Agreement and the other Credit Documents and (iii) that Borrower has satisfied the conditions set forth in Section 4.01.

(e)The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.

(f)The Lenders shall have received from the Borrower audited financial statements for the fiscal year ended December 31, 2011.

(g)The Administrative Agent and the Lenders shall have received a certificate of authority for each of Trinity and United Insurance issued by the department of insurance of its state of domicile.

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(h)The Borrower shall have obtained all Governmental Authorizations and all consents of other Persons, in each case that are necessary in connection with the transactions contemplated by the Credit Documents and all Governmental Authorizations and consents necessary for the continued operation of the business conducted by the Borrower and its Subsidiaries in substantially the same manner as conducted prior to the date hereof. Each such Governmental Authorization and consent shall be in full force and effect, except in a case where the failure to obtain or maintain a Governmental Authorization or consent, either individually or in the aggregate, would not reasonably be expected to result in a Materially Adverse Effect. All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Credit Documents or the financing thereof. No action, request for stay, petition for review or rehearing, reconsideration or appeal with respect to any of the foregoing shall be pending.

(i)All corporate and other proceedings taken or to be taken in connection with the Transactions and all documents incidental thereto not previously found acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel shall be reasonably satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request.

(j)The Administrative Agent shall have received a pay-off letter in form and substance reasonably satisfactory to it evidencing that all Indebtedness under the Existing Credit Agreement has been or concurrently with the Effective Date will be repaid in full and the Existing Credit Agreement has been or concurrently with the Effective Date will be terminated.

(k)The Borrower shall have provided to the Administrative Agent and the Lenders the documentation and other information requested thereby in order to comply with the requirements of the Act.

The Administrative Agent shall promptly notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on March 30, 2012 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

SECTION 4.02.Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(a)The representations and warranties of the Borrower set forth in this Agreement (other than Section 3.09) shall be true and correct in all material respects on

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and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable (except any such representation or warranty that expressly relates to or is made expressly as of a specific earlier date, in which case such representation or warranty shall be true and correct in all material respects with respect to or as of such specific earlier date).

(b)At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

Each Borrowing (other than the conversion or continuation of any Loan) and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw (unless cash collateralized on terms reasonably satisfactory to the Issuing Bank), and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01.Preservation of Existence and Similar Matters. The Borrower will, and will cause each of its Subsidiaries to, (a) preserve and maintain its existence, and all material rights, franchises, licenses, and privileges for the conduct of its businesses, which if not preserved or maintained, could reasonably be expected to have a Materially Adverse Effect, and (b) qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its businesses requires such qualification or authorization, except where the failure to so qualify would not have a Materially Adverse Effect.

SECTION 5.02.Compliance with Applicable Law. The Borrower will comply, and will cause each of its Subsidiaries to comply, with the requirements of all material Applicable Laws, except for non-compliance which could not reasonably be expected to have a Materially Adverse Effect.

SECTION 5.03.Maintenance of Properties. Except as could not reasonably be expected to have a Materially Adverse Effect, the Borrower will maintain, and will cause each of its Subsidiaries to maintain, or cause to be maintained in the ordinary course of business in good repair, working order, and condition, ordinary wear and tear excepted, all properties used or useful in its business (whether owned or held under lease), and from time to time to make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, betterments, and improvements thereto.

SECTION 5.04.Accounting Methods and Financial Records. The Borrower will maintain, and will cause each of its Subsidiaries to maintain, a system of accounting established

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and administered in accordance with GAAP, and will keep and cause each of its Subsidiaries to keep adequate records and books of account in which complete entries will be made in accordance with such accounting principles and reflecting all transactions required to be reflected by such accounting principles.

SECTION 5.05.Payment of Taxes and Claims. The Borrower will pay and discharge when due, and will cause each of its Subsidiaries to pay and discharge when due, all material taxes, assessments, and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it prior to the date on which penalties attach thereto, and all lawful claims for labor, materials, and supplies which, if unpaid, could reasonably be expected to become a Lien or charge upon any of its respective properties; except that no such tax, assessment, charge, levy, or claim need be paid which is being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on the appropriate books, but only so long as such tax, assessment, charge, levy, or claim does not become a Lien or charge other than a Permitted Lien and no foreclosure, distraint, sale, or similar Proceedings shall have been commenced with respect to such item and remain unstayed for a period of thirty (30) days after such commencement. The Borrower shall timely file (subject to extensions permitted by Applicable Law), and will cause each of its Subsidiaries to timely file (subject to extensions permitted by Applicable Law), all material information returns required by federal, state, or local tax authorities.

SECTION 5.06.Visits and Inspections. The Borrower will permit, and will cause each of its Subsidiaries to permit, representatives of the Administrative Agent and each Lender to, upon reasonable prior notice, at any reasonable time during normal business hours, and at the expense of the Administrative Agent and such Lenders, as applicable, (a) visit and inspect the properties of the Borrower and each of its Subsidiaries during normal business hours, (b) inspect and make extracts from and copies of their respective books and records, and (c) discuss with their respective principal officers the businesses, assets, liabilities, financial positions, results of operations, and business prospects relating to the Borrower and each of its Subsidiaries.

SECTION 5.07.Use of Proceeds. The Borrower will use the proceeds of the Loans solely for working capital or any other general corporate purposes of the Borrower (including the repayment or refinancing of existing Indebtedness).

SECTION 5.08.Further Assurances. Upon its actual knowledge of any such defect, the Borrower will promptly cure, or use its commercially reasonable efforts to cause to be cured, defects in the creation and issuance of any promissory notes issued hereunder and the execution and delivery of this Agreement and the other Credit Documents, resulting from any act or failure to act by the Borrower or any employee or officer thereof.

SECTION 5.09.Quarterly Financial Statements of the Borrower. The Borrower will furnish to each Lender within fifty (50) days after the end of each of the first three (3) fiscal quarters of the Borrower in each fiscal year, (a) the condensed consolidated statements (in substantially the condensed form of those provided on or prior to the date hereof) of income and changes in financial position (or of cash flow, as the case may be) of the Borrower and its Subsidiaries for such period and for the period from the beginning of the respective fiscal year to

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the end of such quarter, and (b) the related condensed consolidated balance sheet as at the end of such quarter, setting forth in each case with respect to clauses (a) and (b) immediately above in comparative form results of the preceding fiscal year or year-end, as applicable, which financial statements shall fairly present, in all material respects, the consolidated financial condition and results of operations, as the case may be, of the Borrower and its Subsidiaries in accordance with GAAP, as at the end of, and for, such quarter (subject to the absence of footnotes and normal year-end audit adjustments); it being understood and agreed that the delivery of the Borrower’s Form 10-Q (as filed with the United States Securities and Exchange Commission) shall satisfy the requirements set forth in this subsection.

SECTION 5.10.Annual Financial Statements of the Borrower. The Borrower will furnish to each Lender within seventy-five (75) days after the end of each fiscal year of the Borrower, the consolidated statements of income and changes in financial position (or of cash flow and shareholders’ equity, as the case may be) of the Borrower and its Subsidiaries for such year, and the related consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, accompanied by an opinion of Deloitte & Touche LLP, Pricewaterhouse Coopers, Ernst & Young, KPMG or such other certified public accountants of recognized standing which are reasonably satisfactory to the Administrative Agent, which opinion shall state that such financial statements fairly present, in all material respects, the consolidated financial condition and results of operations, as the case may be, of the Borrower and its Subsidiaries, in accordance with GAAP, as at the end of, and for, such year; it being understood and agreed that the delivery of the Borrower’s Form 10-K (as filed with the United States Securities and Exchange Commission) shall satisfy such delivery requirement in this subsection.

SECTION 5.11.Additional Reporting Requirements and Provisions.

(a)    The Borrower will furnish to each Lender within ninety (90) days after the end of each fiscal year of each of Trinity and United Insurance, a copy of the Annual Statement of such Person, prepared in accordance with SAP, which such Person has filed with the applicable state department of insurance pursuant to state insurance law.

(b)    The Borrower will furnish to each Lender within sixty-five (65) days after the end of each of the first three (3) fiscal quarters in each fiscal year of Trinity and United Insurance, the quarterly unaudited financial statements of Trinity and United Insurance prepared in accordance with SAP.

(c) Upon request of the Administrative Agent, the Borrower will furnish to each Lender promptly after the preparation thereof, copies of all management discussions and analysis reports or similar reports howsoever designated or described prepared by the Borrower with respect to Trinity, United Insurance and other of its Subsidiaries which are insurance companies which are filed with any governmental authority, agency or department.

(d)    Documents required to be delivered pursuant to subsections 5.09, 5.10, 5.11, 5.12 and 5.13(a) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the website on the Internet at the Borrower’s website address; or (ii) on which

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such documents are available via the EDGAR system of the United States Securities and Exchange Commission on the internet; provided that the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents.

SECTION 5.12.Performance Certificates. The Borrower will furnish to each Lender, at the time the financial statements are furnished pursuant to subsections 5.11(a) and 5.11(b) hereof, a certificate of the chief financial officer or treasurer of the Borrower in form and substance satisfactory to the Required Lenders:

(a)    Stating that, to the best of his or her knowledge, no Default has occurred as at the end of such quarter or year, as the case may be, or, if a Default has occurred, disclosing each such Default and its nature, when it occurred, whether it is continuing, and the steps being taken by the Borrower with respect to such Default;

(b)    Setting forth in reasonable detail the computations necessary to determine whether or not the Borrower was in compliance with Sections 6.06, 6.07 and 6.08 hereof;

(c)    Setting forth a schedule of leases to the extent required by Section 1.04 hereof.

SECTION 5.13.Copies of Other Reports. The Borrower will furnish to each Lender:

(a)    As soon as reasonably practicable after the sending thereof, copies of all periodic reports, proxies and prospectuses which the Borrower or any of its Subsidiaries sends to any holder of its Indebtedness or its securities or files with the Securities and Exchange Commission or any national securities exchange.

(b)    As soon as reasonably practicable after the preparation of the same, to the full extent permitted by Applicable Law, copies of all material reports or financial information filed by the Borrower or any of its Subsidiaries with any governmental agency, department, bureau, division or other governmental authority or regulatory body, or other reports with respect to the Borrower or any of its Subsidiaries which, in any such case, evidence facts or contain information which could reasonably be expected to have a Materially Adverse Effect.

(c)    Not less than once during each fiscal year of the Borrower in which the Borrower or any ERISA Affiliate is a member of, or is obligated to contribute to, any Multiemployer Plan, (i) a statement, in form and substance satisfactory to the Administrative Agent, prepared by the actuary for each Multiemployer Plan to which the Borrower or any of its Subsidiaries or any ERISA Affiliate is a party, setting forth the liabilities (under Section 4201 of ERISA) of the Borrower and its ERISA Affiliates, as appropriate, in the event of a “complete” or “partial withdrawal” (as those terms are defined in Sections 4203 and 4205 of ERISA) from each such Multiemployer Plan or (ii) if such statement is not available to the Borrower, a copy of the most recent Internal Revenue Service Form 5500 and supporting schedules with respect to such Multiemployer Plan.

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(d)    From time to time and as soon as reasonably practicable upon each request, such data, internally generated reports, certificates, statements, documents, or further information regarding the business, assets, liabilities, financial position or results of operations of the Borrower or any of its Subsidiaries as the Administrative Agent, for itself or upon request of any Lender, may reasonably request.

SECTION 5.14.Notice of Litigation and Other Matters. The Borrower will provide to each Lender prompt notice of the following events as to which a Financial Officer, the Chief Executive Officer, the President, any Vice President or the General Counsel of the Borrower has received notice or otherwise become aware:

(a)    The occurrence of any Default or the occurrence or non-occurrence of any event or the existence of a condition which has had or could reasonably be expected to have a Materially Adverse Effect with respect to the Borrower, Trinity or United;

(b)    The occurrence of any Reportable Event with respect to any Plan as to which the Pension Benefit Guaranty Corporation has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event (provided that the Borrower shall give the Administrative Agent and the Lenders notice of any failure to meet the minimum funding standards of Section 412 of the Code or Section 302 of ERISA, regardless of the issuance of any waivers in accordance with Section 412(c) of the Code);

(c)    The filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan other than, in either case, a standard termination under Section 4041(b) of ERISA;

(d)    The institution by the Pension Benefit Guaranty Corporation of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan;

(e)    The occurrence or non-occurrence of any event or the existence of any condition which constitutes, or which with the passage of time or giving of notice, or both, would constitute, a default by the Borrower or any of the Subsidiaries under any material agreement (other than any of the Credit Documents) to which such Person is party or by which its properties may be bound or affected, which default could reasonably be expected to have a Materially Adverse Effect; and

(f)    The commencement of all Proceedings and investigations by or before any governmental body and all actions and proceedings in any court or before any arbitrator against the Borrower or any of the Subsidiaries, which could reasonably be expected to have a Materially Adverse Effect or result in a Default, and any material development with respect thereto.

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ARTICLE VI

Negative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw (unless cash collateralized on terms reasonably satisfactory to the Issuing Bank), and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01.Restricted Payments and Restricted Purchases. The Borrower shall not directly or indirectly, declare or make any Restricted Payment or Restricted Purchase, except that the Borrower may declare and make Restricted Payments and make Restricted Purchases, in each case, so long as no Default then exists or would be caused thereby.

SECTION 6.02.Limitations on Indebtedness of Subsidiaries of Borrower. The Borrower shall not permit any of its Subsidiaries to create, assume, incur or otherwise become or remain obligated in respect of, or permit to be outstanding, any Indebtedness except:

(a)    Indebtedness in favor of the Borrower;

(b)    Indebtedness incurred by a direct or indirect special purpose Subsidiary of the Borrower in connection with a Permitted Securitization;

(c)    Indebtedness (i) of any Wholly-Owned Subsidiary of the Borrower owed to the Borrower or another Wholly-Owned Subsidiary in an amount not to exceed $100,000,000 in the aggregate at any time outstanding and (ii) evidenced by the One East Wacker Note, provided that the principal amount of such note shall not be increased to an amount greater than the fair market value of the property securing such note at the time of such increase ;

(d)    Indebtedness incurred in connection with borrowings from the Federal Home Loan Bank or the issuances of Surplus Notes, in an amount not to exceed $100,000,000 in the aggregate at any time outstanding;

(e)    Indebtedness in effect on the date hereof (as any of the same may be amended, modified, supplemented or restated from time to time) in an amount not to exceed the amount set forth on Schedule 6.02 hereto and any extension, renewal or refinancing thereof so long as the principal amount thereof is not increased thereby; and

(f)    any other Indebtedness in an amount not to exceed $100,000,000 in the aggregate principal amount outstanding at any time.

SECTION 6.03.Limitations on Liens. The Borrower shall not, and shall not permit any of its Subsidiaries to, create, assume, incur, or permit to exist or to be created, assumed, incurred or permitted to exist, directly or indirectly, any Lien on any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Liens; provided, that shares of capital stock of Trinity and United Insurance may only be encumbered by Liens specified in clauses (a), (b)(ii), (e) and (h) of the definition of Permitted Liens.

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SECTION 6.04.Amendment and Waiver. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any material amendment of, or agree to or accept any waiver of the provisions of its certificate or articles of incorporation or by-laws or certificate of partnership or partnership agreement, as the case may be, which amendment or waiver could reasonably be expected to have a Materially Adverse Effect.

SECTION 6.05.Liquidation; Merger; Disposition of Assets. The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time (a) liquidate or dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up, except for the liquidation, dissolution or wind up of (i) any Subsidiary in connection with any sale, lease, transfer or other disposition of assets to the extent permitted in clauses (b)(i) through (b)(viii) below, (ii) any Subsidiary that is a holding company, provided that the assets held by such Subsidiary are transferred to one or more direct or indirect Wholly-Owned Subsidiaries of the Borrower, (iii) Fireside Bank or (iv) any inactive Subsidiary, or (b) sell, lease, abandon, transfer or otherwise dispose of any assets or business, other than (i) sales of obsolete equipment, inventory or other assets in the ordinary course of business, (ii) sales of investment securities and other investment assets by the Borrower or Insurance Subsidiaries in the ordinary course of business, (iii) sales, distributions or other dispositions by the Borrower or any of its Subsidiaries of publicly-traded investment securities (including Margin Stock) and other marketable securities, (iv) the sale, distribution or other disposition by the Borrower of the stock or assets of Fireside or the sale, distribution or other disposition by Fireside of the stock or assets of Fireside Bank (including the release of Fireside Bank’s bank charter and FDIC insurance), (v) the sale, distribution or other disposition of the stock or assets of any Person consisting exclusively of all or any portion of Unitrin Direct, (vi) sales or transfers of assets to a special purpose Subsidiary in connection with a Permitted Securitization, (vii) any transaction permitted pursuant to clause (ii) of the proviso to Section 6.09, any Restricted Payment permitted pursuant to Section 6.01 and the payment of any dividend by a Subsidiary to its parent entity, (viii) the sale, distribution or other disposition of the stock or assets of all or any portion of Reserve National and its Wholly-Owned Subsidiaries, (ix) the merger of any Subsidiary of the Borrower (other than Trinity or United Insurance) with and into any Wholly-Owned Subsidiary of the Borrower, or (x) leases, sales, transfers or other dispositions of its property (including equity interests in Subsidiaries other than Trinity and United Insurance) that, together with all other property of the Borrower and its Subsidiaries previously leased, sold, transferred or disposed of since the date hereof (other than sales, distributions, transfers, dispositions or other transactions permitted pursuant to clause (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) or (ix) of clause (b) above), do not constitute a Material Portion of the property of the Borrower and its Subsidiaries.

SECTION 6.06.Borrower’s Maximum Leverage. The Borrower shall not, as of the last day of any fiscal quarter, permit (a) the Total Debt (after giving effect to any Loans outstanding hereunder) of the Borrower and its Subsidiaries on a consolidated basis to be greater than (b) (i) thirty-five percent (35%) of (ii) Total Capitalization of the Borrower (such ratio, the “Leverage Ratio”).

SECTION 6.07.Borrower’s Minimum Consolidated Net Worth. The Borrower shall have, at all times (to be reported to the Administrative Agent and the Lenders as of the end of each Fiscal Quarter and at such other times as shall reasonably be requested by the Administrative Agent), a Consolidated Net Worth at least equal to the sum of (a) the amount

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equal to 80% of the Borrower’s Consolidated Net Worth as of December 31, 2011, calculated by reference to Borrower’s consolidated financial statements set forth in its Form 10-K (as filed with the United States Securities and Exchange Commission with respect to its 2011 fiscal year), plus (b) an amount equal to 25% of Consolidated Net Income of the Borrower and its Subsidiaries for each fiscal quarter ending after December 31, 2011 in which such Consolidated Net Income is greater than $0, plus (c) an amount equal to the aggregate net proceeds of all equity issuances by the Borrower and its Subsidiaries after the Effective Date; provided, that following the adoption by the Borrower of Accounting Standards Update 2010-26 “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts”, resulting in a write-off of deferred acquisition costs for the Borrower, the amount determined above shall be reduced by the lesser of (i) 80% of the after-tax amount of such write-off and (ii) $100,000,000.

SECTION 6.08.Risk-Based Capital Ratio. Neither Trinity nor United Insurance shall, as of the last day of any fiscal quarter, fail to have a Risk-Based Capital Ratio which is equal to at least one hundred fifty percent (150%) of the highest Risk-Based Capital Ratio within the category of Company Action Level (or any successor designation) as prescribed by rules, regulations or guidelines adopted by the National Association of Insurance Commissioners or the state department of insurance of the state of domicile of Trinity or United Insurance, as applicable, and such failure shall continue and not be cured within 60 days after the end of such fiscal quarter.

SECTION 6.09.Affiliate Transactions. The Borrower will not, nor will it permit any of its Subsidiaries to, directly or indirectly: (a) make any investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any assets to an Affiliate; (c) merge into or consolidate with or purchase or acquire assets from an Affiliate; or (d) enter into any other transaction directly or indirectly with or for the benefit of an Affiliate (including, without limitation, guarantees and assumptions of obligations of an Affiliate); provided that (i) any Affiliate who is an individual may serve as a director, officer or employee of the Borrower or any of its Subsidiaries and receive reasonable compensation for his or her services in such capacity; (ii) the Borrower and its Wholly-Owned Subsidiaries may do any of the foregoing with the Borrower and any of its Wholly-Owned Subsidiaries or mutual insurance companies controlled by Borrower, as the case may be; (iii) the Borrower and its Subsidiaries may enter into a tax-sharing agreement and/or any Subsidiary may make distributions to enable its direct and indirect parents (including the Borrower) to pay taxes imposed on them with respect to the income of such Subsidiary; and (iv) the Borrower and its Subsidiaries may engage in any transaction with an Affiliate which transaction is on terms no less advantageous to Borrower or such Subsidiary than would be the case if such transaction had been effected with a non-Affiliate.

SECTION 6.10.Other Indebtedness. All Obligations of the Borrower under this Agreement and the other Credit Documents shall rank at least pari passu with all other Indebtedness (other than in connection with Capitalized Lease Obligations and Permitted Liens).

SECTION 6.11.Restrictions on Upstream Dividends by Subsidiaries. The Borrower shall not permit to exist at any time any consensual restriction (other than consent decrees or comparable arrangements with regulatory authorities) limiting the ability (whether by covenant, event of default, subordination or otherwise) of any Subsidiary of the Borrower to (a)

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make Restricted Payments to or Restricted Purchases from the Borrower or any Subsidiary, (b) pay any obligation owed to the Borrower or any Subsidiary of the Borrower, (c) make any loans or advances to or investments in the Borrower or in any Subsidiary of the Borrower, (d) transfer any of its property or assets (other than property or assets subject to Permitted Liens) to the Borrower or any Subsidiary of the Borrower, or (e) create any Lien (other than any additional Lien on assets already subject to a Permitted Lien) upon its property or assets whether now owned or hereafter acquired or upon any income or profits therefrom, except for restrictions which could not reasonably be expected to impair the Borrower’s ability to perform the Obligations.

SECTION 6.12.Business of the Borrower. The Borrower and its Subsidiaries, taken as a whole, will conduct their business in substantially the same manner and in substantially the same fields of enterprises as it is presently conducted.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a)Any representation or warranty made under this Agreement shall prove incorrect or misleading in any material respect when made or deemed to have been made pursuant to Article IV hereof; or

(b)The Borrower shall default (a) in the payment of any interest and fees payable hereunder or under the other Credit Documents and such default shall not have been cured by payment of such overdue amounts in full within five (5) Business Days from the date such payment became due, or (b) in the payment of any principal of any Loan when due; or

(c)The Borrower shall default in the performance or observance of any agreement or covenant contained in subsection 5.09, 5.10, 5.11, 5.12, 5.14, 6.01, 6.02, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.10 or 6.12 hereof; or

(d)The Borrower shall default in the performance or observance of any other agreement or covenant contained in this Agreement not specifically referred to elsewhere in this Article VII, and such default shall not be cured within a period of forty five (45) days from the date on which such default became known to the Borrower; or

(e)Any representation or warranty made under any of the Credit Documents (other than this Agreement or as otherwise provided in this Article VII) shall prove incorrect or misleading in any material respect when made or deemed to have been made pursuant to Article IV hereof, or there shall occur any default in the performance or observance of any agreement or covenant contained in any of the Credit Documents (other than this Agreement or as otherwise provided in this Article VII) which shall not be cured within the applicable cure period, if any, provided for in such Credit Document or if no such cure period is provided, within 45 days from the date on which such default became known to the Borrower; or

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(f)There shall occur any Change in Control; or

(g)There shall be entered a decree or order for relief in respect of the Borrower or any of its Subsidiaries under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy law or other similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar official of the Borrower or any of its Subsidiaries, or of any substantial part of its respective properties, or ordering the winding-up or liquidation of the affairs of the Borrower or any of its Subsidiaries, or an involuntary petition shall be filed against the Borrower or any of its Subsidiaries, and (a) such petition shall not be diligently contested, or (b) any such petition shall continue undismissed for a period of sixty (60) consecutive days; or

(h)The Borrower or any of its Subsidiaries shall file a petition, answer, or consent seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy law or other similar law, or the Borrower or any of its Subsidiaries shall consent to the institution of Proceedings thereunder or to the filing or any such petition or to the appointment or taking of possession of a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar official of the Borrower or any of its Subsidiaries, or of any substantial part of its respective properties, or the Borrower or any of its Subsidiaries shall fail generally to pay its respective debts as they become due, or the Borrower or any of its Subsidiaries shall take any action in furtherance of any such action; or

(i)One or more final judgments shall be entered by any court against the Borrower and/or any of its Subsidiaries for the payment of money in an aggregate amount in excess of $75,000,000 for the Borrower and its Subsidiaries, taken as a whole, or a warrant of attachment or execution or similar process shall be issued or levied against property of the Borrower or any of its Subsidiaries which, together with all other such property of the Borrower and its Subsidiaries subject to other such process, exceeds in value $75,000,000 in the aggregate, if, within thirty (30) days after the entry, issue, or levy thereof, such judgment, warrant, or process shall not have been paid or discharged or stayed pending appeal, or if, after the expiration of any such stay, such judgment, warrant, or process shall not have been paid or discharged; or

(j)The failure to meet the minimum funding standards with respect to any Plan under Section 412 of the Code, with respect to any Plan maintained by the Borrower or any of its ERISA Affiliates, or to which the Borrower or any of its ERISA Affiliates has any liabilities, or any trust created thereunder; or a trustee shall be appointed by a United States District Court to administer any such Plan; or the Pension Benefit Guaranty Corporation shall institute Proceedings to terminate any such Plan; or the Borrower or any of its ERISA Affiliates shall incur any liability to the Pension Benefit Guaranty Corporation in connection with the termination of any such Plan; or any Plan or trust created under any Plan of the Borrower or any of its ERISA Affiliates shall engage in a non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) which would subject any such Plan, any trust created thereunder, any trustee or administrator thereof, or any party dealing with any such Plan

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or trust to (a) a tax or penalty on “prohibited transactions” imposed by Section 502 of ERISA or Section 4975 of the Code, or (b) costs or expenses of correcting such “prohibited transactions,” which in either case (a) or (b) could reasonably be likely to have a Materially Adverse Effect; or the Borrower and/or any of its ERISA Affiliates shall enter into or become obligated to contribute to a Multiemployer Plan and as a result thereof such Persons have any liability or potential liability (under Section 4201 of ERISA) relating to any actual or potential “complete” or “partial withdrawal” (as those terms are defined in Sections 4203 and 4205 of ERISA) with respect to any such Multiemployer Plans, which liability or potential liability exceeds $75,000,000 in the aggregate for all such Persons at any time; the Borrower or any of its ERISA Affiliates shall have assessed against it any material tax liability as a result of a violation of the provisions of Section 4980B of the Code; or the Borrower or any of its ERISA Affiliates shall amend a Plan so as to require the Borrower or any of its ERISA Affiliates to provide security under Section 436(c) of the Code; or

(k)There shall occur any default or event (which permits the holder(s) thereof to accelerate such Indebtedness or cause such Indebtedness to be prepaid, repurchased or redeemed) beyond the period of grace, if any, applicable thereto under any other indenture, agreement, or instrument evidencing Indebtedness of the Borrower or any of its Subsidiaries in an aggregate principal amount greater than or equal to $75,000,000 for the Borrower and its Subsidiaries, taken as a whole; or

(l)All or any material portion of any Credit Document shall at any time and for any reason be declared by a court of competent jurisdiction in a suit with respect to such Credit Document to be null and void, or a proceeding shall be commenced by the Borrower, or by any governmental authority having jurisdiction over the Borrower or any of its Subsidiaries, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or the Borrower shall deny that it has any liability or obligation for the payment of principal or interest purported to be owed under any Credit Document; or

(m)Any applicable superintendent of insurance (or comparable Person) shall have taken possession of the business or property of either Trinity or United Insurance under any applicable state insurance law for the purposes of rehabilitation, dissolution or liquidation thereof or such Person shall have appointed a receiver, trustee, custodian, liquidator, conservator, sequestrator or similar official for either Trinity or United Insurance or for all or any substantial part of the property or assets of Trinity or United Insurance; or

(n)Any License held by any Insurance Subsidiary on the date of this Agreement or acquired by any Insurance Subsidiary hereafter, the loss of which could reasonably be expected to have a Materially Adverse Effect, (a) shall be revoked by a final non appealable order by the state which shall have issued such License, or any action (whether administrative or judicial) to revoke such License shall have been commenced against such Person which shall not have been dismissed or contested in good faith within 30 days of the commencement thereof, (b) shall be suspended by such state for a period in excess of 60 days or (c) shall not be reissued or renewed by such

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state upon the expiration thereof following application for such reissuance or renewal by such Person.

then, and in every such event (other than an event with respect to the Borrower described in clause (g) or (h) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (g) or (h) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

Notwithstanding anything contained in the preceding paragraph, if, within 45 days after acceleration of the maturity of the Loans or termination of the obligations of the Lenders to make Loans hereunder as a result of any Default (other than any Default as described in clause (g) or (h) of Article VII with respect to the Borrower) and before any judgment or decree for the payment of the amounts due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Administrative Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination; but such action shall not affect any subsequent Default or impair any right consequent thereon. The provisions of this paragraph are intended merely to bind Lenders to a decision which may be made at the election of Required Lenders, and such provisions shall not at any time be construed so as to grant the Borrower the right to require Lenders to rescind or annul any acceleration hereunder or to preclude Administrative Agent or Lenders from exercising any of the rights or remedies available to them under any of the Credit Documents, even if the conditions set forth in this paragraph are met.

ARTICLE VIII

The Administrative Agent

Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.

The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept

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deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective

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activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent of the Borrower, to appoint a successor (provided, that such consent (i) shall not be unreasonably withheld, delayed or conditioned and (ii) shall not be required if, at the time of such appointment, an Event of Default has occurred and is continuing). If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.

No Lender identified in this Agreement as a “Syndication Agent” shall have any

right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Administrative Agent in the preceding paragraph.

ARTICLE IX

Miscellaneous

SECTION 9.01.Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph

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(b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by electronic mail, as follows:

(i)if to the Borrower, to it at One East Wacker Drive, Chicago, IL 60601, Attention of Christopher L. Moses, Vice President and Treasurer (Email: usctreasury2@Kemper.com), with a copy to One East Wacker Drive, Chicago, IL 60601, Attention of Scott Renwick, General Counsel;

(ii)if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 10 S. Dearborn, 7^th Floor, Chicago, Illinois 60603, Attention of Nan Wilson (Email: nan.wilson@jpmchase.com), with a copy to JPMorgan Chase Bank, N.A., 10 S. Dearborn, 9^th Floor, Suite IL1-0364, Chicago, Illinois 60603, Attention of Thomas A. Kiepura (Email: thomas.a.kiepura@jpmorgan.com);

(iii)if to the Issuing Bank, to it at JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 10 S. Dearborn, 7^th Floor, Chicago, Illinois 60603, Attention of Nan Wilson (Email: nan.wilson@jpmchase.com);

(iv)if to the Swingline Lender, to it at at JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 10 S. Dearborn, 7^th Floor, Chicago, Illinois 60603, Attention of Nan Wilson (Email: nan.wilson@jpmchase.com); and

(v)if to any other Lender, to it at its address (or email address) set forth in its Administrative Questionnaire.

(b)Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications (including email and Internet and intranet websites) pursuant to procedures approved by the Administrative Agent; provided that (i) any such notices shall be deemed effective upon receipt or posting in accordance with such procedures (provided that notices delivered or furnished by email shall not be deemed effective if an automatically generated bounce-back email is received by the sender), and (ii) the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c)Any party hereto may change its address or email address for notices and other communications hereunder by notice to the other parties hereto. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received and notices delivered through electronic communications to the extent provided in paragraph (b) of this Section shall be effective as provided in such paragraph.

SECTION 9.02.Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power,

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preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

(b)Except as otherwise provided in connection with Section 2.08(d) in respect of Commitment increases, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon (other than a waiver of the default rate of interest imposed pursuant to Section 2.12(c)) (it being understood that any change to the defined terms used in computing financial covenants hereunder shall not constitute a reduction in interest or fees for purposes of this Section unless the primary purpose and effect thereof is to reduce such interest or fees), or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) other than as set forth at the end of Article VII in respect of the rescission of any acceleration of the Obligations, postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.17(b), or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, or (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; providedfurther that no such agreement shall (i) amend, modify or waive Section 2.19 without the prior written consent of the Administrative Agent, the Issuing Bank and the Swingline Lender or (ii) amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be. Notwithstanding the foregoing, the consent of the Required Lenders shall not be required to amend this Agreement to increase the total Commitments pursuant to Section 2.08 and to make other changes incidental thereto or contemplated thereby.

SECTION 9.03.Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable, documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications

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or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), provided that Borrower shall be responsible for the payment of the reasonable fees, charges and disbursements of only a single primary legal counsel and, if applicable, appropriate local, regulatory or other special counsel, for the Administrative Agent, (ii) all reasonable, documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b)The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or any Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Claim related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by the Borrower or a third party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from (x) the gross negligence or willful misconduct of such Indemnitee, (y) a claim brought by the Borrower against an Indemnitee for breach of such Indemnitee’s obligations under any Credit Document, so long as the Borrower is the prevailing party in such claim, or (z) except with respect to JPMorgan Chase Bank, N.A. in its individual capacity or as Administrative Agent, claims brought by an Indemnitee solely against another Indemnitee and not involving a direct act or omission of Borrower. This Section 9.03(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.

(c)To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is

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sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such.

(d)To the extent permitted by applicable law, no party hereto (or Affiliate thereof) may assert, and each such Person for itself and on behalf of any such Affiliate hereby waives, any claim against any other party hereto (or Affiliate thereof), on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof, other than any claim made by an Indemnitee pursuant to Section 9.03(b) hereof to reimburse it for an amount paid to an unaffiliated third party. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby except to the extent such damages are found by a final, non‑appealable judgment of a court to arise from the willful misconduct or gross negligence of such Indemnitee.

(e)All amounts due under this Section shall be payable promptly after written demand therefor, accompanied by appropriate backup documentation, as applicable.

SECTION 9.04.Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

(A)the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee; and provided that the Borrower shall be deemed to have consented to any such assignment unless it shall

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object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof;

(B)the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Lender with a Commitment immediately prior to giving effect to such assignment;

(C)the Swingline Lender; and

(D)the Issuing Bank.

(ii)Assignments shall be subject to the following additional conditions:

(A)except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(B)each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

(C)the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(D)the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more “Credit Contacts” to whom all syndicate-level information (which may contain material non-public information about the Borrower and its affiliates and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

(iii)Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of

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Sections 2.14, 2.15, 2.16 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv)The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v)Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.17(d) or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c)Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the

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benefits of Sections 2.14, 2.15 and 2.16 (subject to the requirements and limitations therein, including the requirements under Section 2.16(f) (it being understood that the documentation required under Section 2.16(f) shall be delivered by such Participant to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (i) agrees to be subject to the provisions of 2.19 as if it were an assignee under paragraph (b) of this Section; and (ii) shall not be entitled to receive any greater payment under Sections 2.14 or 2.16, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.18(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.17(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Credit Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or in connection with any exercise by a Participant of any rights hereunder. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(d)Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 9.05.Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full

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force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06.Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.07.Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08.Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 9.09.Governing Law; Jurisdiction; Consent to Service of Process. (a)This Agreement shall be construed in accordance with and governed by the law of the State of Illinois.

(b)The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of Illinois sitting in Cook County and of the United States District Court of the Northern District of Illinois, and any appellate court from any thereof, in any action or proceeding arising out of or relating to

71

this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Illinois State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

(c)The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10.WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11.Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12.Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process (in which case the Administrative Agent, Issuing Bank or applicable Lender shall notify Borrower in advance of such disclosure, to

72

the extent permitted by law), (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis from a source other than the Borrower that is not known by such Person to be prohibited from disclosing such information by a legal, contractual or fiduciary obligation to the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis prior to disclosure by the Borrower. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 9.13.Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.14.USA PATRIOT Act. Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

SECTION 9.15.No Fiduciary Duty. The Administrative Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”)may have economic interests that conflict with those of the Borrower, its stockholders and/or its Affiliates. The Borrower agrees that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any

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Lender, on the one hand, and the Borrower, its stockholders or its Affiliates, on the other.  The Borrower acknowledges and agrees that (i) the transactions contemplated by the Credit Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrower, its stockholders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise the Borrower, its stockholders or its Affiliates on other matters) or any other obligation to the Borrower except the obligations expressly set forth in the Credit Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other Person.  The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  The Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty, to the Borrower in connection with such transactions or the process leading thereto.

[signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BORROWER:

KEMPER CORPORATION

By: /s/ Christopher L. Moses

Name: Christopher L. Moses

Title: Vice President and Treasurer

Signature Page to Credit Agreement

LENDERS:

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent and as a Lender

By: /s/ Thomas A. Kiepura

Name: Thomas A. Kiepura

Title: Vice President

Signature Page to Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Co-Syndication Agent and as a Lender

By: /s/ Casey Connelly

Name: Casey Connelly

Title: Vice President

Signature Page to Credit Agreement

FIFTH THIRD BANK,

as Co-Syndication Agent and as a Lender

By: /s/ Rob Szymanski

Name: Rob Szymanski

Title: Portfolio Manager

Signature Page to Credit Agreement

ASSOCIATED BANK,

as a Lender

By: /s/ Edward J. Chidiac

Name: Edward J. Chidiac

Title: Senior Vice President

Signature Page to Credit Agreement

PNC BANK, NATIONAL ASSOCIATION,

as a Lender

By: /s/ Richard Onkey

Name: Richard Onkey

Title: Vice President

Signature Page to Credit Agreement

U.S. BANK NATIONAL ASSOCIATION,

as a Lender

By: /s/ Evan Glass

Name: Evan Glass

Title: Vice President

Signature Page to Credit Agreement

THE BANK OF NEW YORK MELLON,

as a Lender

By: /s/ Paulette Truman

Name: Paulette Truman

Title: Vice President

Signature Page to Credit Agreement

THE NORTHERN TRUST COMPANY,

as a Lender

By: /s/ Chris McKean

Name: Chris McKean

Title: Senior Vice President

Signature Page to Credit Agreement

Schedule 1.01

PRICING SCHEDULE

Applicable Rate	Level I Status	Level II Status	Level III Status	Level IV Status
Eurodollar Rate	1.150%	1.275%	1.375%	1.450%
ABR Rate	0.150%	0.275%	0.375%	0.450%
Facility Fee Rate	0.225%	0.225%	0.250%	0.300%

For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:

"Financials" means the annual or quarterly financial statements of the Borrower delivered pursuant to Section 5.09 or 5.10 of this Agreement.

"Level I Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, the Leverage Ratio is less than or equal to 0.20 to 1.00.

"Level II Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, (i) the Borrower has not qualified for Level I Status and (ii) the Leverage Ratio is less than or equal to 0.25 to 1.00.

"Level III Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Leverage Ratio is less than or equal to 0.30 to 1.00.

"Level IV Status" exists at any date if the Borrower has not qualified for Level I Status, Level II Status or Level III Status.

"Status" means Level I Status, Level II Status, Level III Status or Level IV Status.

The Applicable Rate shall be determined in accordance with the foregoing table based on the Borrower's Status as reflected in the then most recent Financials. Adjustments, if any, to the Applicable Rate shall be effective five Business Days after the Administrative Agent has received the applicable Financials. If the Borrower fails to deliver the Financials to the Administrative Agent at the time required pursuant to this Agreement, then the Applicable Rate shall be the highest Applicable Rate set forth in the foregoing table until five days after such Financials are so delivered. Until adjusted Level II Status shall be deemed to exist.

If, as a result of any restatement of or other adjustment to the Financials of the Borrower or for any other reason, Administrative Agent reasonably determines that (a) the Leverage Ratio as calculated by Borrower as of any applicable date was inaccurate and (b) a proper calculation of the Leverage Ratio would have resulted in different pricing for any period, then (i) if the proper calculation of the Leverage Ratio would have resulted in higher pricing for such period, Borrower shall automatically and retroactively (or, if the recalculation results from anything other than a restatement or post-effective adjustment to such

Financials by the Borrower, upon the Borrower’s receipt of a notice by the Administrative Agent indicating the reason for such recalculation) be obligated to pay to Administrative Agent, for the benefit of the applicable Lenders, promptly on demand by Administrative Agent, an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period; and (ii) if the proper calculation of the Leverage Ratio would have resulted in lower pricing for such period, neither Administrative Agent nor any Lender shall have any obligation to repay any interest or fees to Borrower; provided that if, as a result of any restatement or other event a proper calculation of the Leverage Ratio would have resulted in higher pricing for one or more periods and lower pricing for one or more other periods (due to the shifting of income or expenses from one period to another period or any similar reason), then the amount payable by Borrower pursuant to clause (i) above shall be based upon the excess, if any, of the amount of interest and fees that should have been paid for all applicable periods over the amount of interest and fees paid for all such periods.

Schedule 2.01

Commitments

BANK	ALLOCATION		PERCENT
JPMorgan Chase Bank, N.A.	$75,000,000		23.08	%
Wells Fargo Bank, National Association	$75,000,000		23.08	%
Fifth Third Bank	$55,000,000		16.93	%
The Northern Trust Company	$30,000,000		9.23	%
U.S. Bank National Association	$30,000,000		9.23	%
Associated Bank	$20,000,000		6.15	%
PNC Bank, National Association	$20,000,000		6.15	%
The Bank of New York Mellon	$20,000,000		6.15	%
	$	325,000,000	100.00	%

Schedule 3.03

Subsidiaries

Subsidiaries of KEMPER CORPORATION

Subsidiaries of Kemper Corporation, with their states of incorporation in parentheses, are as follows:

1. 301 Oxford Valley Insurance Agency, Inc.(Pennsylvania)

2. Alpha Property & Casualty Insurance Company (Wisconsin)

3. Capitol County Mutual Fire Insurance Company (Texas)*

4. Charter Indemnity Company (Texas)

5. C L & C Holding Incorporated (Connecticut)

6. Connecticut Casualty Insurance Agency, Inc. (Connecticut)

7. DRC Services Company, Inc. (New York)

8. Direct Response Corporation (Delaware)

9. Family Security Funerals Company (Texas)

10. Financial Indemnity Company (Illinois)

11. Fireside Bank (California)

12. Fireside Securities Corporation (California)

13. KAHG LLC (Illinois)

14. Kemper Corporate Services, Inc. (Illinois)

15. Kemper General Agency, Inc. (Texas)

16. Kemper Independence Insurance Company (Illinois)

17. Merastar Industries, LLC (Delaware)

18. Merastar Insurance Company (Illinois)

19. Mutual Benefit Assessment Corporation (Alabama)

20. Mutual Savings Fire Insurance Company (Alabama)

21. Mutual Savings Life Insurance Company (Alabama)

22. National Merit Insurance Company (Washington)

23. NCM Management Corporation (Delaware)

24. Old Reliable Casualty Company (Missouri)*

25. One East Wacker LLC (Illinois)

26. The Reliable Life Insurance Company (Missouri)

27. Reserve National Insurance Company (Oklahoma)

28. Response General Agency of Texas, Inc. (Connecticut)

29. Response Indemnity Company of California (California)

30. Response Insurance Company (Illinois)

31. Response Property & Management Company (Massachusetts)

32. Response Worldwide Direct Auto Insurance Company (Illinois)

33. Response Worldwide Insurance Company (Illinois)

34. Security One Insurance Agency (Tennessee)

35. Trinity Universal Insurance Company (Texas)

36. UICA Investment Holdings LLC (Delaware)

37. Union National Fire Insurance Company (Louisiana)

38. Union National Life Insurance Company (Louisiana)

39. United Casualty Insurance Company of America (Illinois)

40. United Insurance Company of America (Illinois)

41. Unitrin Advantage Insurance Company (New York)

42. Unitrin Auto and Home Insurance Company (New York)

43. Unitrin County Mutual Insurance Company (Texas)*

44. Unitrin Direct General Agency, Inc. (Texas)

45. Unitrin Direct Insurance Company (Illinois)

46. Unitrin Direct Property & Casualty Company (Illinois)

47. Unitrin Preferred Insurance Company (New York)

48. Unitrin Safeguard Insurance Company (Wisconsin)

49. Valley Insurance Company (California)

50. Valley Property & Casualty Insurance Company (Oregon)

51. Warner Insurance Company (Illinois)

* May be deemed to be an affiliate pursuant to Rule 1-02 of SEC Regulation S-X.

Schedule 6.02

Existing Indebtedness

1. Indebtedness arising out of that certain Mortgage between Wells Fargo Bank, as Mortgagee, and United Insurance Company of America, as Mortgagor, identified as Loan Number 60-0873201, against property located at 4530 East Ray Road, Phoenix, Arizona, in the outstanding principal amount of $5,621,148.99 as of February 29, 2012

2. Indebtedness arising out of that certain Letter of Credit Number CTCS-602545 issued by JPMorgan Chase Bank, N.A. on behalf of Mutual Savings Life Insurance Company in favor of Liberty Mutual Insurance Company (as the same may have been amended from time to time prior to the date hereof) in the aggregate amount of $100,000.00

3. Indebtedness arising out of that certain Letter of Credit Number 00318444 issued by JPMorgan Chase Bank, N.A. (as successor by merger to Bank One, NA) on behalf of Trinity Universal Insurance Company in favor of Argonaut Insurance Company (as the same may have been amended from time to time prior to the date hereof) in the aggregate amount of $100,000.00

4. Certain capital lease obligations as reported in Note 8 – Leases to the Consolidated Financial Statements included in the 2011 Annual Report on Form 10-K. The present value of such obligations is $3.2 million.

Schedule 6.03

Existing Liens

1. Security interest in the property located at 4530 East Ray Road, Phoenix, Arizona

to secure the Indebtedness listed as item number 1 on Schedule 6.02.

2. Security interest in the funds held in the cash collateral account established by the

Borrower with The Travelers Indemnity Company in the aggregate amount of $13,100,000, with regard to the Kemper Corporation Worker’s Compensation policy.

EXHIBIT A

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1. Assignor:    

2. Assignee:        [and is an Affiliate/Approved Fund of [identify Lender]¹]

3. Borrower(s):    Kemper Corporation, a Delaware corporation

4. Administrative Agent:     JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement

5. Credit Agreement:    Credit Agreement dated as of March 7, 2012 among Kemper Corporation, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents party thereto.

____________________

¹Select as applicable

6. Assigned Interest:

Aggregate Amount of Commitment for all Lenders	Amount of Commitment Assigned	Percentage Assigned of Commitment 2
$	$	%
$	$	%
$	$	%

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire in which the Assignee designates one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its related parties or their respective securities) will be made available and who may receive such information in accordance with the Assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:     
Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:     
Title:

_____________________________________________________________________________________

² Set forth to at least 9 decimals, as a percentage of the Commitment of all Lenders thereunder.

[Consented to and] ³ Accepted:

JPMORGAN CHASE BANK, N.A., as
Administrative Agent

By
Title:

[Consented to:] ⁴ 

[NAME OF RELEVANT PARTY]

By
Title:

______________________________________________________________

³To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

⁴To be added only if the consent of the Borrower and/or other parties (e.g. Swingline Lender, Issuing Bank) is required by the terms of the Credit Agreement.

ANNEX 1

Credit Agreement dated as of March 7, 2012 among Kemper Corporation, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents party thereto.

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1.    Representations and Warranties.

1.1    Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document.

1.2.    Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.09 or 5.10 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Documents are required to be performed by it as a Lender.

2.    Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3.    General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by electronic mail shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Illinois.

EXHIBIT B

FORM OF BORROWING REQUEST

______________, 20__

The undersigned, Kemper Corporation (the "Borrower"), refers to the Credit Agreement, dated as of March 7, 2012 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement"), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. The Borrower hereby requests a Borrowing, pursuant to Section 2.03 of the Credit Agreement, as follows:

(i)    The aggregate amount of the requested Borrowing is $___________.

(ii)    The Business Day on which the Borrower requests the Borrowing to be made is ____________, 20__.

(iii)    The requested Borrowing is an [Eurodollar] [ABR] Borrowing.

(iv)    If a Eurodollar Borrowing, the initial Interest Period for the requested Borrowing is ____ [one, two, three or six] months.

(v)    The requested Borrowing shall be funded to Borrower's account no. _____________________.

Very truly yours,

KEMPER CORPORATION

By:    

Name: _____________________________

Title:     

EXHIBIT C

FORM OF PROMISSORY NOTE

_______________, 20__

FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to _____________________ and its registered assigns (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement dated as of March 7 2012 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement”; the terms defined therein being used herein as therein defined), among Kemper Corporation, the Lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent. The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement. This Note is one of the promissory notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. The Lender may attach schedules to this Note and endorse thereon the date, amount, currency and maturity of its Loans and payments with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

[signature page follows]

IN WITNESS WHEREOF, the undersigned has executed this Note by its duly authorized officer.

KEMPER CORPORATION

By:

Name:

Title:

EXHIBIT D

EXHIBIT D-1

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) dated as of March 7, 2012 among Kemper Corporation (the “Borrower”), the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents parties thereto.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:______________________________________    Name:    Title:

Date: ________ __, 20__

EXHIBIT D-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) dated as of March 7, 2012 among Kemper Corporation (the “Borrower”), the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents parties thereto.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such Loan(s) (as well as any promissory note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:______________________________________    Name:    Title:

Date: ________ __, 20__

EXHIBIT D-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Participants That Are Not PartnershipsFor U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) dated as of March 7, 2012 among Kemper Corporation (the “Borrower”), the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents parties thereto.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:______________________________________    Name:    Title:

Date: ________ __, 20__

EXHIBIT D-4

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) dated as of March 7, 2012 among Kemper Corporation (the “Borrower”), the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents parties thereto.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]

By:______________________________________    Name:    Title:

Date: ________ __, 20__

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”), dated as of December 31, 2013, is executed by and among Kemper Corporation (the “Borrower”), the Lenders (as defined below), and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”).

BACKGROUND

A.The Borrower, the lenders party thereto (“Lenders”), the Administrative Agent and the other named agents are party to that certain Credit Agreement dated as of March 7, 2012 (the “Credit Agreement”).

B.The parties wish to amend the Credit Agreement as provided herein.

C.The Borrower, the Administrative Agent and the Lenders are willing to enter into this Amendment upon the terms and conditions set forth below.

NOW THEREFORE, in consideration of the matters set forth in the recitals and the covenants and provisions herein set forth, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

Section 1.Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

Section 2.Reduction of the Commitments. As of the First Amendment Effective Date (as defined below), the aggregate Commitments are hereby reduced by $100,000,000 to $225,000,000 in accordance with the new Schedule 2.01 to the Credit Agreement attached hereto as Exhibit A.

Section 3.Amendments to the Credit Agreement. As of the First Amendment Effective Date, the Credit Agreement is hereby amended as follows:

3.1.Section 1.01 of the Credit Agreement is hereby amended by restating the following defined term in its entirety:

"LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page) on such screen at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits in the London interbank market with a maturity comparable to such Interest Period. In the event that such rate does not appear on such page (or on any successor or substitute page on such screen or otherwise on such screen), the “LIBO Rate” shall be determined by reference to such other comparable publicly available service for displaying interest rates for dollar deposits in the London interbank market as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the

1

London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

3.2.Section 6.02 of the Credit Agreement is hereby amended by deleting paragraph (d) thereof in its entirety and replacing it with the following:

(d) Indebtedness incurred in connection with borrowings from the Federal Home Loan Bank or issuances of Surplus Notes, in an amount not to exceed $250,000,000 in the aggregate at any time outstanding; provided, that the aggregate Indebtedness incurred in connection with issuances of Surplus Notes shall not exceed $100,000,000 at any one time outstanding;

3.3.Schedule 2.01 to the Credit Agreement is hereby restated in its entirety in the form of Schedule 2.01 hereto.

Section 4.Representations and Warranties. To induce the Administrative Agent and the undersigned Lenders to execute this Amendment, the Borrower hereby represents and warrants to the Administrative Agent and such Lenders as follows:

4.1.the execution, delivery and performance of this Amendment have been duly authorized by all requisite action of the Borrower, and this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability;

4.2.each of the representations and warranties in the Credit Agreement and the other Credit Documents is true and correct in all material respects with the same effect as though made on and as of the date hereof (except, in each case, to the extent stated to relate to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date); provided, that if a representation or warranty is qualified as to materiality, the applicable materiality qualifier set forth above shall be disregarded with respect to such representation and warranty for purposes of this provision; and

4.3.no Default exists under the Credit Agreement or would exist after giving effect to this Amendment.

Section 5.Effectiveness. This Amendment shall become effective as of the date first set forth above, subject to the satisfaction of the following conditions precedent (the date of such satisfaction being the “First Amendment Effective Date”):

5.1.Amendment. Administrative Agent shall have received counterparts of this Amendment signed by the Administrative Agent, the Borrower and the Required Lenders.

5.2.Representations and Warranties. The warranties and representations of the Borrower contained in this Amendment shall each be true and correct as of the effective date hereof, with the same effect as though made on such date.

5.3.No Default. After giving effect to this Amendment, no Default under the Credit Agreement shall have occurred and be continuing.

2

Section 6.Reference to and Effect Upon the Credit Agreement.

6.1.Except as specifically provided herein, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.

6.2.Except as specifically set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders under the Credit Agreement or any other Credit Document, nor constitute an amendment or waiver of any provision of the Credit Agreement or any other Credit Document. Upon the effectiveness of this Amendment, each reference to the Credit Agreement contained therein or in any other Credit Document shall mean and be a reference to the Credit Agreement as amended hereby. This Amendment shall constitute a Credit Document for the purposes of the Credit Agreement and each other Credit Document.

Section 7.APPLICABLE LAW.THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.

Section 8.Enforceability and Severability. Wherever possible, each provision in or obligation under this Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any such provision or obligation shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

Section 9.Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. Delivery of a counterpart signature page by facsimile transmission or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file) shall be effective as delivery of a manually executed counterpart signature page.

Section 10.Costs and Expenses. The Borrower hereby affirms its obligation under Section 9.03 of the Credit Agreement to reimburse the Administrative Agent for all reasonable, documented out-of-pocket expenses incurred in connection with the preparation, negotiation, execution and delivery of this Amendment, including but not limited to the attorneys’ fees and expenses of a single primary legal counsel for the Administrative Agent with respect thereto.

[signature pages follow]

3

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the day and year first above written.

BORROWER:

KEMPER CORPORATION, as Borrower

By: /s/ Christopher L. Moses

Title: Vice President

LENDERS: JPMORGAN CHASE BANK, N.A., as Administrative Agent and as a Lender

By: /s/ Hector Varona

Title: Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent and as a Lender

By: /s/ Robert C. Meyer

Title: Managing Director

FIFTH THIRD BANK, as Co-Syndication Agent and as a Lender

By: /s/ Daniel J. Clarke, Jr.

Title: Managing Director

ASSOCIATED BANK, as a Lender

By: /s/ Liliana Huerta

Title: Vice President

PNC BANK, NATIONAL ASSOCIATION, as a Lender

By: /s/ Nicole R. Limberg

Title: Vice President

US BANK NATIONAL ASSOCIATION, as a Lender

By: /s/ Ginger K. So

Title: Senior Vice President

BANK OF NEW YORK MELLON, as a Lender

By: /s/ Ken Sneider

Title: Managing Director

THE NORTHERN TRUST COMPANY, as a Lender

By: /s/ Michael J. Kingsley

Title: Senior Vice President

EXHIBIT A

Schedule 2.01

Commitments

BANK	ALLOCATION		PERCENT
JPMorgan Chase Bank, N.A.		$51,920,000	23.08	%
Wells Fargo Bank, National Association		$51,920,000	23.08	%
Fifth Third Bank		$38,070,000	16.93	%
The Northern Trust Company		$20,770,000	9.23	%
U.S. Bank National Association		$20,770,000	9.23	%
Associated Bank		$13,850,000	6.15	%
PNC Bank, National Association		$13,850,000	6.15	%
The Bank of New York Mellon		$13,850,000	6.15	%
		$225,000,000	100.00	%

EX-10.2

Exhibit 10.2

ADVANCES AND SECURITY AGREEMENT

This Advances and Security Agreement ("Agreement") is made as of December 30,2013_, between the Federal Home Loan Bank of Dallas ("Bank"), with its principal office located at 8500 Freeport Parkway South, Suite 600, Irving, Texas 75063, mailing address: P.O. Box 619026, Dallas, Texas 75261-9026 and Trinity Universal Insurance Company, a Texas-domiciled property and casualty insurance company ("Borrower"), with its chief executive offices located at 12926 Gran Bay Parkway, Jacksonville, Florida 32258.

WHEREAS, from time to time Borrower desires to obtain extensions of credit from the Bank in accordance with the terms and conditions of this Agreement; and

WHEREAS, pursuant to the provisions of the Federal Home Loan Bank Act, as amended from time to time (the "Act"), and the rules, regulations, statements of policy, and guidelines of the Federal Housing Finance Board or any successor entity now or hereafter in effect from time to time promulgated thereunder (the "Regulations"), the Bank is authorized to extend credit to Borrower in accordance with the credit policies and programs adopted by the Bank; and

WHEREAS, the Bank requires that all existing indebtedness of Borrower to the Bank and all extensions of credit by the Bank to Borrower pursuant to this Agreement be secured pursuant to this Agreement, and Borrower is willing to provide such security;

NOW, THEREFORE, Borrower and the Bank agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. DEFINED TERMS. All capitalized terms in this Agreement shall have the defined meanings where given, and the following terms shall have the following meanings:

(a)"Advances" shall mean any and all loans, advances, overdrafts, or other extensions of credit by the Bank to Borrower, including all loans, advances, letters of credit, overdrafts, or extensions of credit heretofore, now, or hereafter granted by the Bank to, or on behalf of or for the account of Borrower.

(b)"Agreement" shall mean this Advances and Security Agreement, together with any and all authenticated amendments, modifications, or restatements hereof as may be duly entered into by the parties hereto and all documents or other agreements incorporated herein by reference.

5/2005    Advances and Security Agreement    Page 1

(c)"Capital Stock" shall mean all of the capital stock of the Bank held by the Borrower and all payments that have been or hereafter are made on account of subscriptions to and all declared and unpaid dividends on such capital stock.

(d)"Collateral" shall mean (i) all First Mortgage Collateral, Other Real Estate Related Collateral, Capital Stock, Deposit Accounts, Securities, Small Business Collateral, and Small Farm and Agri-Business Collateral, (ii) all property in which Borrower has heretofore granted a security interest or has assigned, transferred, or pledged to the Bank as collateral for Advances prior to the date hereof, (iii) all other property as may be accepted by the Bank as collateral from time to time pursuant to the terms hereof, (iv) all securities representing undivided equity interests in any of the foregoing, (v) all accessions to, substitutions for, and replacements and products of all of the foregoing, and (vi) the proceeds, cash proceeds, and noncash proceeds of all of the foregoing, including, without limitation, any of the foregoing that are acquired with any cash proceeds of the foregoing.

(e)"Collateral Maintenance Level" shall mean one hundred percent (100%) of the aggregate outstanding Indebtedness. The Bank may increase or decrease the Collateral Maintenance Level as to all Indebtedness at any time.

(f)"Confirmation of Advance" shall mean a writing or transmission in electronic or other form as may be determined by the Bank from time to time evidencing an Advance.

(g)"Deposit Account" shall mean any and all of the deposit accounts of Borrower with the Bank, including, without limitation, all cash and other funds therein.

(h)"Event of Default" shall be as defined in Section 4.1 hereof.

(i)"Fair Market Value" shall mean the fair market value of Collateral determined in such manner as specified by the Bank from time to time.

(j)"First Mortgage Collateral" shall mean First Mortgage Documents and all ancillary security agreements, policies and certificates of insurance or guarantees, chattel paper, electronic chattel paper, evidences of recordation, applications, underwriting materials, appraisals, notices, opinions of counsel, loan servicing data, and all other electronically stored and written records or materials relating to the loans evidenced or secured by First Mortgage Documents.

(k)"First Mortgage Documents" shall mean all first mortgages and deeds of trust relating to one-to-four family residential dwellings and multifamily residential dwellings ("First Mortgages") and all promissory notes, bonds, or other instruments evidencing loans secured thereby ("First Mortgage Notes") and any endorsements and assignments thereof to Borrower.

(l)"Indebtedness" shall mean all indebtedness, obligations, and liabilities of Borrower to the Bank arising under or pursuant to this Agreement and any other agreements, including, without limitation, all Advances, all interest accruing from time to time (including, without limitation, any interest which accrues after the commencement of any receivership, bankruptcy, insolvency, or similar proceeding with respect to Borrower, whether or not allowed or allowable as a claim under any such proceeding), and all other amounts owed to the Bank under this Agreement or any other agreement.

(m)“Other Real Estate Related Collateral” shall mean (i) all other items of real estate related collateral, including without limitation, all mortgages, deeds of trust, and security agreements relating to loans secured by commercial property, home equity loans, home improvement loans, subordinate loans, mortgage warehouse lines of credit, real estate construction loans, and other real estate related loans, and (A) all promissory notes, bonds, or other instruments evidencing such loans and lines of credit, (B) any endorsements and assignments thereof to Borrower, and (C) all ancillary security agreements, policies and certificates of insurance or guarantees, chattel paper, electronic chattel paper, evidences of recordation, applications, underwriting materials, appraisals, notices, opinions of counsel, loan servicing data, and all other electronically stored and written records or materials relating to the loans evidenced or secured thereby, excluding First Mortgage Collateral, Securities, Small Business Collateral, and Small Farm and Agri-Business Collateral, (ii) all property relating to Borrower’s management, collection, processing, accounting for, monitoring, or servicing of loans and accounts, including, without limitation, all checks, instruments, documents, certificates,

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agreements, loan accounts, payments, chattel paper, electronic chattel paper, collections, account statements, computer files, records, promissory notes, endorsements, assignments, and loan servicing data, together with the rights, remedies, and powers related thereto, and (iii) participations in or portions of First Mortgage Collateral and other real estate related collateral as set forth in clause (i) above.

(n)"Qualifying Collateral" shall mean (a) Collateral, other than Capital Stock, Other Real Estate Related Collateral, Small Business Collateral, and Small Farm and Agri-Business Collateral, that: (i) qualifies as security for Advances under the terms and conditions of the Act and the Regulations and satisfies the requirements that may be established by the Bank; (ii) is owned by Borrower free and clear of any liens, encumbrances, or other interests other than the security interest granted to or permitted by the Bank and the assignment to the Bank hereunder; (iii) in the case of First Mortgage Collateral, has no payments which are overdue by more than the number of days, if any, permitted by the Bank's Member Products & Credit Policy, as amended, restated, or otherwise modified from time to time, or any similar policy of the Bank and within the most recent twelve (12) month period has not otherwise been in default (beyond the applicable grace period with respect to such default, if any) which default has not been cured in a manner acceptable to the Bank in its sole discretion; (iv) in the case of First Mortgage Collateral, relates to residential real property that is covered by fire and hazard insurance in an amount at least sufficient to discharge the mortgage loan in full in case of loss and as to which all real estate taxes are current; (v) in the case of First Mortgage Collateral, does not secure any indebtedness on which any director, officer, employee, attorney, or agent of Borrower or any Federal Home Loan Bank or the Federal Housing Finance Board is personally liable unless the Board of Directors of the Bank has specifically approved acceptance of such Collateral and the Federal Housing Finance Board has endorsed such approval; and (vi) in the case of First Mortgage Collateral, has not been classified as substandard, doubtful or loss by Borrower's regulating authority or Borrower's management; and (b) Other Real Estate Related Collateral, Small Business Collateral, and Small Farm and Agri-Business Collateral that meets the requirements for First Mortgage Collateral except for the requirements in clause (a)(ii) above in the case of subordinate lien mortgages and except for the requirements in clause (a)(iv) above in the case of mortgages on underdeveloped land and in the case of commercial real estate property covered by fire and hazard insurance in an amount at least sufficient to discharge the mortgage loan in full in case of loss and as to which all real estate taxes are current.

(o)"Securities" shall mean mortgage-backed securities (including participation certificates) issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Government National Mortgage Association, obligations of or guaranteed by the United States, United States government agency securities, privately-issued residential mortgage-backed securities, and any other investment property delivered or furnished to the Bank from time to time.

(p)“Small Business Collateral” shall mean loans to persons or entities owning or operating small businesses and all promissory notes, mortgages, deeds of trust, security agreements, bonds, instruments, endorsements, assignments, polices and certificates of insurance, guarantees, evidences of recordations, applications, underwriting materials, appraisals, notices, opinions of counsel, loan servicing data, electronically stored and written records, agreements, chattel paper, electronic chattel paper, and documents relating to, evidencing, or securing such loans.

(q)“Small Farm and Agri-Business Collateral” shall mean loans to persons or entities owning or operating small farms or agri-businesses and all promissory notes, mortgages, deeds of trust, security agreements, bonds, instruments, endorsements, assignments, polices and certificates of insurance, guarantees, evidences of recordations, applications, underwriting materials, appraisals, notices, opinions of counsel, loan servicing data, electronically stored and written records, agreements, chattel paper, electronic chattel paper, and documents relating to, evidencing, or securing such loans.

(r)“UCC” means the Uniform Commercial Code as in effect in the State of Texas or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests hereunder.

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Unless otherwise defined herein or the context otherwise requires, terms defined in the UCC have the respective meanings provided in the UCC. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

ARTICLE II

ADVANCES

SECTION 2.1. APPLICATION AND PROCEDURES FOR ADVANCES. Borrower may from time to time request Advances and agrees to be bound by the terms and conditions contained herein and by the Confirmation of Advance issued with respect to each such Advance. Unless otherwise agreed to by the Bank, each Advance shall be made by crediting the Deposit Account(s) of Borrower with the Bank.

SECTION 2.2. REPAYMENT OF ADVANCES. Borrower agrees to repay each Advance in accordance with this Agreement and the terms and conditions of the Confirmation of Advance and any other document evidencing such Advance. Unless otherwise specified in any document evidencing an Advance, interest shall be paid on the first business day of the month for the amount accrued through the last day of the previous month and at maturity on the daily outstanding principal amount of each Advance at the rate set forth in the Confirmation of Advance evidencing such Advance; provided, however, interest shall be paid at maturity on the daily outstanding principal amount of each Advance with a maturity date of thirty five days or less at the rate set forth in the Confirmation of Advance evidencing such Advance. Interest will be charged for each day that an Advance is outstanding and will be computed on the basis of the actual number of days in the year. Borrower shall pay to the Bank immediately and without demand, interest on any past due principal of and interest on any Advance at the rate in effect and being charged by the Bank from time to time on overdrafts on Deposit Account(s) of its members. Borrower shall maintain in Deposit Account(s) with the Bank an amount at least equal to the amounts then currently due and payable to the Bank on outstanding Advances, and Borrower hereby authorizes the Bank to debit such Deposit Account(s) for all amounts due and payable on any Advance and for all other amounts due and payable hereunder. In the event that the collected balance in such Deposit Account(s) is, at any time, insufficient to pay such due and payable amounts, the Bank may without notice to Borrower apply any other deposits, credits, or monies of Borrower then in the possession of the Bank to the payment of such due and payable amounts. Borrower agrees that, in the event any such debit results in such Deposit Account(s) being overdrawn, Borrower shall pay overdraft charges and interest on the amount of the overdraft at the rate in effect and being charged by the Bank from time to time on overdrafts on Deposit Account(s) of its members. Upon maturity of any Advance, either by its terms, by acceleration pursuant to this Agreement, or otherwise the Bank may without notice to Borrower apply any credits, deposits, or monies of Borrower then in the possession or custody and control of the Bank to the payment of principal, interest, and other due and payable amounts in connection with such Advance, including, without limitation, any prepayment fees owed in connection with the repayment of that Advance. All payments with respect to Advances shall be applied first to any fees or charges applicable thereto, then to interest due thereon, and then to any principal amount thereof that is then due and payable.

SECTION 2.3. ADVANCES WITH RESPECT TO OUTSTANDING COMMITMENTS. In the event that one or more commitments to make Advances to Borrower are outstanding at the time of an Event of Default under Section 4.1 hereof ("Outstanding Commitments"), the Bank may at its option make an Advance by crediting a special reserve account with the Bank in an amount equal to the Outstanding Commitments. Amounts credited to such special reserve account shall be utilized by the Bank for the purpose of satisfying the obligations of the Bank under such Outstanding Commitments. When all such obligations have expired or have been satisfied, the Bank shall disburse the balance, if any, in such special reserve account first to the satisfaction of any amounts

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then due and owing by Borrower to the Bank and then to Borrower or its successors in interest. Advances made pursuant to this Section 2.3 shall be payable on demand and shall bear interest at the rate in effect and being charged by the Bank from time to time on overdrafts on Deposit Account(s) of its Borrowers. Nothing contained in this Section 2.3, however, shall be interpreted to obligate the Bank to release funds or to fund an Outstanding Commitment in the event Borrower is unable to satisfy the continued eligibility for funding Advances or Collateral requirements of this Agreement or is otherwise in default under this Agreement.

ARTICLE III

SECURITY AGREEMENT

SECTION 3.1. CREATION OF SECURITY INTEREST. As security for all Indebtedness and Outstanding Commitments, Borrower hereby assigns, transfers, and pledges to the Bank, and grants to the Bank a security interest in all of the Collateral, including, without limitation, the First Mortgage Collateral, Capital Stock, Deposit Accounts, Other Real Estate Related Collateral, Securities, Small Business Collateral, and Small Farm and Agri-Business Collateral now owned or existing or hereafter owned, acquired, or arising by Borrower, all payment intangibles related to the foregoing, and all proceeds, cash proceeds, and noncash proceeds of the foregoing. Without limitation of the foregoing and for the avoidance of doubt, all property heretofore assigned, transferred, or pledged by Borrower to the Bank or as to which Borrower has granted a security interest to the Bank, as collateral for Advances prior to the date hereof is Collateral hereunder. If, as, and when First Mortgage Collateral, Securities, Small Business Collateral, Small Farm and Agri-Business Collateral, and Other Real Estate Related Collateral is encumbered or disposed of by Borrower in the ordinary course of the Borrower’s business and in conformity with the requirements of Section 3.3 (a) hereof the security interest created hereunder shall be automatically released.

SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF BORROWER CONCERNING COLLATERAL. Borrower represents and warrants to the Bank, as of the date hereof and as of the date of each Advance hereunder, the following:

(a)Borrower owns and has good and marketable title to the Collateral free and clear of any and all liens, claims, or encumbrances and has the right and authority to grant a security interest in the Collateral and to subject all of the Collateral to this Agreement.

(b)The information contained in any status report, schedule, or other documents required hereunder and any other information given from time to time by Borrower as to each item of Collateral is true, accurate, and complete in all material respects.

(c)All of the Collateral meets the standards and requirements with respect thereto from time to time established by the Bank, the Act, and the Regulations.

(d)To the best of Borrower's knowledge and belief, no part of any real property or interest in real property that is the subject of mortgages included in the Collateral contains or is subject to the effects of toxic or hazardous materials or other hazardous substances (including those defined in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. sec. 9601, et. seq.; the Hazardous Materials Transportation Act, 49 U.S.C. sec. 1801, et. seq.; the Resource Conservation and Recovery Act, 42 U.S.C. sec. 6901, et. seq.; and in the regulations adopted and publications promulgated pursuant to said laws, as such laws, regulations, and publications may be amended, reformed, or otherwise modified from time to time) the presence of which could subject the Bank or its successors and assigns to any liability under applicable state or Federal law or local ordinance either at any time that such property is pledged to the Bank or upon the enforcement by the Bank of its security interest therein. Borrower hereby agrees to indemnify and hold the Bank harmless against all costs, claims, expenses, damages, and liabilities resulting in any way from the presence or effects of any such toxic or hazardous substances or materials in, on, under, or emanating from any real property or interest in real property that is

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subject to or included in the Collateral or any other property in which the Borrower has granted a security interest in favor of the Bank.

(e)The exact legal name of Borrower, the type and jurisdiction of organization of Borrower, and the location of Borrower’s chief executive office, each as stated in the first paragraph of this Agreement is true, accurate, and complete. Except with thirty days’ prior written notice to the Bank, Borrower will not change its name, its type and jurisdiction of organization, or the location of its chief executive office.

(f)Borrower is in compliance with all laws, rules, regulations, and ordinances applicable to or binding upon Borrower or the Collateral, including, without limitation, the Truth in Lending Act and the Home Ownership and Equity Protection Act (and Regulation Z promulgated thereunder), Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, Fair and Accurate Credit Transactions Act, Gramm-Leach-Bliley Financial Privacy Act, anti-discrimination and fair lending laws, and all other federal and state laws, regulations, orders, directives, or similar requirements intended for the protection of consumers in connection with the extension of consumer credit, except to the extent that the failure to comply therewith would not be reasonably expected to (i) subject the Bank or its successors and assigns to any liability under applicable state or federal law or local ordinance at any time that Borrower grants a security interest in such property in favor of the Bank, upon the enforcement by the Bank of its security interest therein, or at any other time or (ii) have a material adverse effect on (A) the condition (financial or otherwise), operations, business, assets, or liabilities of Borrower, (B) the ability of Borrower to perform any material obligation under this Agreement, or (C) the material rights and remedies of the Bank under this Agreement. Borrower hereby agrees to indemnify and hold the Bank harmless against all costs, claims, expenses, damages, and liabilities resulting in any way from Borrower’s failure to comply with any laws, rules, regulations, or ordinances applicable to or binding upon Borrower or the Collateral.

SECTION 3.3. COLLATERAL MAINTENANCE REQUIREMENTS.

(a)Borrower shall at all times maintain as Collateral an amount of Qualifying Collateral that has a Fair Market Value that is at least equal to the Collateral Maintenance Level. Borrower shall not assign, pledge, transfer, create any security interest in, sell, or otherwise dispose of any Collateral or interest therein if: (i) such Collateral has been or is required to be specified pursuant to Section 3.4 hereof or is or is required to be held by or on behalf of the Bank pursuant to Section 3.5 hereof, or the Bank has otherwise perfected its security interest in such Collateral; or (ii) at the time of or immediately after such action, Borrower is not or would not be in compliance with the collateral maintenance requirements of the first sentence of this Section 3.3 (a) or there is any other Event of Default under this Agreement.

(b)Subject to the additional requirements set forth in Sections 3.4 and 3.5 hereof that may govern Collateral, Collateral shall be held by Borrower in trust for the benefit of, and subject to the direction and control of, the Bank and will be physically safeguarded by Borrower with at least the same degree of care as Borrower uses in physically safeguarding its other property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry. Without limitation of the foregoing, Borrower shall take all action necessary or desirable to protect and preserve the Collateral and the interest of the Bank therein, including, without limitation, the maintaining of Insurance on property securing First Mortgage Collateral (such policies and certificates of insurance or guaranty relating to such First Mortgage Collateral are herein called "Insurance"), the collection of payments under all mortgages and under all Insurance, and otherwise assuring that all mortgages are serviced in accordance with the standards of a reasonable and prudent servicer in the industry. Borrower, as agent for the Bank, shall collect all payments when due on all Collateral. If the Bank requires, Borrower shall hold all collections and other proceeds of Collateral separate from the other monies of Borrower and apply such collections to the reduction of Indebtedness as it becomes due; otherwise the Bank consents to the use and disposition by Borrower of all such collections in the ordinary course of Borrower’s business.

SECTION 3.4. SPECIFICATION AND SEGREGATION OF COLLATERAL.

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(a)Upon demand by the Bank, or promptly at any time that Borrower becomes subject to any mandatory collateral specification and segregation requirements that may be established in writing by the Bank, and in either case promptly after each valuation date established by the Bank, Borrower shall deliver to the Bank a status report and accompanying schedules, all in the form prescribed by the Bank, specifying and describing such amount of Qualifying Collateral as may be necessary so that the Fair Market Value of the Qualifying Collateral so specified meets or exceeds the Collateral Maintenance Level at all times. Each First Mortgage Note evidencing First Mortgage Collateral shall be endorsed by Borrower at such time as the Bank may request as follows: "Pay to the order of the Federal Home Loan Bank of Dallas." All other First Mortgage Documents and documents representing Securities, Small Farm and Agri-Business Collateral, and Other Real Estate Related Collateral shall be marked and assigned to the Bank in the foregoing manner or in such other manner as shall be specified by the Bank.

(b)Borrower shall physically segregate and hold in trust any First Mortgage Collateral, Small Business Collateral, Small Farm and Agri-Business Collateral, and Other Real Estate Related Collateral specified in each status report or delivered pursuant to subsection (a) of this Section 3.4 from all other property of Borrower in a manner satisfactory to the Bank. Borrower shall hold each First Mortgage Document and each document, agreement, instrument, endorsement, and assignment evidencing Other Real Estate Related Collateral which is a part of such segregated Collateral in a separate file folder with each folder clearly labeled with the loan identification number and the name of the mortgagor. Borrower shall hold each document, agreement, instrument, endorsement, and assignment evidencing Small Business Collateral or Small Farm and Agri-Business Collateral which is a part of such segregated Collateral in a separate file folder with each file folder clearly labeled with the loan identification number and the name of the borrower. Each such file folder shall be clearly marked or stamped with the statement: "The Mortgage, Deed of Trust, or Security Agreement, as applicable, and the Note Relating to this Loan Have Been Assigned to the Federal Home Loan Bank of Dallas."

(c)If requested by the Bank, Borrower shall provide, at its own expense, such certifications by an independent certified public accountant or by another party acceptable to the Bank as the Bank may request with respect to the compliance by Borrower with the terms of Sections 3.3 and 3.4. All Securities and, unless otherwise specified by the Bank, all other Collateral specified in such a status report shall be delivered to the Bank or to a custodian designated by the Bank, or in the case of uncertificated securities, transferred to the Bank in the manner specified in Section 3.5 hereto.

SECTION 3.5. DELIVERY OF COLLATERAL.

(a)Upon demand by the Bank, or promptly at any time that Borrower becomes subject to any mandatory collateral delivery requirements that may be established in writing by the Bank, and in either case from time to time thereafter, Borrower shall deliver to the Bank, or to a custodian designated by the Bank, such Qualifying Collateral as may be necessary so that the Fair Market Value of Qualifying Collateral held by the Bank, or such custodian, meets or exceeds the Collateral Maintenance Level at all times. Collateral delivered to the Bank shall be endorsed or assigned in recordable form by Borrower to the Bank. Unless otherwise specified in writing by the Bank, such endorsements or assignments may be in blanket form provided that, in the case of First Mortgage Collateral, Small Business Collateral, Small Farm and Agri-Business Collateral, and Other Real Estate Related Collateral, there shall be separate endorsements and assignments for each county or recording district in which the real property secured by such First Mortgage Collateral, Small Business Collateral, Small Farm and Agri-Business Collateral, or Other Real Estate Related Collateral is located. Concurrently with the initial delivery under this Section 3.5 of Collateral and promptly after each subsequent valuation date established by the Bank, and at such other times as the Bank may request, Borrower shall deliver to the Bank a status report and accompanying schedules, all in the form prescribed by the Bank and dated as of the then most recent valuation date, describing the Collateral held by the Bank or its custodian.

(b)With respect to uncertificated securities pledged to the Bank as Securities or other property offered as collateral by Borrower to the Bank and as may be accepted by the Bank as

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collateral from time to time pursuant to the terms hereof, the delivery requirements contained in this Agreement shall be satisfied by the Bank becoming the registered owner of such securities or the issuer of such securities having agreed that it will comply with instructions originated by the Bank without further consent by Borrower, such transfer to be effected in such manner and to be evidenced by such documents as specified by the Bank.

(c)Borrower agrees to pay the Bank such reasonable fees and charges as may be assessed by the Bank to cover the overhead and other costs of the Bank relating to the receipt, holding, redelivery, and reassignment of Collateral, and to reimburse the Bank upon request for all recording fees and other reasonable expenses, disbursements, and advances incurred or made by the Bank in connection therewith, including reasonable compensation and the expenses and disbursements of any custodian that may be appointed by the Bank hereunder, and the agents and legal counsel of the Bank and of such custodians.

SECTION 3.6. WITHDRAWAL OR REASSIGNMENT OF COLLATERAL. Upon approval by the Bank and receipt by the Bank of written documents in the form specified by the Bank constituting (i) a request from Borrower for the withdrawal or reassignment of Collateral that has been specified pursuant to Section 3.4 hereof or has been delivered pursuant to Section 3.5 hereof, or as to which the Bank has otherwise perfected its security interest, (ii) a detailed listing of the Collateral to be withdrawn or reassigned, and (iii) a certificate of a duly authorized officer of Borrower certifying that the Fair Market Value of the Qualifying Collateral that is specified and pledged to or will be held by the Bank, as appropriate, after such withdrawal or reassignment will not be less than the Collateral Maintenance Level, the Bank shall promptly redeliver or reassign to Borrower the Collateral specified in said certificate of such duly authorized officer. Notwithstanding anything to the contrary herein contained, while an Event of Default hereunder shall have occurred and be continuing, the Bank will not be required to honor any request for withdrawal or reassignment of any Collateral.

SECTION 3.7. REPORTS, COLLATERAL AUDITS, AND ACCESS.

(a)If the Fair Market Value of Qualifying Collateral owned by Borrower, free and clear of any liens, security interests, or encumbrances other than any lien, security interest, or encumbrance in favor of the Bank, shall at any time fall below the Collateral Maintenance Level or if Borrower becomes aware of, or has reason to believe that a contingency exists, which with the lapse of time, giving of notice, or both could result in Borrower failing to maintain Qualifying Collateral in an amount that has a Fair Market Value at least equal to the Collateral Maintenance Level, Borrower shall immediately notify the Bank. Borrower shall furnish to the Bank annually and at such other times as the Bank may request, an audit report prepared by the Bank, if the Bank in its sole discretion chooses to prepare such audit report, or an external independent auditor of Borrower in accordance with generally accepted auditing standards certifying that Borrower owns, free and clear of any liens, security interests, or encumbrances, other than liens, security interests, or encumbrances in favor of the Bank, Qualifying Collateral with a Fair Market Value at least equal to the Collateral Maintenance Level. If Borrower is required to specify and pledge or deliver Collateral pursuant to Sections 3.4 and 3.5 hereof, such audit report shall refer only to such Qualifying Collateral that is so specified, pledged, delivered, or held by the Bank as of the date of such audit report. If requested by the Bank, Borrower shall furnish to the Bank a written report covering such matters regarding the Collateral as the Bank may require, including, without limitation: listings of First Mortgages and Securities and unpaid principal balances thereof; and certifications concerning the status of payments of First Mortgages and of taxes and Insurance on properties securing First Mortgages

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and Other Real Estate Related Collateral. If so requested by the Bank, Borrower shall promptly report to the Bank any event that reduces the principal balance of any First Mortgage or Security by five percent (5%) or more, whether by payment, prepayment, foreclosure sale, Insurance or guaranty payment, or otherwise. Borrower shall give the Bank access at all reasonable times to Collateral in the possession of Borrower and to the books and records of account of Borrower relating to such Collateral for the purpose of permitting the Bank to examine, verify, or reconcile the Collateral and the reports of Borrower to the Bank thereon.

(b)All Collateral and the maintenance by Borrower of Qualifying Collateral in an amount that has a Fair Market Value at least equal to the Collateral Maintenance Level shall be subject to audit and verification by or on behalf of the Bank. Such audits and verifications may occur without notice by the Bank during normal business hours of Borrower or upon reasonable notice at such other times as the Bank may reasonably request. Borrower shall provide access to, and shall make adequate working facilities available to, the representatives or agents of the Bank for the purposes of such audits and verifications. Borrower agrees to pay to the Bank such reasonable fees and charges as may be assessed by the Bank to cover overhead and other costs relating to such audits and verifications.

SECTION 3.8. ADDITIONAL DOCUMENTATION. Borrower shall make, execute, record, and deliver to the Bank such financing statements, notices, assignments, listings, powers of attorney, and other instruments with respect to the Collateral and the security interest of the Bank therein all in such form as the Bank may require. To the extent permitted by applicable law, Borrower hereby irrevocably authorizes the Bank to file, in the name of Borrower or otherwise and without the signature or other separate authorization or authentication of Borrower appearing thereon, such UCC financing statements (including, without limitation, continuations and amendments) and in such jurisdictions as the Bank may deem necessary or appropriate to perfect or maintain the perfection of the security interest of the Bank. Borrower hereby irrevocably authorizes the Bank to file financing statements (including, without limitation, continuations and amendments) with respect to any Collateral describing the Collateral covered thereby as “all of the debtor’s personal property and assets” or words to similar effect, notwithstanding that such description may be broader in scope than the Collateral described in this Agreement. Borrower agrees that a photocopy, electronic or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement. Borrower shall pay the cost of, or incidental to, any recording or filing of any financing statements (including, without limitation, continuations and amendments) or other assignment documents concerning the Collateral.

SECTION 3.9. RESPONSIBILITY OF THE BANK AS TO COLLATERAL. The duty of the Bank as to the Collateral shall be solely to use reasonable care in the custody and preservation of the Collateral in its possession, which shall not include (i) any steps necessary to preserve rights against other parties with a prior position or (ii) the duty to send notices, perform services, or take any action in connection with the collection or management of the Collateral. The Bank shall not have any responsibility or liability for the form, sufficiency, correctness, genuineness, or legal effect of any instrument or document constituting a part of the Collateral, or any signature thereon or the description or misdescription or value of property represented, or purported to be represented, by any such document or instrument. Borrower agrees that any and all Collateral may be removed by the Bank from the state or location where situated, and may there be dealt with by the Bank as provided in this Agreement.

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SECTION 3.10. RIGHTS OF THE BANK AS TO COLLATERAL; POWER OF ATTORNEY. At any time or times, at the expense of Borrower, the Bank may in its sole discretion, after the occurrence of an Event of Default, in its own name or in the name of its nominee or of Borrower, do any or all things and take any and all actions that are pertinent to the protection of the interest of the Bank hereunder and that are lawful under the laws of the State of Texas or any other State or jurisdiction the laws of which shall apply to (i) the attachment and perfection of a security interest of the Bank hereunder or (ii) the enforcement of the Bank’s rights hereunder, including, but not limited to, the following:

(a)Terminate any consent given hereunder;

(b)Notify obligors on any Collateral to make payments thereon directly to the Bank;

(c)Endorse any Collateral in the name of Borrower;

(d)Enter into any extension, compromise, settlement, or other agreement relating to or affecting any Collateral;

(e)Take any action Borrower is required or permitted to take or that is otherwise necessary to (i) sign and record a financing statement or otherwise perfect a security interest in any or all of the Collateral; or (ii) obtain, preserve, protect, enforce, or collect the Collateral;

(f)Take control of any funds or other proceeds generated by the Collateral and use the same to reduce Indebtedness as it becomes due (or hold the same as additional Collateral); and

(g)Cause the Collateral to be transferred to the Bank’s name or the name of its nominee.

Borrower hereby appoints the Bank as its true and lawful attorney, for and on behalf of Borrower and in its name, place and stead, to prepare, execute, and record endorsements and assignments to the Bank and its successors and assigns and grants to the Bank as such attorney full power and authority to do or perform every lawful act necessary or proper in connection therewith as fully as the Borrower might or could do. Borrower hereby ratifies and confirms all that the Bank shall lawfully do or cause to be done by virtue of this special power-of-attorney set forth in this Section 3.10. This special power-of-attorney is granted for a period commencing on the date hereof and continuing until the discharge of all Indebtedness and all obligations of Borrower hereunder regardless of any Event of Default, is coupled with an interest, and is irrevocable for the period granted.

SECTION 3.11. SUBORDINATION OF OTHER LOANS TO COLLATERAL. Borrower hereby agrees that all First Mortgage Notes that are part of the First Mortgage Collateral and any notes securing personal property or other property (collectively, the "Pledged Notes") shall have priority in right and remedy over any claims, however evidenced, for other loans, whenever made, that are secured by mortgages or security agreements on the property securing the Pledged Notes. The Pledged Notes shall be satisfied out of the property or proceeds thereof covered by such mortgages or security agreements before recourse to such property may be obtained for the repayment of such other loans. To this end, Borrower hereby subordinates the lien and security interests of such mortgages and security agreements with respect to such other loans to the lien and security interests of such mortgages and security agreements with respect to the Pledged Notes. Borrower further agrees to retain possession of any promissory notes evidencing such other loans and not to pledge, assign, or transfer the same, except that (if otherwise qualified) the same may be pledged to the Bank as part of the Collateral.

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SECTION 3.12. NOTARIAL ENDORSEMENTS AND PARAPHS OF PARAPHED NOTES; NOTES NOT PARAPHED. Borrower agrees that to the extent any Collateral consists of First Mortgage Notes or any other promissory notes delivered to the Bank that are payable to the order of Borrower and paraphed for identification with First Mortgages or any other mortgages also secured by property located in Louisiana (such First Mortgages and such other mortgages secured by property located in Louisiana, herein the “Louisiana Mortgages” and such First Mortgages Notes and other promissory notes that are secured by Louisiana Mortgages, herein the “Louisiana Notes”), then Borrower shall endorse such Louisiana Notes payable to the order of Bank (or bearer) pursuant to notarial acts of endorsement (“Notarial Endorsement”) and cause the notary public before whom the Notarial Endorsement is executed to paraph the various Louisiana Notes for identification with the Notarial Endorsement. The Notarial Endorsement shall be delivered to the Bank contemporaneously with the delivery of the Louisiana Notes.

Borrower further agrees that to the extent any Collateral consists of Louisiana Notes that are not paraphed for identification with the Louisiana Mortgages and that are secured by Louisiana Mortgages, Borrower shall endorse such Louisiana Notes and shall execute an Assignment of Note and Mortgage in authentic form assigning the Louisiana Notes and all of Borrower’s interest in and to the Louisiana Mortgages to the Bank. The Assignment of Note and Mortgage shall be delivered to the Bank contemporaneously with the delivery of the Louisiana Notes.

ARTICLE IV

DEFAULT; REMEDIES

SECTION 4.1. EVENTS OF DEFAULT; ACCELERATION. Upon the occurrence of and during the continuation of any of the following events or conditions of default ("Event of Default"), the Bank may at its own option declare all Indebtedness and accrued interest thereon, including any prepayment fees and charges that are provided for in the event of the payment of an Advance before the date(s) scheduled for repayment, to be immediately due and payable without presentment, demand, protest, or any further notice:

(a)The failure of Borrower to pay when due the interest on or the principal of any Advance;

(b)The failure of Borrower to perform any promise or obligation or to satisfy any condition or liability contained herein, in any Confirmation of Advance, or in any other agreement to which Borrower and the Bank are parties;

(c)Evidence coming to the attention of the Bank that any representation, statement, or warranty made or furnished in any manner to the Bank by or on behalf of Borrower in connection with any Advance, any specification of Qualifying Collateral, or any certification of Fair Market Value was false in any material respect when made or furnished;

(d)The issuance of any tax levy, seizure, attachment, garnishment, levy of execution, or other legal process with respect to the Collateral;

(e)Any suspension of payment by Borrower to any creditor of sums due or the occurrence of any event that results in acceleration of the maturity of any indebtedness of Borrower to others under any obligation, security agreement, indenture, loan agreement, or comparable undertaking;

(f)The appointment of a conservator or receiver for Borrower or any subsidiary of Borrower or the property of Borrower; entry of an order for relief against Borrower or any subsidiary of Borrower under the federal bankruptcy laws; entry of a judgment or decree adjudicating Borrower

5/2005    Advances and Security Agreement    Page 11

or any subsidiary of Borrower insolvent; commencement of a case or other proceeding by or against Borrower or any subsidiary of Borrower seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, or similar law now or hereafter in effect; or an assignment by Borrower or any subsidiary of Borrower for the benefit of creditors;

(g)The sale by Borrower of all or a material part of the assets of Borrower or the taking of any other action by Borrower to liquidate or dissolve;

(h)The cessation of Borrower to be a type of institution that is eligible under the Act to become a Borrower of the Bank; or in the case of member borrowers, termination of the membership of Borrower in the Bank;

(i)Merger, consolidation, or other combination of Borrower with an entity that is not a member of the Bank or is not otherwise eligible to borrow from the Bank if such non-member or non-eligible entity is the surviving entity;

(j)The Bank reasonably and in good faith determines that a material adverse change has occurred in the financial condition of Borrower from the time of the making of any Advance or from the condition of Borrower as theretofore most recently disclosed to the Bank; or

(k)The Bank reasonably and in good faith deems itself insecure even though Borrower is not otherwise in default.

SECTION 4.2. REMEDIES. Upon the occurrence of any Event of Default, the Bank shall have all of the rights and remedies provided by applicable law, which shall include, without limitation, all of the remedies of a secured party under the UCC. In addition, the Bank may take immediate possession of any of the Collateral or any part thereof wherever the same may be found. The Bank is irrevocably authorized to foreclose upon the Collateral, in whole or in part, and to thereupon cause such Collateral to be seized and sold under either executory or ordinary proceedings at the Bank’s sole option, without appraisal, in either its entirety or in lot. The Bank may sell, assign, and deliver the Collateral or any part thereof at public or private sale (at the sole option of the Bank), without recourse to judicial proceedings and without demand, appraisal, advertisement or notice of any kind, all of which are expressly waived to the fullest extent permitted by law, for such price as the Bank deems appropriate without any liability for any loss due to a decrease in the market value of the Collateral during the period held. The Bank shall have the right to purchase all or part of the Collateral at such public or private sale free of any right of redemption on the part of Borrower which right is expressly waived and released to the fullest extent permitted by law. If the Collateral includes insurance or securities that will be redeemed by the issuer upon surrender, or any accounts or deposits in the possession of the Bank, the Bank may realize upon such Collateral without notice to Borrower. If any notification of intended disposition of any of the Collateral is required by applicable law, such notification shall be deemed reasonable and properly given if mailed, postage prepaid, at least five (5) days before any such disposition to the principal address of Borrower appearing on the records of the Bank. The Bank shall be entitled to receive the proceeds from any sale of the Collateral by preference and priority over all other parties. The proceeds of any sale shall be applied in the order that the Bank, in its sole discretion, may choose. Borrower agrees to pay all costs and expenses of the Bank in the collection of the Indebtedness and enforcement of the rights and remedies of the Bank in case of default, including, without limitation, reasonable attorney’s fees. The Bank, at its discretion, may apply any surplus after payment of the Indebtedness, provision for repayment to the Bank of any amounts to be paid or advanced under Outstanding Commitments, and all costs of collection and enforcement to third parties, without recourse to the Bank, claiming a secondary security interest in the Collateral, with any remaining surplus paid to Borrower. Borrower shall be liable to the Bank for any deficiency remaining.

ARTICLE V

GENERAL REPRESENTATIONS AND WARRANTIES BY BORROWER

5/2005    Advances and Security Agreement    Page 12

SECTION 5.1. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to the Bank, as of the date hereof and as of the date of each Advance hereunder, each of the following:

(a)Borrower is not now, and neither the execution of nor the performance of any of the transactions or obligations of Borrower under this Agreement shall, with the passage of time, the giving of notice or otherwise, cause Borrower to be: (i) in violation of its charter or articles of incorporation, bylaws, the Act, the Regulations, any other law or administrative regulation or order, or any court decree; or (ii) in default under or in breach of any indenture, contract, or other instrument to which Borrower is a party or by which it or any of its property is bound.

(b)Borrower has full corporate power and authority and has received all corporate and governmental authorizations and approvals as may be required to enter into and perform its obligations under this Agreement and to borrow each Advance.

(c)The information given by Borrower in any document provided, or in any oral statement made, in connection with an application or request for an Advance, is true, accurate, and complete in all material respects.

ARTICLE VI

MISCELLANEOUS

SECTION 6.1. ASSIGNMENT. Borrower hereby gives the Bank the full right, power, and authority to pledge, assign, or negotiate to any person or entity, with or without recourse, all or any part of the Indebtedness or participations therein, and to the extent permitted by law, the Bank may assign or transfer all or any part or right, title, and interest of the Bank in and to this Agreement and may assign and deliver the whole or any part of the Collateral to the transferee, which shall succeed to all of the powers and rights of the Bank in respect thereof, and the Bank shall thereafter be forever relieved and fully discharged from any liability or responsibility with respect to the transferred Collateral. In the event of any such pledge or assignment, all references herein to the "Bank" shall be read to refer also to the pledgee or assignee, as the case may be. Borrower may not assign or transfer any of its rights or obligations hereunder without the express prior written consent of the Bank.

SECTION 6.2. INTENTIONALLY LEFT BLANK

SECTION 6.3. DISCRETION OF THE BANK TO GRANT OR DENY ADVANCES AND COMMITMENTS. Nothing contained herein or in any documents describing or setting forth the credit program or policy of the Bank shall be construed as an agreement or commitment on the part of the Bank to grant Advances or extend commitments hereunder, the right and power of the Bank in its discretion to either grant or deny any Advance or commitment requested hereunder being expressly reserved.

SECTION 6.4. AMENDMENT; WAIVERS. No modification, amendment, or waiver of any provision of this Agreement or consent to any departure therefrom shall be effective unless executed by the party against whom such change is asserted and shall be effective only in the specific instance and for the purpose for which given. “Executed” as used in this Section 6.4 means that a person has signed or executed or otherwise adopted a symbol, or encrypted or similarly processed a record in whole or in part, with the present intent of the authenticating person to identify the person and to adopt or accept a record on behalf of Borrower. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in the same or similar or other circumstances. Any forbearance, failure, or delay by the Bank in the exercise of any right, power, or remedy hereunder shall not be deemed to be a waiver thereof, and any single or partial exercise by the Bank of any right, power, or remedy hereunder shall not preclude the further exercise thereof. Without limiting the generality of Section 6.3 or the foregoing provisions of this Section 6.4, the

5/2005    Advances and Security Agreement    Page 13

making of any Advance after the occurrence or during the continuance of an Event of Default (whether or not known to the Bank) shall not be deemed to be a waiver of such Event of Default or any right, power, or remedy hereunder and shall not preclude the further exercise thereof. Every right, power, and remedy of the Bank shall continue in full force and effect until specifically waived by the Bank in writing.

SECTION 6.5. JURISDICTION; LEGAL FEES. In any action or proceeding brought by the Bank or Borrower in order to enforce any right or remedy under this Agreement, the parties hereby consent to, and agree that they will either (i) submit to the jurisdiction of the United States District Court for the Northern District of Texas or, if such action or proceeding may not be brought and maintained in such court, the jurisdiction of an appropriate District Court for the State of Texas, County of Dallas, or (ii) if the parties mutually agree, submit any disagreement arising out of this Agreement to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, in effect from time to time. Borrower agrees that if any action or proceeding is brought by Borrower seeking to obtain any legal or equitable relief against the Bank under or arising out of this Agreement or any transaction contemplated hereby, and such relief is not granted by the final decision, after judgment of any and all appeals has been entered or the time period to appeal a decision has expired, of a court of competent jurisdiction, Borrower shall pay all attorneys' fees and other costs incurred by the Bank in connection therewith.

SECTION 6.6. NOTICES. Except as otherwise provided for in this Agreement, any notice, advice, request, consent, or direction given, made, or withdrawn pursuant to this Agreement shall be given in writing or by a transmission in electronic or other form, and shall be deemed to have been duly given to and received by a party hereto when it shall have been mailed to such party at its address given above by first class mail, or if given by hand or by a transmission in electronic or other form when actually received by such party at its principal office, chief executive office, or as otherwise designated. Any notice by the Bank to Borrower pursuant to Section 3.4(a) or 3.5(a) hereof may be oral and shall be deemed to have been duly given to and received by Borrower at the time of the oral communication.

SECTION 6.7. TAPE RECORDING. Borrower consents and agrees that all telephone conversations or data transmissions between Borrower and its agents and the Bank may be recorded and retained by either party by use of any reasonable means. Borrower agrees to indemnify and hold the Bank harmless against any and all liability that the Bank may incur as a result of such recordings.

SECTION 6.8. PRIVACY. The Bank shall use and disclose nonpublic personal information (as defined in the Gramm-Leach-Bliley Act and related regulations) received from Borrower only to the extent necessary to allow the Bank to provide Borrower the products and services offered by the Bank or to the extent covered by a statutory exception authorized by the Gramm-Leach-Bliley Act and related regulations.

SECTION 6.9. SIGNATURE OF BORROWER. The Secretary, Assistant Secretary, Treasurer, or Assistant Treasurer of Borrower shall from time to time certify to the Bank on forms provided by the Bank the names and specimen signatures of the persons authorized to apply on behalf of Borrower to the Bank for Advances and otherwise act for and on behalf of Borrower in accordance with this Agreement. Such certifications are incorporated herein and made a part of this Agreement and shall continue in effect until expressly revoked by Borrower, notwithstanding that subsequent certifications may authorize additional or different persons to act for and on behalf of Borrower.

SECTION 6.10. APPLICABLE LAW; SEVERABILITY. IN ADDITION TO THE TERMS AND CONDITIONS SPECIFICALLY SET FORTH HEREIN AND IN ANY CONFIRMATION OF ADVANCE BETWEEN THE BANK AND BORROWER, THIS AGREEMENT AND ALL ADVANCES GRANTED AND COMMITMENTS EXTENDED UNDER THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES INCLUDED THEREIN. NOTWITHSTANDING THE FOREGOING, THE UCC, WITHOUT GIVING EFFECT TO THE

5/2005    Advances and Security Agreement    Page 14

CHOICE OF LAW PRINCIPLES INCLUDED THEREIN, SHALL BE DEEMED APPLICABLE TO THIS AGREEMENT AND TO ANY ADVANCE HEREUNDER AND SHALL GOVERN THE ATTACHMENT AND PERFECTION OF ANY SECURITY INTEREST GRANTED HEREUNDER. IN THE EVENT THAT ANY PORTION OF THIS AGREEMENT CONFLICTS WITH APPLICABLE LAW, SUCH CONFLICT SHALL NOT AFFECT ANY OTHER PROVISION OF THIS AGREEMENT THAT CAN BE GIVEN EFFECT WITHOUT THE CONFLICTING PROVISION, AND TO THIS END THE PROVISIONS OF THIS AGREEMENT ARE DECLARED TO BE SEVERABLE.

SECTION 6.11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the authorized and permitted successors and assigns of Borrower and the Bank.

SECTION 6.12. ENTIRE AGREEMENT; AMENDMENT AND RESTATEMENT. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR (INCLUDING, WITHOUT LIMITATION, THE EXISTING AGREEMENT, IF ANY, AS DEFINED BELOW), CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO. To the extent Borrower and the Bank have entered into an Advances, Specific Collateral Pledge and Security Agreement with Blanket Floating Lien, an Advances, Collateral Pledge and Security Agreement with Delivery, or an Advances, Collateral Pledge and Security Agreement prior to the date hereof (the “Existing Agreement”), (a) this Agreement amends and restates in its entirety the Existing Agreement, (b) this Agreement does not extinguish the indebtedness, liabilities, and obligations of Borrower outstanding in connection with the Existing Agreement nor does it constitute a novation with respect to such indebtedness, liabilities, and obligations of Borrower, (c) all indebtedness, liabilities, and obligations of Borrower under the Existing Agreement are renewed and continued and hereafter shall be payable in accordance with this Agreement; provided, however, for matters relating to the accrual and payment of interest and fees and relating to indemnification arising prior to the effective date of this Agreement, the terms of the Existing Agreement shall control and are hereby ratified and confirmed, (d) this Agreement shall not result in or constitute a waiver of or a release, discharge, or forgiveness of any amount payable pursuant to the Existing Agreement, (e) all security interests and liens previously granted by Borrower pursuant to the Existing Agreement are hereby renewed and continued, and all such security interests and other liens shall remain in full force and effect as security for all indebtedness, liabilities, and obligations of Borrower to the Bank, (f) any default thereunder shall constitute an Event of Default hereunder, and (g) Collateral furnished pursuant to this Agreement shall also secure all indebtedness, liabilities, and obligations of Borrower to the Bank under the Existing Agreement.

SECTION 6.13. MAXIMUM RATE. No interest rate specified in this Agreement shall at any time exceed the maximum rate of nonusurious interest under applicable law that the Bank may charge Borrower (the “Maximum Rate”). In the event the Bank ever receives, collects, or applies as interest any sum which is in excess of the Maximum Rate, such amount which would be in excess of the Maximum Rate shall be applied as a payment and reduction of the principal of the Advances; and, if the principal of the Advances has been paid in full, any remaining excess shall forthwith be paid to Borrower. In determining whether or not the interest paid or payable exceeds the Maximum Rate, Borrower and the Bank shall, to the extent permitted by applicable law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the Advances so that interest for the entire term does not exceed the Maximum Rate.

SECTION 6.14. CAPTIONS AND HEADINGS. The captions and headings in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

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SECTION 6.15. FURTHER ASSURANCES. Borrower shall execute such additional documents and take such other actions as the Bank may reasonably request to effectuate the intent of this Agreement.

SECTION 6.16. EXECUTION. This Agreement may be executed in any number of counterparts, on telecopy counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

5/2005    Advances and Security Agreement    Page 16

IN WITNESS WHEREOF, Borrower and the Bank, each acting through its respective duly authorized representative(s), have caused this Agreement to be signed in their names and delivered as of the date first above written.

Trinity Universal Insurance Company            

Full Corporate Name of Borrower

December 31__________________________________________

Fiscal Year End

/s/ Christopher L. Moses__________________________________

Authorized Signature

Christopher L. Moses Assistant Treasurer            

Typed Name & Title of Signer

_______________________________________________________

Authorized Signature

_______________________________________________________

Typed Name & Title of Signer

FEDERAL HOME LOAN BANK OF DALLAS

/s/ Gustavo Molina________________________________________

Authorized Signature

Gustavo Molina, SVP______________________________________

Typed Name & Title of Signer

5/2005    Advances and Security Agreement    Page 17

ADDENDUM TO ADVANCES AND SECURITY AGREEMENT

This Addendum to Advances and Security Agreement (“Addendum”) is made as of December 31, 2013, between the Federal Home Loan Bank of Dallas (“Bank”), with its principal office located at 8500 Freeport Parkway South, Suite 600, Irving, Texas 75063, and Trinity Universal Insurance Company, a [type of organization] (“Borrower”), with its chief executive office located at 12926 Green Bay Parkway West, Jacksonville, Florida 32258 and amends the Advances and Security Agreement (“Agreement”) dated as of December 30, 2013 between the Borrower and Bank. Unless otherwise defined herein, capitalized terms have the meaning assigned to such terms in the Agreement.

WHEREAS, Borrower desires to only pledge and grant a security interest in collateral delivered to Bank from time to time and certain other collateral as described in this Addendum;

WHEREAS, Borrower has requested that Bank not file a UCC financing statement in the name of Borrower;

WHEREAS, Bank has agreed to such limitations based on the terms and conditions set forth in this Addendum;

NOW, THEREFORE, Borrower and the Bank agree as follows:

1.    AMENDMENT TO SECTION 3.1. The first sentence of Section 3.1 of the Agreement is hereby amended to read in its entirety as follows:

Section 3.1 CREATION OF SECURITY INTEREST. As security for all Indebtedness and Outstanding Commitments, Borrower hereby assigns, transfers, and pledges to the Bank, and grants to the Bank a security interest in (a) all of the Capital Stock and Deposit Accounts, now owned or existing or hereafter owned, acquired, or arising by Borrower, (b) all other Collateral as may be delivered to Bank from time to time, (c) all payment intangibles related to the foregoing, and (d) all proceeds, cash proceeds, and noncash proceeds of the foregoing.

2.    AMENDMENT TO SECTION 3.4. Section 3.4 of the Agreement is hereby amended to read in its entirety as follows:

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Section 3.4 RESERVED.

3.    AMENDMENT TO SECTION 3.8. Section 3.8 of the Agreement is hereby amended to read in its entirety as follows:

Section 3.8 ADDITIONAL DOCUMENTATION. At any time after the occurrence of an Event of Default or at any time that Borrower desires to have Collateral other than Securities be Qualifying Collateral for Borrower, Borrower shall make, execute, record, and deliver to the Bank such financing statements, notices, assignments, listings, powers of attorney, and other instruments with respect to the Collateral and the security interest of the Bank therein all in such form as the Bank may require. To the extent permitted by applicable law, Borrower irrevocably authorizes the Bank to file at any time after the occurrence of an Event of Default or at any time that Borrower desires to have Collateral other than Securities be Qualifying Collateral for Borrower, in the name of Borrower or otherwise and without the signature or other separate authorization or authentication of Borrower appearing thereon, such UCC financing statements (including, without limitation, continuations and amendments) and in such jurisdictions as the Bank may deem necessary or appropriate to perfect or maintain the perfection of the security interest of the Bank. Borrower irrevocably authorizes the Bank to file, at any time after the occurrence of an Event of Default or at any time that Borrower desires to have Collateral other than Securities be Qualifying Collateral for Borrower, financing statements (including, without limitation, continuations and amendments) with respect to any Collateral describing the Collateral covered thereby as “all of the debtor’s personal property and assets” or words to similar effect, notwithstanding that such description may be broader in scope than the Collateral described in this Agreement. Borrower agrees that a photocopy, electronic or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement. Borrower shall pay the cost of, or incidental to, any recording or filing of any financing statements (including, without limitation, continuations and amendments) or other assignment documents concerning the Collateral.

4.    RATIFICATIONS. The terms and provisions set forth in this Addendum shall modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded by this Addendum, the terms and provisions of the Agreement are ratified and confirmed and shall continue in full force and effect. Borrower and the Bank agree that the Agreement as amended hereby shall continue to be legal, valid, binding, and enforceable in accordance with its terms.

5.    APPLICABLE LAW; SEVERABILITY. THIS ADDENDUM SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES INCLUDED THEREIN. IN THE EVENT THAT ANY PORTION OF THIS ADDENDUM CONFLICTS WITH APPLICABLE LAW, SUCH CONFLICT

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SHALL NOT AFFECT ANY OTHER PROVISION OF THIS ADDENDUM THAT CAN BE GIVEN EFFECT WITHOUT THE CONFLICTING PROVISION, AND TO THIS END THE PROVISIONS OF THIS ADDENDUM ARE DECLARED TO BE SEVERABLE.

6.    SUCCESSORS AND ASSIGNS. This Addendum shall be binding upon and inure to the benefit of the authorized and permitted successors and assigns of Borrower and the Bank.

7.    ENTIRE AGREEMENT. THIS ADDENDUM REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO RELATING TO THIS ADDENDUM AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

8.    CAPTIONS AND HEADINGS. The captions and headings in this Addendum are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Addendum.

9.    EXECUTION. This Addendum may be executed in any number of counterparts, on telecopy counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

IN WITNESS WHEREOF, Borrower and the Bank have caused this Addendum to be signed in their respective names by their respective duly authorized officers as of the date first above written.

BORROWER		BANK
TRINITY UNIVERSAL INSURANCE COMPANY		FEDERAL HOME LOAN BANK OF DALLAS
(Full Corporate Name of Borrower)
By:	/s/ Christopher L. Moses	By:	/s/ Michael Sims
Name:	Christopher L. Moses	Name:	Michael Sims
Title:	Assistant Treasurer	Title:	Executive Vice President & CFO
By:		By:	/s/ Gustavo Molina
Name:		Name:	Gustavo Molina
Title:		Title:	Senior Vice President
FHFB ID#

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EX-10.3

Exhibit 10.3

KEMPER CORPORATION PENSION EQUALIZATION PLAN

As Amended and Restated Effective August 25, 2011

TABLE OF CONTENTS

	Page
ARTICLE I	DEFINITIONS	1
ARTICLE II	ELIGIBILITY	6
ARTICLE III	SUPPLEMENTAL RETIREMENT BENEFIT	6
ARTICLE IV	SUPPLEMENTAL SURVIVING SPOUSE BENEFIT	7
ARTICLE V	SUPPLEMENTAL NON-SPOUSAL BENEFIT	9
ARTICLE VI	FUNDING	9
ARTICLE VII	ADMINISTRATION OF THE PLAN	10
ARTICLE VIII	AMENDMENT OR TERMINATION	11
ARTICLE IX	GENERAL PROVISIONS	11

KEMPER CORPORATION PENSION EQUALIZATION PLAN

The Unitrin, Inc. Pension Equalization Plan was adopted effective April 10, 1990, was amended and restated effective January 19, 1995 and was most recently amended and restated effective January 1, 2009 to comply with Section 409A of the Internal Revenue Code. Effective August 25, 2011, Unitrin, Inc. changed its name to Kemper Corporation (the “Company”). As a result of the corporate name change, the plan set forth herein is now known as the Kemper Corporation Pension Equalization Plan (the “Plan”) and the Plan is hereby amended and restated effective as of August 25, 2011 to incorporate that name change into the Plan. The Plan is maintained by the Company for the purpose of providing benefits in excess of the limitations on benefits imposed by Section 415 of the Internal Revenue Code for certain of its or its Affiliates’ employees who participate in any Qualified Plan, as hereinafter defined.

Also, only with respect to those Participants hereunder who are Top Hat Participants as defined in Section 1.25, the Plan shall provide benefits in excess of the limitations on benefits imposed by Section 401(a)(17) of the Internal Revenue Code.

ARTICLE I

DEFINITIONS

1.1General. For purposes of the Plan, the following terms, when capitalized, will have the following meanings. The masculine pronoun wherever used herein will include the feminine gender, the singular number will include the plural, and the plural will include the singular, unless the context clearly indicates a different meaning.

1.2“Affiliated Company” or “Affiliate” means any corporation, trade or business entity which is a member of a controlled group of corporations, trades or businesses of which the Company is also a member, as provided in Code Sections 414(b) or (c).

1.3“Beneficiary” means the person designated as a beneficiary by the Participant in accordance with such procedures as may be established by the Company.

1.4“Board” means the Board of Directors of the Company.

1.5“Change of Control Event” means the occurrence of any of the following events described in subsections (a) through (d) below:

(a)any “Person” (defined below) is or becomes the “Beneficial Owner,” (defined below) directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its “Affiliate” (defined below)) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (1) of subsection (c) below; or

1

(b)the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on December 31, 2008, constituted the Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds of the directors still in office who either were directors on December 31, 2008 or whose appointment, election or nomination for election was previously so approved or recommended; or

(c)there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which results in the directors of the Company immediately prior to such merger or consolidation continuing to constitute at least a majority of the board of directors of the surviving entity or any parent thereof, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliate) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(d)the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board of Directors immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof.

(e)As used in this definition of Change of Control Event:

(i)“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

(ii)“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act; and

(iii)“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified in Sections 13(d)(3) and 14(d)(2) thereof, except that such term shall not include (1) the Company or any entity, more than 50% of the voting securities of which are Beneficially Owned by the Company, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, (5) any individual, entity

2

or group whose ownership of securities of the Company is reported on Schedule 13G pursuant to Rule 13d-1 promulgated under the Exchange Act (but only for so long as such ownership is so reported) or (6) Singleton Group LLC or any successor in interest to such entity.

1.6“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

1.7“Committee” means the Compensation Committee of the Board.

1.8“Company” means Kemper Corporation, a Delaware corporation, or, to the extent provided in Section 9.11, any successor corporation or other entity resulting from a reorganization, merger or consolidation into or with the Company, or a transfer or sale of substantially all of the assets of the Company.

1.9“Early Retirement Date” means any date, prior to a Participant’s normal retirement date under the Qualified Plan, on which a Participant is eligible to begin payment of his or her Qualified Plan Retirement Benefit.

1.10“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

1.11“Employer” means the Company and its Affiliates.

1.12“Normal Retirement Date” means the first day of the month coinciding with or next following the date on which a Participant attains age 65.

1.13“Participant” means an employee of the Company or of an Affiliated Company who at any time after April 10, 1990 is a participant under a Qualified Plan and to whom or with respect to whom a benefit is payable under the Plan. The term “Participant” shall include Top Hat Participants.

1.14“Plan” means the Kemper Corporation Pension Equalization Plan.

1.15“Qualified Plan” means any tax-qualified defined benefit pension plan maintained by the Company or any Affiliate and each predecessor, successor or replacement to any such Qualified Plan, excluding any Qualified Plan maintained solely pursuant to a collective bargaining agreement.

1.16“Qualified Plan Retirement Benefit” means the accrued benefit, determined as of the relevant determination date, which a Participant would be entitled to receive for his or her life under a Qualified Plan commencing on his or her normal retirement date (as defined in the Qualified Plan) by assuming that, as of such determination date, the Participant had a termination of employment with the Company and all Affiliates for any reason other than death. Where a Qualified Plan provides for an offset to a Participant’s accrued benefit thereunder to reflect the accrued benefit the Participant earned under other defined benefit pension plans of the Company or an Affiliated

3

Company, the Participant’s Qualified Plan Retirement Benefit shall be the total value of all such accrued benefits.

1.17“Qualified Plan Surviving Spouse Benefit” means the aggregate benefit payment to the Surviving Spouse of a Participant with respect to the Participant’s Qualified Plan Retirement Benefit in the event of the death of the Participant at any time prior to commencement of payment of his or her Qualified Plan Retirement Benefit.

1.18“Regulations” means the regulations, as amended from time to time, which are issued under Code Section 409A.

1.19“Separation from Service” means the Participant’s termination from employment from the Employer for reasons other than death, subject to the following and other provisions of the Regulations:

(a)The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Employer under an applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer. If the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period.

(b)In determining whether a Separation from Service has occurred, the following presumptions, which may be rebutted as provided in the Regulations, shall apply:

(i)A Participant is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to 20% or less of the average level of services performed by the Participant during the immediately preceding 36-month period.

(ii)A Participant will be presumed not to have separated from service where the level of bona fide services performed continues at a level that is 50% or more of the average level of services performed by the Participant during the immediately preceding 36-month period.

No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20% but less than 50% of the average level of bona fide services performed during the immediately preceding 36-month period. If a Participant had not performed

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services for the Employer for 36 months, the full period that the Participant has performed services for the Employer shall be substituted for 36 months.

(c)For purposes of this Section, the term “Employer” has the meaning set forth in Section 1.11, provided that the following shall apply in determining whether a person is an Affiliate as defined in Section 1.2:

(i)In applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code Sections 1563(a)(1), (2) and (3); and

(ii)In applying Treas. Reg. Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Treas. Reg. Section 1.414(c)-2.

(d)In the event of the sale or other disposition of assets by the Company or an Affiliate (the “Seller”) to an unrelated service recipient (the “Buyer”), the Seller and the Buyer may specify whether a Separation from Service has occurred for a Participant who would otherwise experience a Separation from Service with the Seller, in accordance with the rules set forth in Section 1.409A-1(h)(4) of the Regulations.

1.20“Supplemental Non-Spousal Benefit” means the benefit payable to a Beneficiary pursuant to Article V of the Plan.

1.21“Supplemental Retirement Benefit” means the benefit payable to a Participant pursuant to the Plan by reason of his or her Separation from Service for any reason other than death.

1.22“Supplemental Retirement Payment Date” means the date on which the Participant’s Supplemental Retirement Benefit is, or commences to be, paid pursuant to Sections 3.3, 3.4 or 9.10 as applicable.

1.23“Surviving Spouse” means a person who is married to a Participant at the date of his or her death within the meaning of the laws of the state of the Participant’s residence and as evidenced by a valid marriage certificate or other proof acceptable to the Company.

1.24“Supplemental Surviving Spouse Benefit” means the benefit payable to a Surviving Spouse pursuant to the Plan.

1.25“Top Hat Participant” means a Participant who qualifies for inclusion in a “select group of management or highly compensated employees” as provided in Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA and who has been designated as a Top Hat Participant by the Board, as reflected in Board minutes or other official records of the Board.

ARTICLE II

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ELIGIBILITY

An employee who is eligible to receive a Qualified Plan Retirement Benefit, the amount of which is reduced by reason of the application of the limitations on benefits imposed by application of Code Section 415 (or in the case of a Top Hat Participant, is reduced by the limitations on benefits imposed by application of Code Section 401(a)(17)), shall be eligible to receive a Supplemental Retirement Benefit. If a Participant described in the preceding sentence dies prior to his or her Supplemental Retirement Payment Date, a Supplemental Surviving Spouse Benefit or a Supplemental Non-Spousal Benefit shall be payable if so provided by Article IV or V. The Participant must be fully vested in his or her Qualified Plan Retirement Benefit in order for the Participant, his Surviving Spouse or Beneficiary to receive a benefit under the Plan.

ARTICLE III

SUPPLEMENTAL RETIREMENT BENEFIT

3.1Amount. The Supplemental Retirement Benefit payable to a Participant in the form of a single life annuity over the lifetime of the Participant only, commencing on the later of his or her Normal Retirement Date or the first day of the seventh month following the Participant’s Separation from Service, shall be a monthly amount equal to the difference between (A) and (B) below where (A) is:

the monthly amount of the Qualified Plan Retirement Benefit to which the Participant would have been entitled if such Qualified Plan Retirement Benefit were computed without giving effect to the limitations on benefits imposed by application of Code Section 415 (and in the case of a Top Hat Participant, Code Section 401(a)(17)) to plans to which those Sections apply;

and (B) is:

the monthly amount of the Participant’s Qualified Plan Retirement Benefit.

The amounts described in (A) and (B) shall be computed as of the Participant’s Separation from Service.

3.2Payment Options. Except as described in Section 9.10, the Company shall distribute the Participant’s Supplemental Retirement Benefit to the Participant (as adjusted pursuant to Section 3.5) in one of the following forms selected by the Participant prior to his or her Supplemental Retirement Payment Date: (a) single life annuity; (b) ten year certain and life annuity; (c) fifteen year certain and life annuity; (d) joint and 50% survivor annuity; (e) joint and 75% survivor annuity; and (f) joint and 100% survivor annuity; provided, however, that each of the payment options described above is actuarially equivalent to the other, pursuant to the terms of Section 3.5 and the Regulations. If the Participant fails to make an election prior to his or her Supplemental Retirement Payment Date, payment shall be made to the Participant in the form of a single life annuity. If the Participant dies prior to his or her Supplemental Retirement Payment Date, no Supplemental Retirement Benefit will be payable and the Supplemental Surviving Spouse Benefit, if any, or the

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Supplemental Non-Spousal Benefit, if any, shall be payable as set forth in Article IV or Article V, as applicable.

3.3Commencement of Supplemental Retirement Benefit. Except as otherwise provided in Section 3.4 or Section 9.10, payment of a Participant’s Supplemental Retirement Benefit shall commence on the later of (a) the first day of the seventh month following his or her Separation from Service or (b) his or her Normal Retirement Date. If payment to the Participant is made pursuant to the foregoing clause (a), the first payment to the Participant shall include the monthly pension payments the Participant would have received had payments begun as of the first day of the month following the Participant’s Separation from Service.

3.4Transitional Relief. To the extent permitted by IRS Notice 2007-86 and administrative procedures adopted by the Company, a Participant who participated in the Plan prior to January 1, 2009 shall have the option of electing, no later than December 31, 2008, to have his or her benefit commence on or after the later of (a) the first day of the seventh month following his or her Separation from Service or (b) an Early Retirement Date. If payment to the Participant is made pursuant to the foregoing clause (a), the first payment to the Participant shall include the monthly pension payments the Participant would have received had payments begun as of the first day of the month following the Participant’s Separation from Service. Any such election shall be made prior to January 1, 2009 and shall be irrevocable.

3.5Actuarial Equivalent. A Supplemental Retirement Benefit which is payable in any form other than a single life annuity over the lifetime of the Participant or which commences at any time prior tothe Participant’s Normal Retirement Date, shall be the actuarial equivalent of the Supplemental Retirement Benefit set forth in Section 3.1 above as determined by the same actuarial adjustments as those specified in the Qualified Plan with respect to determination of the amount of the Qualified Plan Retirement Benefit on the date for commencement of payment hereunder or on the last day that any such Qualified Plan was in effect.

3.6Acceleration Prohibited. Except as otherwise provided in Section 9.10, the acceleration of the time of payment of any portion of a Supplemental Retirement Benefit is prohibited.

ARTICLE IV

SUPPLEMENTAL SURVIVING SPOUSE BENEFIT

4.1Amount. If a Participant dies prior to his or her Supplemental Retirement Payment Date and after he is vested in his or her Qualified Plan Retirement Benefit, then a Supplemental Surviving Spouse Benefit is payable to his or her Surviving Spouse, if any, as hereinafter provided. The Supplemental Surviving Spouse Benefit payable to a Surviving Spouse shall be a monthly amount equal to the difference between (A) and (B) below where (A) is:

the monthly amount of the Qualified Plan Surviving Spouse Benefit to which the Surviving Spouse would have been entitled if such Qualified Plan Surviving Spouse Benefit were computed without giving effect to the limitations on benefits imposed

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by application of Code Section 415 (and in the case of a Top Hat Participant, Code Section 40l(a)(17)) to plans to which those Sections apply;

and (B) is:

the monthly amount of the Qualified Plan Surviving Spouse Benefit that is, or would have been, payable to the Surviving Spouse if the Participant died prior to commencement of payment of his or her Qualified Plan Retirement Benefit.

The amounts described in (A) and (B) shall be computed by assuming that the Participant had a Separation from Service on the date of his or her death, survived to his or her Normal Retirement Date, began receiving his Qualified Plan Retirement Benefit in the form of a joint and 50% survivor annuity on the later of the date of his or her death or his or her Normal Retirement Date and then died.

4.2Payment Option. Except as described in Section 9.10, a Supplemental Surviving Spouse Benefit shall be payable over the lifetime of the Surviving Spouse only in monthly installments commencing on the date specified in Section 4.3 and terminating on the date of the last monthly payment prior to the Surviving Spouse’s death.

4.3Commencement of Supplemental Surviving Spouse Benefit. Except as otherwise provided in Section 4.4 or Section 9.10, payment of the Supplemental Surviving Spouse Benefit, if any, shall commence on the later of (a) the first day of the month following the Participant’s death or (b) the Participant’s Normal Retirement Date.

4.4Transitional Relief. To the extent permitted by IRS Notice 2007-86 and administrative procedures adopted by the Company, a Participant who participated in the Plan prior to January 1, 2009 shall have the option of electing, no later than December 31, 2008, to have payment of the Supplemental Surviving Spouse Benefit, if any, commence on the later of (a) the first day of the month following the Participant’s death or (b) an Early Retirement Date. Any such election shall be made prior to January 1, 2009 and shall be irrevocable.

4.5Actuarial Equivalent. A Supplemental Surviving Spouse Benefit which commences at any time prior to the date set forth in Section 4.3 shall be the actuarial equivalent of the Supplemental Surviving Spouse Benefit set forth in Section 4.1 as determined by the same actuarial adjustments as those specified in the Qualified Plan with respect to determination of the amount of the Qualified Plan Surviving Spouse Benefit on the date for commencement of payment hereunder or on the last day that any such Qualified Plan was in effect.

4.6Acceleration Prohibited. Except as provided in Section 9.10, the acceleration of the time of payment of any portion of a Supplemental Surviving Spouse Benefit is prohibited.

ARTICLE V

SUPPLEMENTAL NON-SPOUSAL BENEFIT

5.1Death Within 30 Days Before Proposed Retirement Date.

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(a)If a married Participant (i) elects a joint and 75% or 100% survivor annuity under the Plan, (ii) properly completes, signs and delivers to the Company all of the relevant distribution forms, as determined by the Company, and (iii) dies within 30 days before the “proposed retirement date” (as hereinafter defined), then the surviving Spouse shall not receive the pre retirement death benefit described in Article IV, but shall, subject to Section 9.10, rather be eligible for the 75% or 100% survivor annuity (based upon the Participant’s election), as if the Participant had begun receiving the joint and 75% or 100% survivor annuity (whichever was elected by the Participant) and then died after the proposed retirement date. If the commencement of a Participant’s benefit is delayed due to the requirement that payment be made no earlier than the first day of the seventh month following the Participant’s Separation from Service, the proposed retirement date shall be the date that payment of such benefit would have commenced but for such requirement.

(b)If an unmarried Participant properly completes and signs and delivers to the Company all of the relevant distribution forms, as determined by the Company, and the Participant dies within 30 days before the proposed retirement date after electing one of the forms of payment described in Section 3.2 which provides for payments to continue after his death, then the Beneficiary designated by the Participant, if any, shall, subject to Section 9.10, be eligible for the applicable benefit selected by the Participant, as if the Participant had begun receiving the selected benefit and then died after the proposed retirement date. Except as otherwise provided in this subsection, if an unmarried Participant dies prior to the actual benefit commencement date, no death benefit shall be payable hereunder.

5.2Benefit Commencement and Payment Option. Except as otherwise provided in Section 9.10, the benefit provided by this Article shall commence as of the date the Supplemental Retirement Benefit would have commenced had the Participant survived to such date.

5.3Acceleration Prohibited. Except as otherwise provided in Section 9.10, the acceleration of the time of payment of any portion of a Supplemental Non-Spousal Benefit is prohibited.

ARTICLE VI

FUNDING

The Plan at all times shall be entirely unfunded and the Company shall not be required at any time to segregate any assets of the Company for payment of any benefits hereunder. No Participant, Surviving Spouse or any other person shall have any interest in any particular assets of the Company by reason of the right to receive a benefit under the Plan and any such Participant, Surviving Spouse or other person shall have only the contractual rights of a general unsecured creditor of the Company with respect to any rights under the Plan.

ARTICLE VII

ADMINISTRATION OF THE PLAN

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7.1Administration by the Company. The Committee, acting through the Company, shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof.

7.2General Powers of Administration. The Committee shall have such powers and duties with respect to the administration of the Plan as are applicable to the Administrative Committee of the Kemper Corporation Pension Plan. The Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, treasurer, controller, counsel or other person employed or engaged by the Company with respect to the Plan.

7.3Claims. Any Participant or Beneficiary who believes that there was an error in the calculation of his or her account balance or in the payment of benefits under the Plan shall file a claim with the Committee. The claim must be filed, signed and dated within 90 days of the date on which the claimant learned of the facts from which such claim arises. The claim must be sent by certified mail or presented in person to the Committee.

The Committee, acting through the Company, shall respond in writing to the claimant within a reasonable period of time but not later than 90 days after receipt of the claim unless special circumstances require an extension of time for processing. If such extension of time is required, the Committee, acting through the Company, shall furnish written notice of the extension to the claimant prior to the termination of the initial 90 day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee, acting through the Company, expects to render a final decision. In no event shall such extension exceed a period of 90 days from the end of the initial period.

7.4Appeals. Any claimant not satisfied with the Committee’s decision of a claim shall have the right to appeal to the Committee. The appeal must be signed and dated by the claimant and include a copy of the claim submitted to the Committee as well as a copy of the Committee’s decision. The appeal should explain why the claimant does not agree with the Committee’s decision. The appeal must be filed within 60 days of the receipt of the Committee’s decision. The appeal must be sent by certified mail or presented in person to the Committee.

The Committee shall promptly advise the claimant of its decision on the claimant’s appeal. Such decision shall be written in layman’s terms, shall include specific reasons for the decision and shall contain specific references to pertinent Plan provisions upon which the decision is based. The decision on appeal shall be made no later than 60 days after the Committee’s receipt of the appeal, unless special circumstances require an extension of the time for processing. If such an extension of time is required, the Committee shall furnish written notice of the extension to the claimant prior to the termination of the 60 day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render a final decision. If an extension of time is required, a decision shall be rendered as soon as possible, but not later than 120 days following receipt of the appeal.

ARTICLE VIII

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AMENDMENT OR TERMINATION

8.1Amendment or Termination. The Company intends the Plan to be permanent but reserves the right, subject to Section 8.2, to amend or terminate the Plan when, in the sole opinion of the Company, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Board and shall be effective as of the date of such resolution or as specified therein. Notwithstanding the foregoing, the Board may from time to time by specific resolution delegate its right to amend the Plan to any person or persons and in such event, such person may take such action to amend the Plan in lieu of the Board in accordance with this Section.

8.2Effect of Amendment or Termination. No amendment or termination of the Plan shall, without the express written consent of the affected current or former Participant, Surviving Spouse or Beneficiary, reduce or alter any benefit entitlement (as defined below) of such Participant, Surviving Spouse or Beneficiary. The benefit entitlement of any Participant, Surviving Spouse or Beneficiary whose benefit hereunder shall have commenced on a date prior to or coincident with the date of a Plan termination or amendment shall be the amount and form of payment hereunder in effect at the time of such termination or amendment. The benefit entitlement of any other Participant, Surviving Spouse or Beneficiary shall be the benefit that would be payable hereunder as a single life annuity if payment of the Participant’s Qualified Plan Retirement Benefit or the Surviving Spouse’s Qualified Plan Surviving Spouse Benefit were to commence on the date of a Plan termination or amendment; provided that such benefit entitlement shall not exceed the benefit that would be subsequently calculated and payable hereunder as a single life annuity if the Plan in effect on the day immediately preceding the date of such Plan termination or amendment were to continue until the Participant’s Qualified Plan Retirement Benefit or the Surviving Spouse’s Qualified Plan Surviving Spouse Benefit actually commences. If the benefit of a Participant is payable in any form other than a single life annuity over the lifetime of the Participant, the provisions of Section 3.5 shall be applicable in determining the amount of benefit so payable. The termination of the Plan shall not affect the form or time of payment, which shall be determined in accordance with Article III, IV or V, as applicable.

ARTICLE IX

GENERAL PROVISIONS

9.1General Conditions. Except as otherwise expressly provided herein and to the extent permitted by Section 1.409A-2(a)(9) and Section 1.409A-3(j)(5) of the Regulations, all terms and conditions of the Qualified Plan applicable to the Qualified Plan Retirement Benefit or a Qualified Plan Surviving Spouse Benefit shall also be applicable to a Supplemental Retirement Benefit, Supplemental Surviving Spouse Benefit or Supplemental Non-Spousal Benefit payable hereunder. Any Qualified Plan Retirement Benefit, Qualified Plan Surviving Spouse Benefit or any other benefit payable under a Qualified Plan, shall be paid solely in accordance with the terms and conditions of such Qualified Plan and nothing in this Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of such Qualified Plan.

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9.2Taxes. The Company shall have the right to (a) require any Participant or Beneficiary to pay the Company the amount of any taxes which the Company may be required to withhold with respect to any benefits earned under, or distributions from, the Plan or (b) deduct from all amounts paid the amount of any taxes which the Company may be required to withhold with respect to any such distributions.

9.3Entire Agreement. The Plan document along with the administrative forms required of Participants, and made known to them by the Company, shall constitute the entire agreement or contract between the Company and the Participant regarding the Plan. No oral statement regarding the Plan may be relied upon by the Participant or any other person claiming through or under the Participant.

9.4Construction. Any mention of “Articles,” “Sections” and subsections thereof, unless stated specifically to the contrary, refers to Articles, Sections or subsections in the Plan. Headings of Articles, Sections and subsections are for convenient reference. The headings are not part of the Plan and are not to be considered in its construction. All references to statutory sections shall include the section as amended from time to time.

9.5Employment Rights. Neither the establishment of the Plan nor any modification thereof, nor the creation of any Trust or account, nor the payment of any benefits, shall be construed as conferring upon a Participant the right to continue to be employed by the Company in his or her present capacity, or in any capacity. The Plan relates to the payment of deferred compensation as provided herein, and is not intended to be an employment contract.

9.6Benefit Transfers. Neither the Participant nor his or her Beneficiary under the Plan shall have any right to transfer, assign, anticipate, hypothecate or otherwise encumber all or any part of the amounts payable under the Plan; except that a domestic relations order (as defined in Code Section 414(p)(1)(B)) may assign a portion or all of a Participant’s benefit payment under the Plan, but may not change the date on which a benefit payment under the Plan shall commence. No such amounts shall be subject to seizure by any creditor of any such Participant or Beneficiary, by a proceeding at law or in equity, nor shall any such amounts be transferable by operation of law in the event of bankruptcy, insolvency or death of the Participant, his or her Beneficiary or any other beneficiary hereunder. Any attempted assignment or transfer in contravention of this provision shall be void.

9.7Governing Law. Construction, validity and administration of the Plan shall be governed by applicable Federal law and the laws of the State of Illinois.

9.8Inurement. The Plan shall be binding upon and inure to the benefit of Kemper Corporation and its successors and assigns, and the Participant, his or her successors, heirs, executors, administrators and beneficiaries.

9.9Notices. Except as otherwise provided in procedures adopted by the Company, any notice required or permitted to be given pursuant to the Plan shall be in writing, and shall be signed by the person giving the notice. If such notice is mailed, it shall be sent by United States first class mail, postage prepaid, addressed to such person’s last known address as shown on the records of

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the Company. The date of such mailing shall be deemed to be the date of notice, but the notice shall not be effective until actually received. The Company or the Participant may change the address to which notice is sent by giving notice of such change in the manner above.

9.10Small Benefits. If, upon the date payment of a Participant’s Supplemental Retirement Benefit, Supplemental Surviving Spouse Benefit or Supplemental Non-Spousal Benefit is scheduled to commence, the actuarial equivalent of such benefit (determined in accordance with Section 3.5) is less than or equal to the applicable dollar limit under Code Section 402(g)(1)(B) and results in the determination and liquidation of the entirety of the Participant’s interest under all agreements, methods, programs or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Section 1.409A-1(c)(2) of the Regulations, the Company may pay such benefit to the Participant, his or her Surviving Spouse or his or her Beneficiary in a single lump sum in lieu of any further benefit payments hereunder.

9.11Corporate Successor. The Plan shall not be automatically terminated by a Change of Control Event, but the Plan shall be continued after such Change of Control Event only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of Section 8.2.

9.12Unclaimed Benefit. Each Participant shall keep the Company informed of his or her current address and the current address of his or her Spouse and Beneficiary. The Company shall not be obligated to search for the whereabouts of any person. The Company is authorized to adopt procedures regarding unclaimed benefits that provide for the irrevocable forfeiture of a benefit if the Company is unable to locate the Participant, or if the Participant is deceased, his or her beneficiary. Such procedures shall be consistent with the Regulations and any other guidance issued by the Internal Revenue Service.

9.13Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, former Participant, Surviving Spouse, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

9.14No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Company or any other entity or person that the assets of the Company will be sufficient to pay any benefit hereunder.

9.15409A Compliance. The Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Code Section 409A and the Regulations, and shall be interpreted and operated consistent with such intent. If any ambiguity exists in the terms of the Plan, it shall be interpreted to be consistent with this purpose.

IN WITNESS WHEREOF, a duly appointed member of the Kemper Corporation Pension Plan Administrative Committee has executed the Plan on this 31^st day of October, 2011.

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KEMPER CORPORATION

By: /s/ Lisa M. King

Its: Vice President

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AMENDMENT NO. 2 TO THE

KEMPER CORPORATION

PENSION EQUALIZATION PLAN

WHEREAS, Kemper Corporation, a Delaware corporation (the “Company”), maintains the Kemper Corporation Pension Equalization Plan, as amended and restated effective August 25, 2011 (the “Plan”);

WHEREAS, it is desirable for the Company to amend the Plan to update the definition of spouse used by the Plan; and

WHEREAS, the Board of Directors of the Company has delegated to the Administrative Committee of the Kemper Corporation Pension Plan (the “Committee”) the authority to adopt such an amendment to the Plan.

NOW, THEREFORE, the Committee, on behalf of the Company, does hereby adopt the following amendment to the Plan:

1.Effective September 16, 2013, the Plan is amended by amending the definition of Surviving Spouse at Section 1.23 to read as follows:

“1.23 “Surviving Spouse” means the person who is treated as the spouse of the Participant for federal tax purposes, provided that such marriage is evidenced by either a valid marriage certificate or other proof acceptable to the Company.”

IN WITNESS WHEREOF, a duly appointed member of the Committee has executed this Amendment No. 2 to the Plan on this 16th day of December, 2013.

KEMPER CORPORATION

By: /s/ Lisa King

Lisa King

Its: Vice President

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EX-10.5

Exhibit 10.5

KEMPER CORPORATION
NON-QUALIFIED DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2014

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	1
ARTICLE II	ELIGIBILITY	5
ARTICLE III	DEFERRALS	5
ARTICLE IV	FUNDING	7
ARTICLE V	INVESTMENT OF FUNDS, ACCOUNT MAINTENANCE AND VESTING	9
ARTICLE VI	PAYMENT OF BENEFITS	10
ARTICLE VII	PAYMENTS UPON DEATH	12
ARTICLE VIII	ADMINISTRATION OF THE PLAN	12
ARTICLE IX	AMENDMENT OR TERMINATION	14
ARTICLE X	GENERAL PROVISIONS	15

KEMPER CORPORATION
NON-QUALIFIED DEFERRED COMPENSATION PLAN

The Unitrin, Inc. Non-Qualified Deferred Compensation Plan was adopted effective January 1, 2002, was amended and restated effective January 1, 2008 to comply with Code Section 409A and was further amended and restated effective January 1, 2009 to clarify the operation of the Plan and its compliance with Code Section 409A. Effective August 25, 2011, the Plan was amended and restated to change the name of the Plan to the Kemper Corporation Non-Qualified Deferred Compensation Plan (the “Plan”) in connection with the change in the name of Unitrin, Inc. to Kemper Corporation. The Plan is hereby amended and restated effective as of January 1, 2014 to allow distributions to be made upon a Participant’s death or Disability as set forth herein and to incorporate prior amendments to the Plan since its August 25, 2011 amendment and restatement.

The purpose of the Plan is to provide a benefit to directors who are not employees of Kemper Corporation and select executives of Kemper Corporation or one of its subsidiaries. Plan Participants are allowed the opportunity to elect to defer a portion of their Eligible Compensation (as defined in Section 1.14) to some future period. The Plan is intended to be an unfunded “top hat plan” exempt from certain provisions of ERISA.

ARTICLE IDEFINITIONS

1.1General. For purposes of the Plan, the following terms, when capitalized, will have the following meanings. The masculine pronoun wherever used herein will include the feminine gender, the singular number will include the plural, and the plural will include the singular, unless the context clearly indicates a different meaning.

1.2“Account” means the aggregate of a Participant’s bookkeeping sub-accounts established pursuant to Section 5.1.

1.3“Administrative Committee” means the Administrative Committee of the Kemper Corporation 401(k) Savings Plan.

1.4“Affiliated Company” or “Affiliate” means any corporation, trade or business entity which is a member of a controlled group of corporations, trades or businesses of which the Company is also a member, as provided in Code Sections 414(b) or (c).

1.5“Beneficiary Designation Form” means a written document (in printed or electronic form), the form of which the Company shall determine from time to time, on which a Participant shall have the right to designate a beneficiary.

1.6“Board” means the Board of Directors of the Company.

1.7“Bonus Compensation” means the annual formula and annual discretionary management bonuses earned in a given year and generally paid in the following year. Bonus

Compensation does not include any other bonus including, but not limited to, a relocation bonus, a hiring bonus, a stay bonus, Multi-Year Incentive Compensation or other periodic bonuses.

1.8“Change of Control” means Change of Control as defined in Section 4.3.

1.9“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

1.10“Committee” means the Compensation Committee of the Board.

1.11“Company” means Kemper Corporation, a Delaware corporation, or, to the extent provided in Section 10.9, any successor corporation or other entity resulting from a reorganization, merger or consolidation into or with the Company, or a transfer or sale of substantially all of the assets of the Company.

1.12“Director Fees” means the cashfees Outside Directors earn.

1.13“Disability” means that a Participant either

(a)is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and, with respect to an Employee Participant, is receiving income replacement benefits for a period of not less than three months under an accident and health plan (e.g. an Employer’s long term disability plan) covering employees of the Employee Participant’s Employer; or

(b)has been determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.

1.14“Eligible Compensation” means Regular Base Salary, Bonus Compensation, Multi-Year Incentive Compensation or Director Fees.

1.15“Eligible Employees” means a select group of management employees of the Company or an Affiliate.

1.16“Employee Participant” means with respect to any Plan Year, an Eligible Employee who has been designated in writing as a Participant pursuant to Section 2.1.

1.17“Employer” means the Company and its Affiliates.

1.18“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

1.19“401(a)(17) Limit” means the amount of compensation which may be considered by a plan sponsor for purposes of determining benefits under a qualified retirement plan. This amount is automatically adjusted annually by the Secretary of the Treasury for increases in the cost-of-living and such adjustment shall automatically be taken into account by the Plan.

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1.20“Investment Preference Form” means a written document (in printed or electronic form), the form of which the Company shall determine from time to time, on which a Participant shall communicate his or her investment preference.

1.21“Multi-Year Incentive Compensation” means compensation based on the achievement of one or more performance goals measured over more than a one year period. Multi-Year Incentive Compensation does not include Bonus Compensation.

1.22“Outside Directors” mean the directors of the Board who are not employees of the Company.

1.23“Outside Director Participant” means with respect to any Plan Year, a Participant who is an Outside Director for that Plan Year.

1.24“Participation Date” means the date on which an Eligible Employee or an Outside Director is eligible to participate in the Plan, as set forth in Section 2.2.

1.25“Participant” means an Employee Participant or an Outside Director Participant.

1.26“Plan” means the Kemper Corporation Non-Qualified Deferred Compensation Plan.

1.27“Plan Administrator” means the Committee.

1.28“Plan Election” means the following: (a) for Employee Participants, an election to defer a part of such Participant’s Regular Base Salary, such Participant’s Bonus Compensation, or such Participant’s Multi-Year Incentive Compensation, all pursuant to Section 3.1, and (b) for Outside Director Participants, an election to defer Director Fees pursuant to Section 3.1. A Participant’s Plan Election shall also include an election by the Participant specifying the calendar year in which payments shall commence, the method of payment with respect to the payout of all future benefits attributable to deferrals for the Plan Year and whether the Participant elects to receive a lump sum distribution upon death or Disability prior to the calendar year in which payments would otherwise commence. A Participant may delay payment or change the form of payment by filing a new Plan Election, but only to the extent permitted by Section 6.4 of the Plan.

1.29“Plan Year” means any calendar year during which the Plan is in effect.

1.30“Regular Base Salary” means the annual scheduled base salary, excluding, without limitation, stock option income, severance pay, and income included in pay due to fringe benefits.

1.31“Regulations” means the regulations, as amended from time to time, which are issued under Code Section 409A.

1.32“Separation from Service” means the Participant’s termination from employment from the Employer, subject to the following and other provisions of the Regulations:

(a)The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period

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of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Employer under an applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer. If the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six-month period.

(b)In determining whether a Separation from Service has occurred, the following presumptions, which may be rebutted as provided in the Regulations, shall apply:

(i)A Participant is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to 20% or less of the average level of services performed by the Participant during the immediately preceding 36-month period.

(ii)A Participant will be presumed not to have separated from service where the level of bona fide services performed continues at a level that is 50% or more of the average level of services performed by the Participant during the immediately preceding 36-month period.

No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20% but less than 50% of the average level of bona fide services performed during the immediately preceding 36-month period. If a Participant had not performed services for the Employer for 36 months, the full period that the Participant has performed services for the Employer shall be substituted for 36 months.

(c)For purposes of this Section, the term “Employer” has the meaning set forth in Section 1.17 provided that the following shall apply in determining whether a person is an Affiliate as defined in Section 1.4:

(i)In applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code Sections 1563(a)(1), (2) and (3); and

(ii)In applying Treas. Reg. Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Treas. Reg. Section 1.414(c)-2.

(d)In the event of the sale or other disposition of assets by the Company or an Affiliate (the “Seller”) to an unrelated service recipient (the “Buyer”), the Seller and the Buyer may specify whether a Separation from Service has occurred for a Participant who would otherwise experience a Separation from Service with the Seller, in accordance with the rules set forth in Section 1.409A-1(h)(4) of the Regulations.

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1.33“Trust” means a so-called “rabbi trust,” the assets of which shall remain, for all purposes, a part of the general unrestricted assets of the Company.

1.34“Valuation Date” means each day that the New York Stock Exchange is open for business. The determination of the Valuation Date as of which changes in investment preferences under the Plan are effected shall be made in accordance with rules and procedures established by the Company.

ARTICLE II
ELIGIBILITY

2.1Eligibility. The Board may, in its discretion, or an Affiliate may, in its discretion and subject to the approval of the Board, designate in writing any Eligible Employee as a Participant who is eligible to participate in the Plan. An Outside Director is automatically eligible to participate in the Plan.

2.2Participation Date and Notice. An Eligible Employee designated as a Participant pursuant to Section 2.1 shall become a Participant as of the first day of the Plan Year following such designation. An Outside Director shall become a Participant as of the date he or she is elected a director of the Board. The date that an Eligible Employee or Outside Director is eligible to participate in the Plan shall be known as the Participation Date. The Company will provide the Participant with notice of the Participant’s Participation Date and the forms needed to make an election pursuant to Section 3.2 as soon as reasonably practicable after the Company is informed of a Participant’s Participation Date.

ARTICLE III
DEFERRALS

3.1Deferral Amounts.

(a)Participants may elect to defer Eligible Compensation subject to the limits described below. A separate election for Regular Base Salary, Bonus Compensation, Multi-Year Incentive Compensation and Director Fees must be made. Outside Director Participants may elect to defer up to 100% of their Director Fees. Subject to Section 3.1(b), Employee Participants may elect to defer up to (i) 60% of their Regular Base Salary, (ii) 85% of their Bonus Compensation, and (iii) for Multi-Year Incentive Compensation for which the first year of the performance period begins on or after January 1, 2013, 85% of their Multi-Year Incentive Compensation.

(b)The amount that an Employee Participant may defer cannot be in excess of his or her Regular Base Salary, Bonus Compensation and Multi-Year Compensation, respectively, reduced by their “Applicable Taxes.” “Applicable Taxes” means the taxes on the Regular Base Salary, Bonus Compensation and Multi-Year Compensation, respectively, which a Participant elects to defer under the Plan and which are described in the following Regulations:

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(i)Treas. Reg. § 1.409A-3(j)(4)(vi), which allows an Employer to accelerate payment of Eligible Compensation deferred under the Plan to pay FICA taxes on such Eligible Compensation and income tax withholding related to such FICA taxes; and

(ii)Treas. Reg. § 1.409A-3(j)(4)(xi), which allows an Employer to accelerate payment of Eligible Compensation deferred under the Plan to pay state, local or foreign taxes on such Eligible Compensation and income tax withholding related to such taxes.

3.2Plan Election. The Company shall provide each Participant, upon becoming a Participant and thereafter annually, with a Plan Election to be filed by the Participant, in accordance with such procedures as may be established by the Company but subject to the following:

(a)An Employee Participant desiring to participate in the Plan must file with the Company a Plan Election not later than the close of the Participant’s taxable year next preceding the period of service for which the right to the compensation arises, at which time the election shall become irrevocable. For avoidance of doubt, this means that with respect to Multi-Year Incentive Compensation with a three year performance period, a Plan Election must be filed prior to the beginning of the first year of the three year performance period. A Plan Election shall be effective on the first day of the Plan Year following the filing thereof.

(b)A Director Participant desiring to participate in the Plan must file with the Company an initial Plan Election within 30 days (or such lesser number of days as the Company shall determine) following such Participant’s Participation Date at which time the election shall become irrevocable. Such initial election shall be effective commencing with the first day of the first month following such filing. Thereafter, a Plan Election must be filed by a Director Participant prior to the beginning of the Plan Year to which it pertains, at which time the election shall become irrevocable. Such Plan Election shall be effective on the first day of the Plan Year following the filing thereof.

(c)In no event shall a Participant be permitted to defer Eligible Compensation for any period that has commenced prior to the date on which the Plan is effective or the date on which a Plan Election is signed by the Participant and accepted by the Company.

(d)Upon receipt of a properly completed and executed Plan Election, the Company shall notify the payroll department of the Participant’s Employer to withhold that portion of the Participant’s Eligible Compensation specified in the agreement. All amounts shall be withheld ratably throughout the Plan Year except for any bonus or incentive amounts, which shall be withheld in a single lump sum. In no event shall the Participant be permitted to defer more than the amount specified by the Plan.

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ARTICLE IV
FUNDING

4.1Unsecured Obligation. Individual Participant deferrals of Eligible Compensation and the hypothetical investment earnings/losses thereon shall be reflected in book entries maintained by or on behalf of the Company, as set forth in Section 5.1. The existence of such book entries shall not create a trust of any kind, or a fiduciary relationship between the Company, any third party record keeper and the Participant, his or her designated beneficiary, or other beneficiaries provided for under the Plan. The bookkeeping entries represent an unsecured obligation of the Company to pay deferred Eligible Compensation and the investment earnings/losses thereon to a Participant at a future date.

4.2Discretionary Rabbi Trust. If the Company so determines, in its sole discretion, payments to a Participant or his or her designated beneficiary or any other beneficiary hereunder may be made from assets held in a Trust. No person shall have any interest in such assets by virtue of the Plan. The Company’s obligations hereunder shall be an unfunded and unsecured promise to pay money in the future. Any Participant having a right to receive payments pursuant to the provisions of the Plan shall have no greater rights than any unsecured general creditor of the Company in the event of the Company’s insolvency or bankruptcy, and no person shall have nor acquire any legal or equitable right, claim or interest in or to any property or assets of the Company. In no event shall the assets accumulated in the Trust be construed as creating a funded plan under the applicable provisions of ERISA, or under the Code, or under the provisions of any other applicable statute or regulation.

4.3Change in Control.

(a)Upon a Change of Control the Company shall, as soon as possible, but in no event longer than 30 days following the Change of Control, make an irrevocable contribution to the Trust in an amount that is sufficient to pay each Participant or beneficiary the benefits to which such Participant(s) or their beneficiaries would be entitled pursuant to the terms of the Plan as of the date on which the Change of Control occurred. For purposes of the Plan “Change of Control” shall mean the occurrence of any of the following events:

(i) any “Person” (defined below) is or becomes the “Beneficial Owner,” (defined below) directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its “Affiliate” (defined below)) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (1) of subparagraph (iii) below; or

(ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on

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December 31, 2013, constituted the Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds of the directors still in office who either were directors on December 31, 2013 or whose appointment, election or nomination for election was previously so approved or recommended; or

(iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (1) a merger or consolidation which results in the directors of the Company immediately prior to such merger or consolidation continuing to constitute at least a majority of the board of directors of the surviving entity or any parent thereof, or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliate) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board of Directors immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof.

(b)As used in this Change of Control section:

(i) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

(ii) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act; and

(iii) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified in Sections 13(d)(3) and 14(d)(2) thereof,

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except that such term shall not include (1) the Company or any entity, more than 50% of the voting securities of which are Beneficially Owned by the Company, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, (5) any individual, entity or group whose ownership of securities of the Company is reported on Schedule 13G pursuant to Rule 13d-1 promulgated under the Exchange Act (but only for so long as such ownership is so reported) or (6) Singleton Group LLC or any successor in interest to such entity.

ARTICLE V
INVESTMENT OF FUNDS, ACCOUNT MAINTENANCE AND VESTING

5.1Record Keeper. The Company shall appoint a Plan record keeper which shall establish and maintain an individual bookkeeping Account on behalf of each Participant for purposes of determining each Participant’s benefits under the Plan. Separate sub-accounts shall be established for each Participant with respect to each year’s Plan Election and for which a different form of payment or payment start date has been elected.

5.2Account Adjustments.

(c)The Plan record keeper shall adjust each Participant’s Account for amounts representing:

(i)Participant deferrals,

(ii)Hypothetical investment earnings/losses,

(iii)Expenses, and

(iv)Distributions paid to the Participant or beneficiaries.

(d)Each Participant electing to defer Eligible Compensation pursuant to the Plan shall also specify at the time the Plan Election is made, the hypothetical measure(s) of investment performance from among the choices made available from time to time to Plan participants by the Trust Administrative Committee of the Kemper Corporation 401(k) Savings Plan. If the Participant fails to specify the hypothetical measure of investment performance, the Company shall do so. The Participant’s bookkeeping account shall be deemed to be invested in the hypothetical investment selected by the Participant, or if none, by the Company. Investment preferences selected by the Participant are used only to determine the value of a Participant’s Account and in no event is the Company required to follow these investment preferences for actual plan investments. A

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Participant’s investment preference shall be communicated to the Company by completion and delivery to the Company of an Investment Preference Form in such form as the Company shall determine from time to time. Participants shall indicate their initial investment preferences by filing an Investment Preference Form with the Company prior to the date on which deferrals commence under the terms of the Participant’s Plan Election. Once elected, investment preferences shall be valid until revoked by filing a new Investment Preference Form. Participants shall have the opportunity to change their investment preferences with respect to (i) new deferrals, (ii) their entire existing balances or (iii) deferrals made for a specific Plan Year, in accordance with such procedures as may be established by the Company.

(e)The Plan record keeper shall determine the value of all Accounts maintained under the terms of the Plan on each Valuation Date. The Plan record keeper shall provide each Participant with a statement of his or her individual bookkeeping Account reflecting adjustments to such Account during the period from the last statement date. Such statement shall be provided to Participants as soon as administratively feasible following the end of each calendar quarter.

ARTICLE VI
PAYMENT OF BENEFITS

6.1Distributions. A Participant’s or beneficiary’s benefit payable under the Plan shall be determined by reference to the value of each bookkeeping sub-account balance at the time of distribution. Sub-accounts shall be maintained for each Plan Year’s deferrals. Benefit payments from the Plan shall be payable from the general assets of the Company which include any assets held in the Trust.

6.2Timing of Payments. Subject to Section 6.4 through Section 6.10, each of a Participant’s subaccounts shall be paid or payment shall begin within 30 days following January 1 of the year elected by the Participant on the Participant’s applicable Plan Election. Except as set forth in Section 6.7 through Section 6.10, no Participant or beneficiary shall have any right to receive payment of his or her benefit under the Plan prior to the specific date elected on the applicable Plan Election.

6.3Form of Payments. Each of a Participant’s subaccounts shall be paid as a lump sum or in installments as elected in the applicable Plan Election. A different form of payment, as to amount and timing, may be elected with respect to each year’s Plan Election. Except as otherwise provided in Section 6.4, once a Plan Election is made with respect to amounts deferred for a Plan Year, it cannot be altered and is irrevocable. A Participant’s account balance shall be distributed to the Participant or his or her beneficiary in the form of cash only. Notwithstanding the foregoing, an election made by a Participant prior to January 1, 2009 to change the specific date for payment and the form of payment for one or more of his or her subaccounts shall be recognized to the extent permitted by IRS Notice 2007-86 and administrative procedures adopted by the Company.

6.4Subsequent Deferral. A Participant may elect to delay payment or change the form of payment of any of his or her sub-accounts if all of the following conditions are met with respect to such sub-account:

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(a)Such election shall not take effect until at least 12 months after the date on which the election is made;

(b)Payment must be deferred for a period of not less than five years from the date such payment would otherwise have been paid, unless the election is related to a payment on account of Disability or death; and

(c)Any election must be made not less than 12 months before the first day of the calendar year in which payment of such sub-account would otherwise be made or commence.

The right to a series of installment payments, as defined in the Regulations, shall be treated as a right to a single payment.

6.5Acceleration Prohibited. Except as provided in Section 6.7 through 6.10, acceleration of the time of payment of any portion of the balance of a Participant’s Account is prohibited.

6.6Payments in Violation of Federal Securities Laws. To the extent permitted by the Regulations, the Company may delay a benefit payment where the Company reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law. Such a benefit payment shall be made at the earliest date at which the Company reasonably anticipates that the making of the benefit payment will not cause such violation and, if the Participant had elected installment payments, the first payment to the Participant shall include the payments that the Participant would have received had payments begun as of the date such payments were scheduled to begin. Notwithstanding the foregoing, if a benefit payment to a Participant is delayed until the Participant’s Separation from Service, then the benefit payment shall not be made before the first day of the seventh month after the Participant’s Separation from Service or, if earlier, the date of death of the Participant.

6.7Accelerated Payment Upon Death or Disability. A Participant may elect, on the applicable Plan Election or pursuant to Section 6.4, to have payment of a sub-account made in a single lump sum payment upon the Participant’s death or Disability before the calendar year otherwise selected by the Participant for payment of such sub-account. If a Participant makes such an election, payment shall be made in a single lump sum payment within 90 days of the Participant’s Disability or death, as applicable, and neither the Participant nor the Participant’s beneficiary, as applicable, shall have the right to designate the taxable year of the payment. This provision shall not apply in the event that payment is being made to the Participant in accordance with Section 6.10 or with respect to a sub-account for which payment has begun prior to the Participant’s death or Disability.

6.8Accelerated Payment for Domestic Relations Orders. To the extent necessary to fulfill a domestic relations order (as defined in Code Section 414(p)(1)(B)) and as permitted by the Regulations, the Company, in its sole discretion, may accelerate the time or schedule of a benefit payment under the Plan to an individual other than the Participant, or a benefit payment under the Plan may be made to an individual other than the Participant.

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6.9Accelerated Payment for Failure to Comply with Code Section 409A. To the extent permitted by the Regulations, at any time the Plan fails to meet the requirements of Code Section 409A and the Regulations, the Company may accelerate the time or schedule of a payment, or a payment under the Plan may be made; provided, however, that such payment shall not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code Section 409A and the Regulations.

6.10Small Benefits. If, upon the first day of the seventh month following a Participant’s Separation from Service (“Payment Date”), a Participant’s Account is less than or equal to the applicable dollar limit under Code Section 402(g)(1)(B) and results in the determination and liquidation of the entirety of the Participant’s interest under all agreements, methods, programs or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Section 1.409A-1(c)(2) of the Regulations, the Company may pay such Account to the Participant or his or her beneficiary in a single lump sum, in lieu of any further benefit payments hereunder, on the Payment Date.

ARTICLE VII
PAYMENTS UPON DEATH

7.1Payment to Beneficiary. Any benefit which a deceased Participant is entitled to receive under the Plan shall be paid to such Participant’s beneficiary. Such death benefit shall be paid in the form and at the time elected in accordance with the Participant’s Plan Elections.

7.2Designation of Beneficiary. A Participant shall have the right to designate a beneficiary on the Beneficiary Designation Form and to amend or revoke such designation at any time in writing. Such designation, amendment or revocation shall be effective only when filed with the Company. Any beneficiary designation, amendment or revocation shall apply to all past and present Plan Elections.

If no Beneficiary Designation Form is filed with the Company, or if the Beneficiary Designation Form is held invalid, or if no beneficiary survives the Participant and benefits remain payable following the Participant’s death, the Company shall direct that payment of benefits be made to the person or persons in the first category in which there is a survivor. The categories of successor beneficiaries, in order, are (a) the Participant’s spouse and (b) the Participant’s estate.

ARTICLE VIII
ADMINISTRATION OF THE PLAN

8.1Plan Administration. The Plan Administrator is the Committee. The Committee has complete authority to interpret and administer the Plan. The Committee’s responsibilities and obligations may be delegated as deemed necessary by the Committee from time to time. The Committee may establish administrative practices as necessary for the establishment and ongoing maintenance of the Plan. The Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person

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to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. The decisions made by and the actions taken by the Plan Administrator in the administration and interpretation of the Plan shall be final and conclusive for all persons. If, after reading the Plan, Participants have questions about the Plan, such questions should be directed to the designated contact at the Company.

8.2Claims.

Any Participant or beneficiary who believes that there was an error in the calculation of his or her account balance or in the payment of benefits under the Plan or who desires to enforce his or her rights under the terms of the Plan or clarify his or her rights to future benefits under the terms of the Plan (referred to in this Section as a “claim” or “claims”) shall file a claim with the Plan Administrator. The claim must be filed, signed and dated within 90 days of the date on which the claimant learned of the facts from which such claim arises. The claim must be sent by certified mail or presented in person to the Plan Administrator.

The Plan Administrator, acting through the Company, shall respond in writing to the claimant within a reasonable period of time but not later than 90 days after receipt of the claim unless special circumstances require an extension of time for processing. If such extension of time is required, the Plan Administrator, acting through the Company, shall furnish written notice of the extension to the claimant prior to the termination of the initial 90 day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan Administrator, acting through the Company, expects to render a final decision. In no event shall such extension exceed a period of 90 days from the end of the initial period. If the Plan Administrator, acting through the Company, does not issue a determination on the claim within the required time period, such claim shall be deemed denied.

8.3Appeals.

Any claimant not satisfied with the Plan Administrator’s decision of a claim shall have the right to appeal to the Plan Administrator. The appeal must be signed and dated by the claimant and include a copy of the claim submitted to the Plan Administrator as well as a copy of the Plan Administrator’s decision. The appeal should explain why the claimant does not agree with the Plan Administrator’s decision. The appeal must be filed within 60 days of the receipt of the Plan Administrator’s decision. The appeal must be sent by certified mail or presented in person to the Plan Administrator.

The Plan Administrator shall promptly advise the claimant of its decision on the claimant’s appeal. Such decision shall be written in layman’s terms, shall include specific reasons for the decision and shall contain specific references to pertinent Plan provisions upon which the decision is based. The decision on appeal shall be made no later than 60 days after the Plan Administrator’s receipt of the appeal, unless special circumstances require an extension of the time for processing. If such an extension of time is required, the Plan Administrator shall furnish written notice of the extension to the claimant prior to the termination of the 60 day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render a final decision. If an extension of time is required, a decision shall

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be rendered as soon as possible, but not later than 120 days following receipt of the appeal. If the Plan Administrator, acting through the Company, does not issue a decision on appeal within the required time period, such appeal shall be deemed denied.

The decision on appeal shall be final and conclusive. A claimant may not bring a lawsuit on a claim under the Plan until he or she has exhausted the internal administrative claim process established under Sections 8.2 and 8.3. No action at law or in equity to recover under the Plan shall be commenced later than one year from the date a determination is made on the request for review or the expiration of the appeal decision period if no determination is issued.

ARTICLE IX
AMENDMENT OR TERMINATION

9.1Amendment or Termination. The Company intends the Plan to be permanent but reserves the right, subject to Section 9.2, to amend or terminate the Plan when, in the sole opinion of the Company, such amendment or termination is advisable. However, no amendment shall deprive a Participant or beneficiary of any of the benefits which he or she has accrued under the Plan or otherwise adversely affect the Participant’s Account with respect to amounts credited thereto prior to the date such amendment is made. The Administrative Committee of the Kemper Corporation 401(k) Savings Plan (the “Administrative Committee”) shall have the authority, on behalf of the Company, to amend the Plan in any manner permitted by Article IX of the Plan as the Administrative Committee considers desirable, appropriate or necessary, provided that no such amendments, either individually or in the aggregate, have a material adverse financial impact on the Company and the Employers. The Board reserves the authority to make any other amendments to the Plan, including, but not limited to, amendments that the Administrative Committee deems desirable, appropriate or necessary which would have a material adverse financial impact on the Company and the Employers.

9.2Effect of Amendment or Termination. No amendment or termination of the Plan shall, without the express written consent of the affected current or former Participant or beneficiary, reduce or alter any benefit entitlement of such Participant or beneficiary. Upon Plan termination, no further deferrals shall be made. In such event, the Participant or his or her beneficiary, as the case may be, shall be entitled to receive any benefit attributable to the deferrals accrued as of the day preceding the effective date of termination, plus hypothetical investment earnings and less hypothetical investment losses, taxes and expenses chargeable to the Participant’s Account up to the benefit distribution date. The Plan Administrator shall make distributions of the Participant’s benefit (a) in accordance with the Participant elections then in effect, or (b) if permitted by the Regulations and elected by the Company, in a single lump sum payment that is paid at such time as is permitted by Section 1.409A-3(j)(4)(ix) of the Regulations.

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ARTICLE X
GENERAL PROVISIONS

10.1Taxes. The Company shall have the right to (a) require any Participant or beneficiary to pay the Company the amount of any taxes which the Company may be required to withhold with respect to any benefits earned under, or distributions from, the Plan or (b) deduct from all amounts paid the amount of any taxes which the Company may be required to withhold with respect to any such distributions.

10.2Entire Agreement. The Plan document along with the Plan Election, Investment Preference Form, Beneficiary Designation Form and other administration forms required of Participants, and made known to them by the Company, shall constitute the entire agreement or contract between the Company and the Participant regarding the Plan. No oral statement regarding the Plan may be relied upon by the Participant or any other person claiming through or under the Participant.

10.3Construction. Any mention of “Articles,” “Sections” and subsections thereof, unless stated specifically to the contrary, refers to Articles, Sections or subsections in the Plan. Headings of Articles, Sections and subsections are for convenient reference. The headings are not part of the Plan and are not to be considered in its construction. All references to statutory sections shall include the section as amended from time to time.

10.4Employment Rights. Neither the establishment of the Plan nor any modification thereof, nor the creation of any trust or account, nor the payment of any benefits, shall be construed as conferring upon a Participant the right to continue to be employed by the Company in his or her present capacity, or in any capacity, or the right to continue to serve as an Outside Director. The Plan relates to the payment of deferred compensation as provided herein, and is not intended to be an employment contract.

10.5Benefit Transfers. Neither the Participant nor his or her designated or other beneficiary under the Plan shall have any right to transfer, assign, anticipate, hypothecate or otherwise encumber all or any part of the amounts payable under the Plan, except as provided in Section 6.8. No such amounts shall be subject to seizure by any creditor of any such Participant or beneficiary, by a proceeding at law or in equity, nor shall any such amounts be transferable by operation of law in the event of bankruptcy, insolvency or death of the Participant, his or her designated beneficiary or any other beneficiary hereunder. Any attempted assignment or transfer in contravention of this provision shall be void.

10.6Governing Law. Construction, validity and administration of the Plan shall be governed by applicable Federal law and the laws of the State of Illinois.

10.7Inurement. The Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the Participant, his or her successors, heirs, executors, administrators and beneficiaries.

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10.8Notices. Any notice (other than pursuant to enrollment materials) required or permitted to be given pursuant to the Plan shall be in writing, and shall be signed by the person giving the notice. If such notice is mailed, it shall be sent by United States first class mail, postage prepaid, addressed to such person’s last known address as shown on the records of the Company. The date of such mailing shall be deemed to be the date of notice, but the notice shall not be effective until actually received. The Company or the Participant may change the address to which notice is sent by giving notice of such change in the manner above.

10.9Corporate Successor. The Plan shall not be automatically terminated by a Change of Control event, but the Plan shall be continued after such Change of Control event only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of Section 9.2.

10.10Unclaimed Benefit. Each Participant shall keep the Company informed of his or her current address and the current address of his or her beneficiary. The Company shall not be obligated to search for the whereabouts of any person. The Company is authorized to adopt procedures regarding unclaimed benefits that provide for the irrevocable forfeiture of a benefit if the Company is unable to locate the Participant, or if the Participant is deceased, his or her beneficiary. Such procedures shall be consistent with the Regulations and any other guidance issued by the Internal Revenue Service.

10.11Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, former Participant, beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

10.12No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Company or any other entity or person that the assets of the Company will be sufficient to pay any benefit hereunder.

10.13409A Compliance. The Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Code Section 409A and the Regulations, and shall be interpreted and operated consistent with such intent. If any ambiguity exists in the terms of the Plan, it shall be interpreted to be consistent with this purpose.

IN WITNESS WHEREOF, a duly appointed member of the Administrative Committee has executed the Plan on this 4th day of December, 2013.

KEMPER CORPORATION

By: /s/ Lisa King

Its: Vice President

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EX-10.24

Exhibit 10.24

Kemper Corporation 2011 Omnibus Equity Plan

NON-QUALIFIED STOCK OPTION AND SAR AGREEMENT

(Installment-Vesting Form)

This NON-QUALIFIED STOCK OPTION AND SAR AGREEMENT (“Agreement”) is made as of this ______ day of ___________, 2___ (“Grant Date”) between KEMPER CORPORATION, a Delaware corporation (the “Company”), and «name» (the “Award Holder”), for an award consisting of the right and option (the “Option”) to purchase on the terms and conditions hereinafter set forth, all or any part (subject to the limitations of Section 3) of an aggregate of «shares» («number») shares of the Common Stock of the Company (“Common Stock”) at the purchase price of $______ per share.

SIGNATURES

As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.

KEMPER CORPORATION            AWARD HOLDER

By: «CEO Signature and Title»    «name»                

RECITALS

A.    The Board of Directors of the Company has adopted the Kemper Corporation 2011 Omnibus Equity Plan (the “Plan”), including all amendments to date, to be administered by the Compensation Committee of the Company’s Board of Directors or any subcommittee thereof, or any other committee designated by the Board to administer the Plan (the “Committee”). Capitalized terms that are not defined herein shall be defined in accordance with the Plan.

B.    The Plan authorizes the Committee to grant to selected employees, directors and Third Party Service Providers of the Company or any Affiliate of the Company awards of various types, including of options to purchase shares of Common Stock of the Company and tandem stock appreciation rights (“SAR(s)”).

C.    Pursuant to the Plan, the Committee has determined that it is in the best interest of the Company and its shareholders to grant a non-qualified stock option (and tandem SAR) to the Award Holder, and has approved the execution of this Non-Qualified Stock Option and SAR Agreement between the Company and the Award Holder.

D.    Neither the option nor the SAR granted hereby is intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Grant.

(a) The Company grants the Option to the Award Holder, which Option will be exercisable from time to time in accordance with the provisions of this Agreement during a period expiring on the tenth anniversary of the Grant Date or such later date as may result from the application of Section 6 (such anniversary or later date is referred to as the “Expiration Date”). The Option is also subject to early termination pursuant to Section 3(f) and Section 5.

(b) The Option is coupled with a SAR that is exercisable to the extent, and only to the extent, that the Option is exercisable under the vesting provisions of Section 2. The term of the SAR shall expire on the Expiration Date and shall be subject to early termination pursuant to Section 3(f) and Section 5. The SAR shall entitle the Award Holder to surrender the Option (or any portion thereof, subject to Section 3(a)) to the Company unexercised and receive in exchange for the surrender of the Option (or the surrendered portion thereof) that number of shares of the Company’s common stock having an aggregate value equal to: (A) the excess of the fair market value of one share of such stock (as determined in accordance with Section 4) over the purchase price per share specified on page one above (or, if applicable, such price as adjusted pursuant to Section 9 hereof), multiplied by (B) the number of such shares subject to the Option (or portion thereof) which is so surrendered.

2.    Vesting.

(a) The Award Holder may not purchase any shares by exercise of this Option or the SAR until the date on which they are exercisable (the “Vesting Date(s)”). Subject to early vesting or forfeiture pursuant to Section 5, the shares subject to this Option and SAR shall become exercisable in four (4), equal annual installments, the first of which shall vest on the six-month anniversary of the Grant Date (the “Initial Vesting Date”), and the remainder of which shall vest on the first, second and third anniversaries of the Initial Vesting Date, respectively, provided that: (i) the Award Holder is in Service (as hereafter defined) on the Vesting Date; or (ii) the Award Holder is Retirement Eligible (as hereafter defined) prior to the date the Award Holder terminates Service and the Award Holder has not, at any time prior to or on the Vesting Date, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion.

(b)     Certain Definitions.

(i) “Service” means that the Award Holder is employed by, or a Third Party Service Provider or member of the board of directors of, the Company or an Affiliate.

(ii) “Retirement Eligible” means that the Award Holder has either attained age 60 and completed 10 years of Service as an Employee or attained age 65 and completed 5 years of Service as an Employee.

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Subject to early vesting or forfeiture under Section 5 or the terms of the Plan and no later than the Expiration Date, the Award Holder may purchase all or any part (subject to the limitations of Section 3) of the shares subject to this Option which are currently exercisable, or such lesser number of shares as may be available through the exercise of the SAR. The total number of shares subject to the Option and the number of shares subject to the Option which are currently exercisable by the Award Holder each shall be reduced by the number of shares previously acquired by the Award Holder pursuant to this Agreement.

3.    Manner of Exercise.

(a)    Each exercise of this Option shall be by means of a written notice of exercise delivered to the Company by the Award Holder or his or her Representative. Such notice shall identify the Options being exercised. When applicable, the notice shall also specify the number of shares of Common Stock that the Award Holder plans to deliver in payment of all or part of the exercise price. Before shares will be issued, the full purchase price of the shares subject to the Options being exercised shall be paid to the Company using the following methods, individually or in combination: (i) by check payable to the order of the Company in an amount equal to the purchase price, (ii) by Constructive or Actual Delivery of shares of Common Stock with a fair market value as of the close of business on the date of exercise equal to or greater than the purchase price, (iii) by electronic transfer of funds to an account of the Company, or (iv) by other means acceptable to the Committee. This Option may not be exercised for a fraction of a share and no partial exercise of this Option may be for less than fifty (50) shares unless the total number of shares covered by this Option is less than 50 on the date of exercise or unless this Option is scheduled to expire within six months of the date of exercise.

(b)    Each exercise of the SAR shall be by means of a written notice of exercise delivered to the Company, specifying whether the Award Holder is surrendering all or a portion of the Option and, if only a portion of the Option is being surrendered, how many shares are included in such portion (to the extent determinable by the Award Holder). Upon satisfaction of the Award Holder’s obligation to pay the Company the amount of all taxes that the Company is required to withhold in connection with such exercise as specified in Section 3(e) below, the Company shall issue to the Award Holder a number of shares of the Company’s common stock computed in accordance with Section 1(b) and the Option and the SAR (or the surrendered portions thereof) shall be deemed extinguished. The SAR may only be settled in shares of the Company’s common stock and not by payment of cash to the Award Holder. Any fractional share that would otherwise result from an exercise of the SAR shall be rounded down to the nearest whole share.

(c)    The date of exercise shall be: (i) in the case of a broker-assisted cashless exercise, the earlier of (A) the trade date of the related sale of stock or (B) the date that the Company receives the purchase price; (ii) in the case of a SAR, or an Option exercise in which the Award Holder elects to pay some or all of the exercise price and/or any related withholding taxes by Constructive or Actual Delivery of shares of Common Stock (or, in the case of such taxes, by directing the Company to withhold shares that would otherwise be issued upon exercise of such Option), the date that the Company receives written notice of such exercise; or (iii) in all other cases, the date that the Company receives the purchase price.

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(d)    This Option and SAR may be exercised only by the Award Holder or his or her Representative, and not otherwise, regardless of any community property interest therein of the spouse of the Award Holder, or such spouse’s successors in interest. If the spouse of the Award Holder shall have acquired a community property interest in this Option and the SAR, the Award Holder, or the Award Holder’s Representative, may exercise the Option and the SAR on behalf of the spouse of the Award Holder or such spouse’s successors in interest.

(e)    Upon the exercise of this Option or SAR, the Company shall require the Award Holder or the Award Holder’s Representative to pay the Company the amount of any taxes which the Company may be required to withhold with respect to such exercise. Subject to the limitations set forth in the next three sentences, the Award Holder or his/her Representative may elect to satisfy all or any portion of such tax withholding obligations either by: (i) any of the methods described in Sections 3(a)(i) through 3(a)(iv) above, or (ii) directing the Company to withhold shares that would otherwise have been issued pursuant to the exercise of this Option or SAR. Neither the Award Holder nor his/her Representative shall have the right to utilize Constructive or Actual Delivery of shares of Common Stock or to have shares withheld, in either case, in excess of the minimum number required to satisfy applicable tax withholding requirements based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes. Shares used in either of the foregoing ways to satisfy tax withholding obligations will be valued at their fair market value on the date of exercise. In the case of an exercise of the SAR, the Company retains the right to require the Award Holder to pay any and all withholding taxes arising out of such exercise solely in cash.

(f)    In the event the Option (or any portion thereof) is exercised, then the SAR (or the corresponding portion) shall terminate. In the event that the SAR (or any portion thereof) is exercised, then the Option (or the corresponding portion) shall likewise terminate.

4.    Fair Market Value of Common Stock. The fair market value of a share of Common Stock shall be determined for purposes of this Agreement by reference to the closing price of a share of Common Stock, as reported by the New York Stock Exchange (or such other exchange on which the Shares of Common Stock are primarily traded) for the Grant Date or date of exercise, as applicable, or if such date is not a business day, for the business day immediately preceding such date (or, if for any reason no such price is available, in such other manner as the Committee may deem appropriate to reflect the then fair market value thereof).

5.    Termination of Service. The Option may be subject to early vesting or forfeiture in accordance with the following provisions:

(a) Death or Disability.

(i)    The Vesting Date shall be the date of the Award Holder’s death or Disability if the Award Holder dies or becomes Disabled: (A) while in Service; or (B) after terminating Service if the Award Holder (1) was Retirement Eligible on the date of such termination of Service, and (2) had not, at any time prior to the date of the Award Holder’s death or Disability, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole

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discretion. On such Vesting Date, any portion of this Option and SAR granted hereunder that is outstanding but not vested shall immediately vest and, along with any previously-vested portion that is then outstanding, remain outstanding and exercisable until the earlier of the Expiration Date or one year from the Vesting Date, and any portion not exercised within such period shall be forfeited to the Company.

(ii) “Disabled” or “Disability” means that the Award Holder either:

(A)    is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and, with respect to an Award Holder who is an Employee, is receiving income replacement benefits for a period of not less than three months under an accident and health plan (e.g. a long term disability plan) covering Employees of the Company or Affiliate that employs the Award Holder; or

(B)    has been determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.

(b)    Divestiture of Employer. If the Company divests its controlling interest in an Affiliate, or if its control of such Affiliate otherwise ceases, and the Award Holder is in Service to such Affiliate and is not in Service to the Company or another Affiliate,then any unvested portion of this Option and SAR held by the Award Holder on the date of such divestiture or cessation of control shall be forfeited to the Company if the Award Holder is not Retirement Eligible on such date. The Award Holder shall have until the earlier of 90 days from such date or the Expiration Date, in which to exercise any portion that is vested on such date, and any portion that is not exercised within such period shall be forfeited to the Company.

If the Award Holder is Retirement Eligible on the date of such divestiture or cessation of control, this Option and SAR shall continue to vest in accordance with Section 2(a) and the Award Holder shall have until the Expiration Date to exercise any portion of the Option that becomes vested; provided, however, that if the Award Holder dies or becomes Disabled prior to the Expiration Date, Section 5(a) shall apply.

(c)    Other Termination of Service. If the Award Holder ceases to be in Service under circumstances other than those set forth in the foregoing subsections (a) or (b), then:

(i)     If the termination of Service is not for Substantial Cause and the Award Holder is not Retirement Eligible, then any portion of this Option and SAR held by the Award Holder that was not vested on the date of termination shall immediately be forfeited to the Company, and the Award Holder shall have until the earlier of 90 days from the date of termination or the Expiration Date in which to exercise any portion that was vested on such date, and any portion not exercised within such period shall be forfeited to the Company.

(ii)    If the termination of Service is not for Substantial Cause and the Award Holder is Retirement Eligible, the Award Holder shall continue to vest in this Option and SAR in

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accordance with Section 2(a) and shall have until the Expiration Date to exercise any portion of the Option that becomes vested, unless (A) the Award Holder becomes an employee of a competitor of the Company or any of its Affiliates or otherwise engages in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion, in which case any portion of this Option and SAR that was not vested on the date that such employment or activity began shall be forfeited to the Company on such date, or (B) the Award Holder dies or becomes Disabled prior to the Expiration Date, in which case Section 5(a) shall apply.

(iii)    If the termination of Service is for Substantial Cause, regardless of whether the Award Holder is Retirement Eligible, then any portion of this Option and SAR that remains outstanding on the date of termination (whether vested or unvested) shall be forfeited to the Company, notwithstanding any otherwise applicable term of this Agreement that provided for vesting or non-forfeitability, including (but not limited to) Section 2(a).

6.    Extension of Expiration in Certain Cases. From time to time, the Company may declare “blackout” periods during which the Award Holder may be prohibited from engaging in certain transactions in Company securities. In the event that the scheduled Expiration Date of this Option and SAR shall fall within a blackout period that has been declared by the Company and that applies to the Award Holder, then the Expiration Date shall automatically, and without further notice to Award Holder, be extended until such time as fifteen (15) consecutive business days have elapsed after the scheduled Expiration Date without interruption by any blackout period that applied to the Award Holder.

7.    Shares to be Issued in Compliance with Federal Securities Laws and Exchange Rules. No shares issuable upon the exercise of this Option or SAR shall be issued and delivered unless and until there shall have been full compliance with all applicable requirements of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption conditions), all applicable listing requirements of the New York Stock Exchange or such other exchange(s) or markets on which shares of the same class are then listed and any other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery. The Company shall use its best efforts and take all necessary or appropriate actions to assure that such full compliance on the part of the Company is made.

8.    No Assignment. This Option and SAR and all rights and privileges granted hereby (including the right of exercise) shall not be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution. Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Option or SAR or any other rights or privileges granted hereby contrary to the provisions hereof, this Option and SAR and all other rights and privileges contained herein shall immediately become null and void and of no further force or effect.

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9.    Certain Adjustments; Change in Control.

(a)     The provisions of Sections 4.4 and 19.2 of the Plan relating to certain adjustments in the case of stock splits, reorganizations, equity restructurings and similar matters described therein are hereby incorporated in and made a part of this Agreement. Any such adjustments shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional shares of Common Stock shall be issued under the Plan on any such adjustment.

(b)     This award may be subject to termination or early vesting in connection with a Change in Control in accordance with the provisions of Section 18.3 of the Plan.

10.    Participation by Award Holder in Other Company Plans. Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit plan or program of the Company or of any Affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.

11.    No Rights as a Stockholder Until Issuance of Shares. Neither the Award Holder nor his/her Representative shall be entitled to any of the rights or privileges of a stockholder of the Company in respect of any shares issuable upon any exercise of this Option or SAR unless and until such shares shall have been issued and delivered to: (i) Award Holder in the form of certificates, (ii) a brokerage or other account for the benefit of Award Holder either in certificate form or via “DWAC” or similar electronic means, or (iii) a book entry or direct registration account in the name of Award Holder.

12.    Not an Employment or Service Contract. Nothing herein contained shall be construed as an agreement by the Company or any of its Affiliates, expressed or implied, to employ the Award Holder or contract for the Award Holder’s services, to restrict the right of the Company or any of its Affiliates to discharge Award Holder or cease contracting for Award Holder’s services or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement or contract for services which may exist between the Award Holder and the Company or any of its Affiliates.

13.Agreement Subject to the Plan. This Option and SAR hereby granted are subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder’s rights under this Agreement without the prior written consent of the Award Holder. To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.

14.    Arbitration. Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time. A copy of the AAA Rules is available to the Award Holder upon written request to

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the Company’s Director of Human Resources at One East Wacker Drive, Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.

To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules. After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated. If mediation does not fully resolve the dispute or if neither party requests mediation, then the matter will be subject to arbitration before a single arbitrator who shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available. Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company. The parties agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.

15.    Governing Law. This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.

16.    Miscellaneous. This Agreement, together with the Plan, is the entire agreement of the parties with respect to the Option and SAR granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder or his/her Representative. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.

ADDITIONAL PROVISIONS APPLICABLE ONLY TO EXECUTIVE OFFICERS OF THE COMPANY:

17.    Clawbacks. Notwithstanding the terms regarding vesting and forfeitability or any other provision set forth in this Agreement, including (but not limited to) Sections 2 and 5 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extentrequired by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements. Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.

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18.    Stock Holding Period. The Award Holder agrees to hold all shares of Common Stock acquired upon the exercise of Options granted hereunder for a minimum of twelve months following the date of such exercise. This holding period shall not apply to shares sold or tendered by the Award Holder and/or withheld by the Company to pay the Option exercise price and/or to settle tax liabilities related to the Option exercise, and as otherwise may be provided under the Company’s Stock Ownership Policy.

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EX-10.25

Exhibit 10.25

Kemper Corporation 2011 Omnibus Equity Plan

NON-QUALIFIED STOCK OPTION AND SAR AGREEMENT

(Cliff-Vesting Form)

This NON-QUALIFIED STOCK OPTION AND SAR AGREEMENT (“Agreement”) is made as of this ______ day of ___________, 2___ (“Grant Date”) between KEMPER CORPORATION, a Delaware corporation (the “Company”), and «name» (the “Award Holder”), for an award consisting of the right and option (the “Option”) to purchase on the terms and conditions hereinafter set forth, all or any part (subject to the limitations of Section 3) of an aggregate of «shares» («number») shares of the Common Stock of the Company (“Common Stock”) at the purchase price of $______ per share.

SIGNATURES

As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.

KEMPER CORPORATION            AWARD HOLDER

By: «CEO Signature and Title»    «name»

RECITALS

A.    The Board of Directors of the Company has adopted the Kemper Corporation 2011 Omnibus Equity Plan (the “Plan”), including all amendments to date, to be administered by the Compensation Committee of the Company’s Board of Directors or any subcommittee thereof, or any other committee designated by the Board to administer the Plan (the “Committee”). Capitalized terms that are not defined herein shall be defined in accordance with the Plan.

B.    The Plan authorizes the Committee to grant to selected employees, directors and Third Party Service Providers of the Company or any Affiliate of the Company awards of various types, including of options to purchase shares of Common Stock of the Company and tandem stock appreciation rights (“SAR(s)”).

C.    Pursuant to the Plan, the Committee has determined that it is in the best interest of the Company and its shareholders to grant a non-qualified stock option (and tandem SAR) to the Award Holder, and has approved the execution of this Non-Qualified Stock Option and SAR Agreement between the Company and the Award Holder.

D.    Neither the option nor the SAR granted hereby is intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Grant.

(a) The Company grants the Option to the Award Holder, which will Option be exercisable from time to time in accordance with the provisions of this Agreement during a period expiring on the tenth anniversary of the Grant Date or such later date as may result from the application of Section 6 (such anniversary or later date is referred to as the “Expiration Date”). The Option is also subject to early termination pursuant to Section 3(f) and Section 5.

(b) The Option is coupled with a SAR that is exercisable to the extent, and only to the extent, that the Option is exercisable under the vesting provisions of Section 2. The term of the SAR shall expire on the Expiration Date and shall be subject to early termination pursuant to Section 3(f) and Section 5. The SAR shall entitle the Award Holder to surrender the Option (or any portion thereof, subject to Section 3(a)) to the Company unexercised and receive in exchange for the surrender of the Option (or the surrendered portion thereof) that number of shares of the Company’s common stock having an aggregate value equal to: (A) the excess of the fair market value of one share of such stock (as determined in accordance with Section 4) over the purchase price per share specified on page one above (or, if applicable, such price as adjusted pursuant to Section 9 hereof), multiplied by (B) the number of such shares subject to the Option (or portion thereof) which is so surrendered.

2.    Vesting. The Award Holder may not purchase any shares by exercise of this Option or the SAR until the date on which they are exercisable (the “Vesting Date”). Subject to Section 5, the shares subject to this Option and SAR shall become exercisable on the fourth anniversary of the Grant Date.

Subject to early vesting or forfeiture pursuant to Section 5 or the terms of the Plan and no later than the Expiration Date, the Award Holder may purchase all or any part (subject to the limitations of Section 3) of the shares subject to this Option which are currently exercisable, or such lesser number of shares as may be available through the exercise of the SAR. The total number of shares subject to the Option and the number of shares subject to the Option which are currently exercisable by the Award Holder each shall be reduced by the number of shares previously acquired by the Award Holder pursuant to this Agreement.

3.    Manner of Exercise.

(a)    Each exercise of this Option shall be by means of a written notice of exercise delivered to the Company by the Award Holder or his or her Representative. Such notice shall identify the Options being exercised. When applicable, the notice shall also specify the number of shares of Common Stock that the Award Holder plans to deliver in payment of all or part of the exercise price. Before shares will be issued, the full purchase price of the shares subject to the Options being exercised shall be paid to the Company using the following methods, individually

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or in combination: (i) by check payable to the order of the Company in an amount equal to the purchase price, (ii) by Constructive or Actual Delivery of shares of Common Stock with a fair market value as of the close of business on the date of exercise equal to or greater than the purchase price, (iii) by electronic transfer of funds to an account of the Company, or (iv) by other means acceptable to the Committee. This Option may not be exercised for a fraction of a share and no partial exercise of this Option may be for less than fifty (50) shares unless the total number of shares covered by this Option is less than 50 on the date of exercise or unless this Option is scheduled to expire within six months of the date of exercise.

(b)    Each exercise of the SAR shall be by means of a written notice of exercise delivered to the Company, specifying whether the Award Holder is surrendering all or a portion of the Option and, if only a portion of the Option is being surrendered, how many shares are included in such portion (to the extent determinable by the Award Holder). Upon satisfaction of the Award Holder’s obligation to pay the Company the amount of all taxes that the Company is required to withhold in connection with such exercise as specified in Section 3(e) below, the Company shall issue to the Award Holder a number of shares of the Company’s common stock computed in accordance with Section 1(b) and the Option and the SAR (or the surrendered portions thereof) shall be deemed extinguished. The SAR may only be settled in shares of the Company’s common stock and not by payment of cash to the Award Holder. Any fractional share that would otherwise result from an exercise of the SAR shall be rounded down to the nearest whole share.

(c)    The date of exercise shall be: (i) in the case of a broker-assisted cashless exercise, the earlier of (A) the trade date of the related sale of stock or (B) the date that the Company receives the purchase price; (ii) in the case of a SAR, or an Option exercise in which the Award Holder elects to pay some or all of the exercise price and/or any related withholding taxes by Constructive or Actual Delivery of shares of Common Stock (or, in the case of such taxes, by directing the Company to withhold shares that would otherwise be issued upon exercise of such Option), the date that the Company receives written notice of such exercise; or (iii) in all other cases, the date that the Company receives the purchase price.

(d)    This Option and SAR may be exercised only by the Award Holder or his or her Representative, and not otherwise, regardless of any community property interest therein of the spouse of the Award Holder, or such spouse’s successors in interest. If the spouse of the Award Holder shall have acquired a community property interest in this Option and the SAR, the Award Holder, or the Award Holder’s Representative, may exercise the Option and the SAR on behalf of the spouse of the Award Holder or such spouse’s successors in interest.

(e)    Upon the exercise of this Option or SAR, the Company shall require the Award Holder or the Award Holder’s Representative to pay the Company the amount of any taxes which the Company may be required to withhold with respect to such exercise. Subject to the limitations set forth in the next three sentences, the Award Holder or his/her Representative may elect to satisfy all or any portion of such tax withholding obligations either by: (i) any of the methods described in Sections 3(a)(i) through 3(a)(iv) above, or (ii) directing the Company to withhold shares that would otherwise have been issued pursuant to the exercise of this Option or SAR. Neither the Award Holder nor his/her Representative shall have the right to utilize Constructive or Actual

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Delivery of shares of Common Stock or to have shares withheld, in either case, in excess of the minimum number required to satisfy applicable tax withholding requirements based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes. Shares used in either of the foregoing ways to satisfy tax withholding obligations will be valued at their fair market value on the date of exercise. In the case of an exercise of the SAR, the Company retains the right to require the Award Holder to pay any and all withholding taxes arising out of such exercise solely in cash.

(f)    In the event the Option (or any portion thereof) is exercised, then the SAR (or the corresponding portion) shall terminate. In the event that the SAR (or any portion thereof) is exercised, then the Option (or the corresponding portion) shall likewise terminate.

4.    Fair Market Value of Common Stock. The fair market value of a share of Common Stock shall be determined for purposes of this Agreement by reference to the closing price of a share of Common Stock, as reported by the New York Stock Exchange (or such other exchange on which the Shares of Common Stock are primarily traded) for the Grant Date or date of exercise, as applicable, or if such date is not a business day, for the business day immediately preceding such date (or, if for any reason no such price is available, in such other manner as the Committee may deem appropriate to reflect the then fair market value thereof).

5.    Termination of Service. The Option may be subject to early vesting or forfeiture in accordance with the following provisions:

(a)    Death or Disability.

(i) If the Award Holder dies or becomes Disabled while in Service, then any portion of this Option and SAR granted hereunder that is outstanding but not vested on the date of the Award Holder’s death or Disability shall immediately vest on such date and, along with any previously-vested portion that is then outstanding, remain outstanding and exercisable until the earlier of the Expiration Date or one year from the date of death or the date the Award Holder first became Disabled, and any portion not exercised within such period shall be forfeited to the Company.

(ii) “Disabled” or “Disability” means that the Award Holder either:

(A)    is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and, with respect to an Award Holder who is an Employee, is receiving income replacement benefits for a period of not less than three months under an accident and health plan (e.g. a long term disability plan) covering Employees of the Company or Affiliate that employs the Award Holder; or

(B)    has been determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.

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(b)    Retirement.

(i)    If the Award Holder Retires but continues to provide Services, then any outstanding portion of this Option and SAR shall continue to vest and remain outstanding in accordance with this Agreement until he or she ceases to provide Services. If such Services cease as a result of death or Disability, then subsection (a) above shall apply. If such Services cease for any other reason, then subsection (b)(ii) below shall apply as if the Award Holder were Retiring on the date of such cessation of Services.

(ii)    If the Award Holder Retires but does not continue to provide Services as provided in subsection (b)(i) above, then such Award Holder may exercise any vested and outstanding portion of this Option and SAR until the earlier of one year from the date of Retirement or the Expiration Date and any portion that is not exercised within such period shall be forfeited to the Company, and any portion that is not vested on the date of Retirement shall be forfeited to the Company.

(iii)     For the purposes of this Agreement, “Retires” or “Retirement” shall mean the termination of the Award Holder’s employment on or after either attaining age 60 and completing ten years of Service as an Employee, or attaining age 65 and completing five years of Service as an Employee, and “Service” means that the Award Holder is employed by, or a Third Party Service Provider or member of the board of directors of, the Company or an Affiliate.

(c)    Divestiture of Employer. If the Company divests its controlling interest in an Affiliate, or if its control of such Affiliate otherwise ceases, and the Award Holder is in Service to such Affiliate and is not in Service to the Company or another Affiliate,then any unvested portion of this Option and SAR held by the Award Holder on the date of such divestiture or cessation of control shall be forfeited to the Company, and the Award Holder shall have until the earlier of 90 days from such date or the Expiration Date, in which to exercise any portion that is vested on such date, and any portion that is not exercised within such period shall be forfeited to the Company.

(d)    Other Termination of Employment. If the Award Holder ceases to be in Service under circumstances other than those set forth in the foregoing subsections (a) – (c), then:

(i)    If the termination of Service is not for Substantial Cause, then any portion of this Option and SAR held by the Award Holder that is not vested on the date of termination shall immediately be forfeited to the Company, and the Award Holder shall have until the earlier of 90 days from the date of termination or the Expiration Date in which to exercise any portion that is vested on such date, and any portion not exercised within such period shall be forfeited to the Company.

(ii)    If the termination of Service is for Substantial Cause, then any portion of this Option and SAR that remains outstanding on the date of termination (whether vested or unvested) shall be forfeited to the Company, notwithstanding any otherwise applicable term of this Agreement.

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6.    Extension of Expiration in Certain Cases. From time to time, the Company may declare “blackout” periods during which the Award Holder may be prohibited from engaging in certain transactions in Company securities. In the event that the scheduled Expiration Date of this Option and SAR shall fall within a blackout period that has been declared by the Company and that applies to the Award Holder, then the Expiration Date shall automatically, and without further notice to Award Holder, be extended until such time as fifteen (15) consecutive business days have elapsed after the scheduled Expiration Date without interruption by any blackout period that applied to the Award Holder.

7.    Shares to be Issued in Compliance with Federal Securities Laws and Exchange Rules. No shares issuable upon the exercise of this Option or SAR shall be issued and delivered unless and until there shall have been full compliance with all applicable requirements of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption conditions), all applicable listing requirements of the New York Stock Exchange or such other exchange(s) or markets on which shares of the same class are then listed and any other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery. The Company shall use its best efforts and take all necessary or appropriate actions to assure that such full compliance on the part of the Company is made.

8.    No Assignment. This Option and SAR and all rights and privileges granted hereby (including the right of exercise) shall not be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution. Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Option or SAR or any other rights or privileges granted hereby contrary to the provisions hereof, this Option and SAR and all other rights and privileges contained herein shall immediately become null and void and of no further force or effect.

9.    Certain Adjustments; Change in Control.

(a)    The provisions of Sections 4.4 and 19.2 of the Plan relating to certain adjustments in the case of stock splits, reorganizations, equity restructurings and similar matters described therein are hereby incorporated in and made a part of this Agreement. Any such adjustments shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional shares of Common Stock shall be issued under the Plan on any such adjustment.

(b)    This award may be subject to termination or early vesting in connection with a Change in Control in accordance with the provisions of Section 18.3 of the Plan.

10.    Participation by Award Holder in Other Company Plans. Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit

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plan or program of the Company or of any Affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.

11.    No Rights as a Stockholder Until Issuance of Shares. Neither the Award Holder nor his/her Representative shall be entitled to any of the rights or privileges of a stockholder of the Company in respect of any shares issuable upon any exercise of this Option or SAR unless and until such shares shall have been issued and delivered to: (i) Award Holder in the form of certificates, (ii) a brokerage or other account for the benefit of Award Holder either in certificate form or via “DWAC” or similar electronic means, or (iii) a book entry or direct registration account in the name of Award Holder.

12.    Not an Employment or Service Contract. Nothing herein contained shall be construed as an agreement by the Company or any of its Affiliates, expressed or implied, to employ the Award Holder or contract for the Award Holder’s services, to restrict the right of the Company or any of its Affiliates to discharge Award Holder or cease contracting for Award Holder’s services or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement or contract for services which may exist between the Award Holder and the Company or any of its Affiliates.

13.Agreement Subject to the Plan. This Option and SAR hereby granted are subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder’s rights under this Agreement without the prior written consent of the Award Holder. To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.

14.    Arbitration. Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time. A copy of the AAA Rules is available to the Award Holder upon written request to the Company’s Director of Human Resources at One East Wacker Drive, Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.

To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules. After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated. If mediation does not fully resolve the dispute or if neither party requests mediation, then the matter will be subject to arbitration before a single arbitrator who shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available. Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company. The parties

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agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.

15.    Governing Law. This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.

16.    Miscellaneous. This Agreement, together with the Plan, is the entire agreement of the parties with respect to the Option and SAR granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder or his/her Representative. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.

ADDITIONAL PROVISIONS APPLICABLE ONLY TO EXECUTIVE OFFICERS OF THE COMPANY:

17.    Clawbacks. Notwithstanding the terms regarding vesting and forfeitability or any other provision set forth in this Agreement, including (but not limited to) Sections 2 and 5 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extentrequired by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements. Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.

18.    Stock Holding Period. The Award Holder agrees to hold all shares of Common Stock acquired upon the exercise of Options granted hereunder for a minimum of twelve months following the date of such exercise. This holding period shall not apply to shares sold or tendered by the Award Holder and/or withheld by the Company to pay the Option exercise price and/or to settle tax liabilities related to the Option exercise, and as otherwise may be provided under the Company’s Stock Ownership Policy.

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EX-10.26

Exhibit 10.26

Kemper Corporation 2011 Omnibus Equity Plan

TIME-VESTED RESTRICTED STOCK UNIT AWARD AGREEMENT

(Installment-Vesting Form)

This TIME-VESTED RESTRICTED STOCK UNIT AWARD AGREEMENT (“Agreement”) is made as of this ______ day of ___________, ____ (“Grant Date”) between KEMPER CORPORATION, a Delaware corporation (the “Company”), and «name» (the “Award Holder”) for an Award of an aggregate of «shares» («shares») restricted stock units (the “RSUs”), each representing the right to receive one share of the Company’s common stock (“Common Stock”) on the terms and conditions set forth in this Agreement.

SIGNATURES

As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.

KEMPER CORPORATION     AWARD HOLDER

By: «CEO Signature and Title»    By: «name»

RECITALS

A.    The Board of Directors of the Company has adopted the Kemper Corporation 2011 Omnibus Equity Plan (the “Plan”), including all amendments to date, to be administered by the Compensation Committee of the Company’s Board of Directors or any subcommittee thereof, or any other committee designated by the Board to administer the Plan (the “Committee”).Capitalized terms that are not defined herein shall be defined in accordance with the Plan.

B.    The Plan authorizes the Committee to grant to selected employees, directors and Third Party Service Providers of the Company or any Affiliate of the Company awards of various types, including restricted stock units providing the right to receive shares of Common Stock under specified terms and conditions.

C.    Pursuant to the Plan, the Committee has determined that it is in the best interest of the Company and its shareholders to grant the Award Holder an Award of restricted stock units

under the terms and conditions specified in this Agreement as an inducement to remain in the service of the Company and an incentive for increased effort during such service.

NOW, THEREFORE, the parties hereto agree as follows:

1.Grant. The Company grants the RSUs to the Award Holder, subject to the terms and conditions set forth in this Agreement. Except as otherwise set forth herein, the RSUs shall not entitle the Award Holder to any rights of a shareholder of Common Stock.

2.Vesting and Forfeiture.

(a)Restricted Period. The RSUs shall be restricted during a period (the “Restricted Period”) beginning on the Grant Date and expiring on the date(s) that they vest in accordance with the next sentence (the “Vesting Date(s)”), provided that the RSUs have not vested early or been forfeited pursuant to Section 2(c) below and: (i) the Award Holder is in Service (as hereafter defined) on the Vesting Date; or (ii) the Award Holder is Retirement Eligible (as hereafter defined) prior to the date the Award Holder terminates Service and the Award Holder has not, at any time prior to or on the Vesting Date, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion. The Vesting Dates are, for the first of four equal installments of the RSUs, the six-month anniversary of the Grant Date (the “Initial Vesting Date”), and for each of the remaining three installments, respectively, the first, second and third anniversaries of the Initial Vesting Date.

(b)     Certain Definitions.

(i) “Service” means that the Award Holder is employed by, or a Third Party Service Provider or member of the board of directors of, the Company or an Affiliate.

(ii) “Retirement Eligible” means that the Award Holder has either attained age 60 and completed 10 years of Service as an Employee or attained age 65 and completed 5 years of Service as an Employee.

(iii) “Disability” means that the Award Holder either:

(A) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and, with respect to an Award Holder who is an Employee, is receiving income replacement benefits for a period of not less than three months under an accident and health plan (e.g. a long term disability plan) covering Employees of the Company or Affiliate that employs the Award Holder; or

(B) has been determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.

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(c)Termination of Service. During the Restricted Period, the RSUs may be subject to early vesting or forfeiture in accordance with the following provisions:

(i)    Death or Disability. Notwithstanding the foregoing, the Vesting Date shall be the date of the Award Holder’s death or Disability if the Award Holder dies or becomes Disabled: (a) while in Service; or (b) after terminating Service if the Award Holder (1) was Retirement Eligible on the date of such termination of Service, and (2) had not, at any time prior to the date of the Award Holder’s death or Disability, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion. On such Vesting Date, any of the RSUs that were outstanding but not vested shall immediately vest.

(ii)    Divestiture of Employer. If the Company divests its controlling interest in an Affiliate, or if its control of such Affiliate otherwise ceases, and the Award Holder is in Service to such Affiliate and is not in Service to the Company or another Affiliate,then all unvested RSUs shall be forfeited to the Company on the date of such divestiture or cessation of control, except if the Award Holder is Retirement Eligible on such date, in which case the Award Holder may continue to vest in accordance with Section 2(a).

(iii)     Other Termination of Service. If the Award Holder ceases to be in Service prior to becoming Retirement Eligible under circumstances other than those set forth in the foregoing subsections (i) or (ii), or if the Award Holder’s Service is terminated for Substantial Cause prior to or after becoming Retirement Eligible, all unvested RSUs held by the Award Holder shall be forfeited to the Company on the date of such cessation of Service or termination, notwithstanding any otherwise applicable term of this Agreement that provided for vesting or non-forfeitability, including (but not limited to) Section 2(a).

3.Conversion of RSUs; Issuance of Common Stock. Except as otherwise provided in Section 8, the Company shall cause one share of Common Stock to be issued, within the time period provided below, for each RSU that is vesting upon the applicable Vesting Date.

Any issuance of Common Stock shall be subject to applicable tax withholding obligations as described in Section 6 and shall be in book-entry form, registered in the Award Holder’s name (or in the name of the Award Holder’s Representative, as the case may be), in payment of whole RSUs. Except as otherwise provided in Section 8, in no event shall the date that Common Stock is issued to the Award Holder (“Settlement Date”) occur later than the first to occur of (a) March 15^th following the calendar year in which the Vesting Date occurred, or (b) ninety (90) days following the applicable Vesting Date.

4. Dividend Equivalents. If a cash dividend is declared and paid by the Company with respect to the Common Stock during the Restricted Period, the Award Holder shall be entitled to receive a cash payment equal to the total cash dividend the Award Holder would have received had the RSUs been actual shares of Common Stock, subject to applicable tax withholding obligations as described in Section 6. The cash payment shall be made on the date that the dividends are payable

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to holders of Common Stock (the “Dividend Payment Date”).  The rules of Treas. Reg. § 1.409A-3(d) shall be applied in determining whether a cash payment is made on the Dividend Payment Date.

5.Fair Market Value of Common Stock. The fair market value (“Fair Market Value”) of a share of Common Stock shall be determined for purposes of this Agreement by reference to the closing price of a share of Common Stock as reported by the New York Stock Exchange (or such other exchange on which the shares of Common Stock are primarily traded) for the Grant Date or Vesting Date, as applicable, or if no prices are reported for that day, the last preceding day on which such prices are reported (or, if for any reason no such price is available, in such other manner as the Committee in its sole discretion may deem appropriate to reflect the fair market value thereof).

6.Withholding of Taxes. The Award Holder acknowledges that the conversion of the RSUs to Common Stock upon the Vesting Date will result in the Award Holder being subject to income taxes and payroll taxes, to the extent that payroll taxes have not previously become due. The Company will deduct from the number of RSUs that are scheduled to vest on the Vesting Date(s) whole shares of Common Stock having a Fair Market Value equal to the amount determined by the Company to satisfy any applicable minimum statutory withholding or other tax obligations that may arise upon such vesting, and the Award Holder shall remit to the Company in cash any and all applicable withholding taxes that exceed the amount available to the Company using whole shares.

The Award Holder further acknowledges that the Award Holder will be subject to payroll taxes upon becoming Retirement Eligible prior to termination of the Award Holder’s Service and agrees that the Company or its Affiliate shall withhold such payroll taxes from any other compensation paid by the Company or its Affiliate to the Award Holder.

The Company shall withhold from any dividend equivalents paid during the Restricted Period only the amounts the Company is required to withhold to satisfy any applicable tax withholding requirements with respect to such dividend equivalents based on minimum statutory withholding rates for federal and state tax purposes, including any payroll taxes.

7.Code Section 409A.The Company intends that the Award hereunder shall either be exempt from the application of, or compliant with, the requirements of Section 409A and this Award Agreement shall be interpreted and administered in accordance with such intent. In no event shall the Company and/or its Affiliates be liable for any tax, interest or penalties that may be imposed on the Award Holder (or the Award Holder’s estate) under Code Section 409A.

8.Shares to be Issued in Compliance with Federal Securities Laws and Other Rules. No shares of Common Stock issuable in settlement of the RSUs shall be issued and delivered unless and until there shall have been full compliance with all applicable requirements of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption conditions), all applicable listing requirements of the New York Stock Exchange (or such other exchange(s) or market(s) on which shares of the same class are then listed) and any other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery. The Company shall use its best efforts and take all necessary or appropriate actions to assure that such full compliance on the part of the Company is made. By signing this Agreement, the Award Holder represents and

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warrants that none of the shares to be acquired in settlement of the RSUs will be acquired with a view towards any sale, transfer or distribution of said shares in violation of the Securities Act of 1933, as amended (the “Act”), and the rules and regulations promulgated thereunder, or any applicable “blue sky” laws, and that the Award Holder hereby agrees to indemnify the Company in the event of any violation by the Award Holder of such Act, rules, regulations or laws. The Company will use its best efforts to complete all actions necessary for such compliance so that settlement can occur within the period specified in Section 3; provided that if the Company reasonably anticipates that settlement within such period will cause a violation of applicable law, settlement may be delayed provided that settlement occurs at the earliest date at which the Company reasonably anticipates that such settlement will not cause a violation of applicable law, all in accordance with Treas. Reg. § 1.409A-2(b)(7)(ii).

9.No Assignment or Other Transfer. During the Restricted Period, neither this Agreement, the RSU nor any rights and privileges granted hereby may be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution. Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred during the Restricted Period to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Agreement, the RSUs or any other rights or privileges granted hereby contrary to the provisions hereof shall be null and void and of no force or effect.

10.Certain Adjustments; Change in Control.

(a)    The provisions of Sections 4.4 and 19.2 of the Plan relating to certain adjustments in the case of stock splits, reorganizations, equity restructurings and similar matters described therein are hereby incorporated in and made a part of this Agreement. Any such adjustments shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional shares of Common Stock shall be issued under the Plan on any such adjustment.

(b)    The RSUs may be subject to termination or early vesting in connection with a Change in Control in accordance with the provisions of Section 18.3 of the Plan.

11.Participation by Award Holder in Other Company Plans. Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit plan or program of the Company or of any Affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.

12.Not an Employment or Service Contract. Nothing herein contained shall be construed as an agreement by the Company or any of its Affiliates, expressed or implied, to employ or contract for the services of the Award Holder, to restrict the right of the Company or any of its Affiliates to discharge the Award Holder or cease contracting for the Award Holder’s services or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment

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agreement or contract for services which may exist between the Award Holder and the Company or any of its Affiliates.

13.Agreement Subject to the Plan. The RSUs hereby granted are subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder’s rights under this Agreement without his or her prior written consent. To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.

14.Arbitration.Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time. A copy of the AAA Rules is available to the Award Holder upon written request to the Company’s Director of Human Resources at One East Wacker Drive, Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.

To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules. After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated. If mediation does not fully resolve the dispute or if neither party requests mediation, then the matter will be subject to arbitration before a single arbitrator who shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available. Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company. The parties agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.

15.Governing Law. This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.

16.Miscellaneous. This Agreement, together with the Plan, is the entire agreement of the parties with respect to the RSUs granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.

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Additional Provisions Applicable to Executive Officers Only:

17.Clawbacks. Notwithstanding the terms regarding vesting and forfeiture or any other provision set forth in this Agreement, including (but not limited to) Section 2 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extentrequired by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements. Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.

18.Stock Holding Period. The Award Holder agrees to hold the shares of Common Stock acquired upon the vesting of the RSUs for a minimum of twelve months following their Vesting Date. This holding period shall not apply to shares of Common Stock withheld by the Company to settle tax liabilities related to vesting, and as otherwise may be provided under the Company’s Stock Ownership Policy.

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EX-10.27

Exhibit 10.27

Kemper Corporation 2011 Omnibus Equity Plan

TIME-VESTED RESTRICTED STOCK UNIT AWARD AGREEMENT

(Cliff-Vesting Form)

This TIME-VESTED RESTRICTED STOCK UNIT AWARD AGREEMENT (“Agreement”) is made as of this ______ day of ___________, ____ (“Grant Date”) between KEMPER CORPORATION, a Delaware corporation (the “Company”), and «name» (the “Award Holder”) for an Award of an aggregate of «shares» («shares») restricted stock units (the “RSUs”), each representing the right to receive one share of the Company’s common stock (“Common Stock”) on the terms and conditions set forth in this Agreement.

SIGNATURES

As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.

KEMPER CORPORATION     AWARD HOLDER

By: «CEO Signature and Title»    By: «name»

RECITALS

A.    The Board of Directors of the Company has adopted the Kemper Corporation 2011 Omnibus Equity Plan (the “Plan”), including all amendments to date, to be administered by the Compensation Committee of the Company’s Board of Directors or any subcommittee thereof, or any other committee designated by the Board to administer the Plan (the “Committee”).Capitalized terms that are not defined herein shall be defined in accordance with the Plan.

B.    The Plan authorizes the Committee to grant to selected employees, directors and Third Party Service Providers of the Company or any Affiliate of the Company awards of various types, including restricted stock units providing the right to receive shares of Common Stock under specified terms and conditions.

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C.    Pursuant to the Plan, the Committee has determined that it is in the best interest of the Company and its shareholders to grant the Award Holder an Award of restricted stock units under the terms and conditions specified in this Agreement as an inducement to remain in the service of the Company and an incentive for increased effort during such service.

NOW, THEREFORE, the parties hereto agree as follows:

1.Grant. The Company grants the RSUs to the Award Holder, subject to the terms and conditions set forth in this Agreement. Except as otherwise set forth herein, the RSUs shall not entitle the Award Holder to any rights of a shareholder of Common Stock.

2.Vesting and Forfeiture.

(a)Restricted Period. The RSUs shall be restricted during a period (the “Restricted Period”) beginning on the Grant Date and expiring on the date that they vest in accordance with the next sentence (the “Vesting Date”), provided that the RSUs have not vested early or been forfeited pursuant to Section 2(c) below. The Vesting Date is the fourth anniversary of the Grant Date.

(b)     Certain Definitions.

(i) “Service” means that the Award Holder is employed by, or a Third Party Service Provider or member of the board of directors of, the Company or an Affiliate.

(ii) “Retires” or “Retirement” shall mean the termination of the Award Holder’s employment on or after either attaining age 60 and completing ten years of Service as an Employee, or attaining age 65 and completing five years of Service as an Employee.

(iii) “Disability” means that the Award Holder either:

(A)    is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and, with respect to an Award Holder who is an Employee, is receiving income replacement benefits for a period of not less than three months under an accident and health plan (e.g. a long term disability plan) covering Employees of the Company or Affiliate that employs the Award Holder; or

(B)    has been determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.

(c)    Termination of Service. During the Restricted Period, the RSUs may be subject to early vesting or forfeiture in accordance with the following provisions:

(i)    Death or Disability. Notwithstanding the foregoing, the Vesting Date shall be the date of the Award Holder’s death or Disability if the Award Holder dies or becomes Disabled while in Service.

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(ii)    Retirement.

(A)    If the Award Holder Retires but continues to provide Services, then any portion of the RSUs that is unvested on the date of Retirement shall continue to vest in accordance with this Agreement until the Award Holder ceases to provide Services. If such Services cease as a result of death or Disability, then subsection (i) above shall apply. If such Services cease for any reason other than death or Disability, all unvested RSUs shall be forfeited to the Company on the date of such cessation of Services.

(B)    If the Award Holder Retires but does not continue to provide Services as provided in subsection (ii)(A) above, then all unvested RSUs shall be forfeited to the Company on the date of Retirement.

(ii)    Divestiture of Employer. If the Company divests its controlling interest in an Affiliate, or if its control of such Affiliate otherwise ceases, and the Award Holder is in Service to such Affiliate and is not in Service to the Company or another Affiliate,then all unvested RSUs shall be forfeited to the Company on the date of such divestiture or cessation of control.

(iii)     Other Termination of Service. If the Award Holder ceases to be in Service under circumstances other than those set forth in the foregoing subsections (i) and (ii), then all unvested RSUs shall be forfeited to the Company on the date of such cessation of Service, notwithstanding any otherwise applicable term of this Agreement.

3.Conversion of RSUs; Issuance of Common Stock. Except as otherwise provided in Section 8, the Company shall cause one share of Common Stock to be issued, within the time period provided below, for each RSU that is vesting upon the applicable Vesting Date.

Any issuance of Common Stock shall be subject to applicable tax withholding obligations as described in Section 6 and shall be in book-entry form, registered in the Award Holder’s name (or in the name of the Award Holder’s Representative, as the case may be), in payment of whole RSUs. Except as otherwise provided in Section 8, in no event shall the date that Common Stock is issued to the Award Holder (“Settlement Date”) occur later than the first to occur of (a) March 15^th following the calendar year in which the Vesting Date occurred, or (b) ninety (90) days following the applicable Vesting Date.

4. Dividend Equivalents. If a cash dividend is declared and paid by the Company with respect to the Common Stock during the Restricted Period, the Award Holder shall be entitled to receive a cash payment equal to the total cash dividend the Award Holder would have received had the RSUs been actual shares of Common Stock, subject to applicable tax withholding obligations as described in Section 6. The cash payment shall be made on the date that the dividends are payable to holders of Common Stock (the “Dividend Payment Date”).  The rules of Treas. Reg. § 1.409A-3(d) shall be applied in determining whether a cash payment is made on the Dividend Payment Date.

5.Fair Market Value of Common Stock. The fair market value (“Fair Market Value”) of a share of Common Stock shall be determined for purposes of this Agreement by reference to

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the closing price of a share of Common Stock as reported by the New York Stock Exchange (or such other exchange on which the shares of Common Stock are primarily traded) for the Grant Date or Vesting Date, as applicable, or if no prices are reported for that day, the last preceding day on which such prices are reported (or, if for any reason no such price is available, in such other manner as the Committee in its sole discretion may deem appropriate to reflect the fair market value thereof).

6.Withholding of Taxes. The Award Holder acknowledges that the conversion of the RSUs to Common Stock upon the Vesting Date will result in the Award Holder being subject to income taxes and payroll taxes, to the extent that payroll taxes have not previously become due. The Company will deduct from the number of RSUs that are scheduled to vest on the Vesting Date(s) whole shares of Common Stock having a Fair Market Value equal to the amount determined by the Company to satisfy any applicable minimum statutory withholding or other tax obligations that may arise upon such vesting, and the Award Holder shall remit to the Company in cash any and all applicable withholding taxes that exceed the amount available to the Company using whole shares.

The Company shall withhold from any dividend equivalents paid during the Restricted Period only the amounts the Company is required to withhold to satisfy any applicable tax withholding requirements with respect to such dividend equivalents based on minimum statutory withholding rates for federal and state tax purposes, including any payroll taxes.

7.Code Section 409A.The Company intends that the Award hereunder shall either be exempt from the application of, or compliant with, the requirements of Section 409A and this Award Agreement shall be interpreted and administered in accordance with such intent. In no event shall the Company and/or its Affiliates be liable for any tax, interest or penalties that may be imposed on the Award Holder (or the Award Holder’s estate) under Code Section 409A.

8.Shares to be Issued in Compliance with Federal Securities Laws and Other Rules. No shares of Common Stock issuable in settlement of the RSUs shall be issued and delivered unless and until there shall have been full compliance with all applicable requirements of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption conditions), all applicable listing requirements of the New York Stock Exchange (or such other exchange(s) or market(s) on which shares of the same class are then listed) and any other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery. The Company shall use its best efforts and take all necessary or appropriate actions to assure that such full compliance on the part of the Company is made. By signing this Agreement, the Award Holder represents and warrants that none of the shares to be acquired in settlement of the RSUs will be acquired with a view towards any sale, transfer or distribution of said shares in violation of the Securities Act of 1933, as amended (the “Act”), and the rules and regulations promulgated thereunder, or any applicable “blue sky” laws, and that the Award Holder hereby agrees to indemnify the Company in the event of any violation by the Award Holder of such Act, rules, regulations or laws. The Company will use its best efforts to complete all actions necessary for such compliance so that settlement can occur within the period specified in Section 3; provided that if the Company reasonably anticipates that settlement within such period will cause a violation of applicable law, settlement may be delayed provided that settlement occurs at the earliest date at which the Company reasonably anticipates

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that such settlement will not cause a violation of applicable law, all in accordance with Treas. Reg. § 1.409A-2(b)(7)(ii).

9.No Assignment or Other Transfer. During the Restricted Period, neither this Agreement, the RSU nor any rights and privileges granted hereby may be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution. Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred during the Restricted Period to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Agreement, the RSUs or any other rights or privileges granted hereby contrary to the provisions hereof shall be null and void and of no force or effect.

10.Certain Adjustments; Change in Control.

(a)    The provisions of Sections 4.4 and 19.2 of the Plan relating to certain adjustments in the case of stock splits, reorganizations, equity restructurings and similar matters described therein are hereby incorporated in and made a part of this Agreement. Any such adjustments shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional shares of Common Stock shall be issued under the Plan on any such adjustment.

(b)    The RSUs may be subject to termination or early vesting in connection with a Change in Control in accordance with the provisions of Section 18.3 of the Plan.

11.Participation by Award Holder in Other Company Plans. Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit plan or program of the Company or of any Affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.

12.Not an Employment or Service Contract. Nothing herein contained shall be construed as an agreement by the Company or any of its Affiliates, expressed or implied, to employ or contract for the services of the Award Holder, to restrict the right of the Company or any of its Affiliates to discharge the Award Holder or cease contracting for the Award Holder’s services or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement or contract for services which may exist between the Award Holder and the Company or any of its Affiliates.

13.Agreement Subject to the Plan. The RSUs hereby granted are subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder’s rights under this Agreement without his or her prior written consent. To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.

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14.Arbitration.Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time. A copy of the AAA Rules is available to the Award Holder upon written request to the Company’s Director of Human Resources at One East Wacker Drive, Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.

To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules. After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated. If mediation does not fully resolve the dispute or if neither party requests mediation, then the matter will be subject to arbitration before a single arbitrator who shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available. Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company. The parties agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.

15.Governing Law. This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.

16.Miscellaneous. This Agreement, together with the Plan, is the entire agreement of the parties with respect to the RSUs granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.

Additional Provisions Applicable to Executive Officers Only:

17.Clawbacks. Notwithstanding the terms regarding vesting and forfeiture or any other provision set forth in this Agreement, including (but not limited to) Section 2 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extentrequired by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements. Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.

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18.Stock Holding Period. The Award Holder agrees to hold the shares of Common Stock acquired upon the vesting of the RSUs for a minimum of twelve months following their Vesting Date. This holding period shall not apply to shares of Common Stock withheld by the Company to settle tax liabilities related to vesting, and as otherwise may be provided under the Company’s Stock Ownership Policy.

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EX-10.28

Exhibit 10.28

Kemper Corporation 2011 Omnibus Equity Plan

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

This PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT (“Agreement”) is made as of this ______ day of ___________, ____ (“Grant Date”) between KEMPER CORPORATION, a Delaware corporation (the “Company”), and «name» (the “Award Holder”) for an Award of an aggregate of «shares» («shares») restricted stock units (the “RSUs”), each representing the right to receive one share of the Company’s common stock (“Common Stock”) on the terms and conditions set forth in this Agreement.

SIGNATURES

As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.

KEMPER CORPORATION     AWARD HOLDER

By: «CEO Signature and Title»    By: «name»

RECITALS

A.    The Board of Directors of the Company has adopted the Kemper Corporation 2011 Omnibus Equity Plan (the “Plan”), including all amendments to date, to be administered by the Compensation Committee of the Company’s Board of Directors or any subcommittee thereof, or any other committee designated by the Board to administer the Plan (the “Committee”). Capitalized terms that are not defined herein shall be defined in accordance with the Plan.

B.    The Plan authorizes the Committee to grant to selected employees, directors and Third Party Service Providers of the Company or any Affiliate of the Company awards of various types, including restricted stock units providing the right to receive shares of Common Stock under specified terms and conditions.

C.    Pursuant to the Plan, the Committee has determined that it is in the best interest of the Company and its shareholders to grant the Award Holder an Award of restricted stock units

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under the terms and conditions specified in this Agreement as an inducement to remain in the service of the Company and an incentive for increased effort during such service.

NOW, THEREFORE, the parties hereto agree as follows:

1.Grant. The Company grants the RSUs to the Award Holder, subject to the terms and conditions set forth in this Agreement. Except as otherwise set forth herein, the RSUs shall not entitle the Award Holder to any rights of a shareholder of Common Stock.

2.Vesting and Forfeiture.

(a)Restricted Period. The RSUs shall be restricted during a period (the “Restricted Period”) beginning on the Grant Date and expiring on the date(s) that they vest in accordance with Exhibit A (the “Vesting Date”), provided that the RSUs have not been forfeited pursuant to Section E of Exhibit A and: (i) the Award Holder is in Service (as hereafter defined) on the Vesting Date; or (ii) the Award Holder is Retirement Eligible (as hereafter defined) prior to the date the Award Holder terminates Service and the Award Holder has not, at any time prior to or on the Vesting Date, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion. The RSUs will vest on the Vesting Date only to the extent provided in and in accordance with the provisions of Exhibit A.

(b)     Certain Definitions.

(i) “Service” means that the Award Holder is employed by, or a Third Party Service Provider or member of the board of directors of, the Company or an Affiliate.

(ii) “Retirement Eligible” means that the Award Holder has either attained age 60 and completed 10 years of Service as an Employee or attained age 65 and completed 5 years of Service as an Employee.

3.Conversion of RSUs; Issuance of Common Stock. Except as otherwise provided in Section 8, the Company shall cause one share of Common Stock to be issued, within the time period provided below, for each RSU that is vesting upon the applicable Vesting Date.

Any issuance of Common Stock shall be subject to applicable tax withholding obligations as described in Section 6 and shall be in book-entry form, registered in the Award Holder’s name (or in the name of the Award Holder’s Representative, as the case may be), in payment of whole RSUs. Except as otherwise provided in Section 8, in no event shall the date that Common Stock is issued to the Award Holder (“Settlement Date”) occur later than the first to occur of (a) March 15^th following the calendar year in which the Vesting Date occurred, or (b) ninety (90) days following the applicable Vesting Date.

4. Dividend Equivalents. If a cash dividend is declared and paid by the Company with respect to the Common Stock during the Restricted Period, the Award Holder shall be entitled to receive a cash payment equal to the total cash dividend the Award Holder would have received had

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the RSUs been actual shares of Common Stock, subject to applicable tax withholding obligations as described in Section 6. The cash payment shall be made on the date that the dividends are payable to holders of Common Stock (the “Dividend Payment Date”).  The rules of Treas. Reg. § 1.409A-3(d) shall be applied in determining whether a cash payment is made on the Dividend Payment Date.

5.Fair Market Value of Common Stock. The fair market value (“Fair Market Value”) of a share of Common Stock shall be determined for purposes of this Agreement by reference to the closing price of a share of Common Stock as reported by the New York Stock Exchange (or such other exchange on which the shares of Common Stock are primarily traded) for the Grant Date or Vesting Date, as applicable, or if no prices are reported for that day, the last preceding day on which such prices are reported (or, if for any reason no such price is available, in such other manner as the Committee in its sole discretion may deem appropriate to reflect the fair market value thereof).

6.Withholding of Taxes. The Award Holder acknowledges that the conversion of the RSUs to Common Stock upon the Vesting Date will result in the Award Holder being subject to income taxes and payroll taxes, to the extent that payroll taxes have not previously become due. The Company will deduct from the number of RSUs that are scheduled to vest on the Vesting Date(s) whole shares of Common Stock having a Fair Market Value equal to the amount determined by the Company to satisfy any applicable minimum statutory withholding or other tax obligations that may arise upon such vesting, and the Award Holder shall remit to the Company in cash any and all applicable withholding taxes that exceed the amount available to the Company using whole shares.

The Company shall withhold from any dividend equivalents paid during the Restricted Period only the amounts the Company is required to withhold to satisfy any applicable tax withholding requirements with respect to such dividend equivalents based on minimum statutory withholding rates for federal and state tax purposes, including any payroll taxes.

7.Section 409A. The Company intends that the Award hereunder shall either be exempt from the application of, or compliant with, the requirements of Section 409A and this Award Agreement shall be interpreted and administered in accordance with such intent. In no event shall the Company and/or its Affiliates be liable for any tax, interest or penalties that may be imposed on the Award Holder (or the Award Holder’s estate) under Section 409A.

8.Shares to be Issued in Compliance with Federal Securities Laws and Other Rules. No shares of Common Stock issuable in settlement of the RSUs shall be issued and delivered unless and until there shall have been full compliance with all applicable requirements of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption conditions), all applicable listing requirements of the New York Stock Exchange (or such other exchange(s) or market(s) on which shares of the same class are then listed) and any other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery. The Company shall use its best efforts and take all necessary or appropriate actions to assure that such full compliance on the part of the Company is made. By signing this Agreement, the Award Holder represents and warrants that none of the shares to be acquired in settlement of the RSUs will be acquired with a view towards any sale, transfer or distribution of said shares in violation of the Securities Act of 1933, as amended (the “Act”), and the rules and regulations promulgated thereunder, or any

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applicable “blue sky” laws, and that the Award Holder hereby agrees to indemnify the Company in the event of any violation by the Award Holder of such Act, rules, regulations or laws. The Company will use its best efforts to complete all actions necessary for such compliance so that settlement can occur within the period specified in Section 3; provided that if the Company reasonably anticipates that settlement within such period will cause a violation of applicable law, settlement may be delayed provided that settlement occurs at the earliest date at which the Company reasonably anticipates that such settlement will not cause a violation of applicable law, all in accordance with Treas. Reg. § 1.409A-2(b)(7)(ii).

9.No Assignment or Other Transfer. During the Restricted Period, neither this Agreement, the RSU nor any rights and privileges granted hereby may be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution. Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred during the Restricted Period to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Agreement, the RSUs or any other rights or privileges granted hereby contrary to the provisions hereof shall be null and void and of no force or effect.

10.Certain Adjustments. The provisions of Sections 4.4 and 19.2 of the Plan relating to certain adjustments in the case of stock splits, reorganizations, equity restructurings and similar matters described therein are hereby incorporated in and made a part of this Agreement. Any such adjustments shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional shares of Common Stock shall be issued under the Plan on any such adjustment.

11.Participation by Award Holder in Other Company Plans. Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit plan or program of the Company or of any Affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.

12.Not an Employment or Service Contract. Nothing herein contained shall be construed as an agreement by the Company or any of its Affiliates, expressed or implied, to employ or contract for the services of the Award Holder, to restrict the right of the Company or any of its Affiliates to discharge the Award Holder or cease contracting for the Award Holder’s services or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement or contract for services which may exist between the Award Holder and the Company or any of its Affiliates.

13.Agreement Subject to the Plan. The RSUs hereby granted are subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder’s rights under this Agreement without

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his or her prior written consent. To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.

14.Arbitration.Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time. A copy of the AAA Rules is available to the Award Holder upon written request to the Company’s Director of Human Resources at One East Wacker Drive, Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.

To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules. After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated. If mediation does not fully resolve the dispute or if neither party requests mediation, then the matter will be subject to arbitration before a single arbitrator who shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available. Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company. The parties agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.

15.Governing Law. This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.

16.Miscellaneous. This Agreement, together with the Plan, is the entire agreement of the parties with respect to the RSUs granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.

ADDITIONAL PROVISIONS APPLICABLE ONLY TO EXECUTIVE OFFICERS OF THE COMPANY:

17.Clawbacks. Notwithstanding the terms regarding vesting and forfeiture or any other provision set forth in this Agreement, including (but not limited to) Section 2 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extentrequired by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock

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Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements. Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.

18.Stock Holding Period. The Award Holder agrees to hold the shares of Common Stock acquired upon the vesting of the RSUs for a minimum of twelve months following their Vesting Date. This holding period shall not apply to shares of Common Stock withheld by the Company to settle tax liabilities related to vesting, and as otherwise may be provided under the Company’s Stock Ownership Policy.

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EXHIBIT A

Vesting Schedule for the Award Agreement

A. Definition of Terms:

“Additional Shares” means any shares of Common Stock to be issued to the Award Holder on the Vesting Date in the event that the Company’s Relative TSR Percentile Rank exceeds the Target Performance Level.

“Award Agreement” means the Performance-Based Restricted Stock Unit Award Agreement to which this Exhibit is a part, pursuant to which an award of performance-based RSUs has been granted.

“Company’s Relative TSR Percentile Rank” meansthe Company’s TSR Percentile Rank relative to the companies in the Peer Group as determined by the Committee for the Performance Period.

“Disability” means that the Award Holder either: (A) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and, with respect to an Award Holder who is an Employee, is receiving income replacement benefits for a period of not less than three months under an accident and health plan (e.g. a long term disability plan) covering Employees of the Company or Affiliate that employs the Award Holder; or (B) has been determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.

“Grant Date” is defined in the Award Agreement.

“Peer Group” means the peer group approved by the Committee which shall be the companies that comprised the S&P Supercomposite Insurance Index at the beginning of the Performance Period (other than the Company), adjusted as of the end of the Performance Period to remove any such companies which are no longer included in the S&P Supercomposite Insurance Index as of the last day of the Performance Period.

“Performance Period” means the three-year period ending on the December 31 immediately preceding the three-year anniversary of the Grant Date.

“Separation from Service” has the meaning ascribed to such term in Section 409A.

“Target Shares” means the number of shares of performance-based RSUs granted on the Grant Date pursuant to the Award Agreement.

“Target Performance Level” means the Company’s Relative TSR Percentile Rank at the 50^th percentile.

“TSR” means Total Shareholder Return as determined by the Committee for the Performance Period.

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“TSR Percentile Rank” means the percentile performance of the Company and each of the companies in the Peer Group based on the TSR for such company as determined by the Committee for the Performance Period.

“Vesting Date” means the three-year anniversary of the Grant Date, except as otherwise provided in subsections E(1), E(2) and E(3) below, but in no event shall the Vesting Date be later than the date on which the Award Holder’s RSUs are no longer subject to a substantial risk of forfeiture, as such term is defined for purposes of Section 409A.

B. Determination of Vesting Date Events:

As soon as practicable following the end of the Performance Period, the Committee will determine the Company’s Relative TSR Percentile Rank in accordance with the methodology described in the next section below. The Company’s Relative TSR Percentile Rank will determine the number of Target Shares that will vest or be forfeited on the Vesting Date, and the number of Additional Shares, if any, that will be issued to the Award Holder on the Vesting Date, as described below under “Vesting Determination.”

C. TSR Percentile Rank Calculation Methodology:

The Company’s Relative TSR Percentile Rank will be calculated in a two-step process. First, the TSR will be calculated for the Company and each company in the Peer Group. Then, the TSR Percentile Rank for the Company and each of the companies in the Peer Group will be determined. The TSR and the TSR Percentile Rank will be determined by the Committee in accordance with the formula and methods approved by the Committee, as described below.

Formula for Calculating TSR

For purposes of this Exhibit A to the Award Agreement, the TSR for the Company and each of the companies comprising the Peer Group will be calculated as follows:

Ending Stock Price – Beginning Stock Price + Dividends Reinvested on all Ex-Dividend Dates

Beginning Stock Price

Share Price Averaging Period

The beginning and ending stock prices in the above formula for TSR will be calculated using a trailing average approach (i.e., average of the closing stock prices for 20 consecutive trading days prior to the beginning and end of the Performance Period).

Reinvestment of Dividends and Other Adjustments

The above TSR formula assumes that dividends are paid and reinvested into additional shares of common stock on their ex-dividend dates. TSR will be adjusted for stock dividends, stock splits, spin-offs and other corporate changes having a similar effect.

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Calculation of TSR Percentile Rank

The percentile performance for determining the TSR Percentile Rank will be measured using the Microsoft Excel function PERCENTRANK.

D. Vesting Determination:

Except as otherwise provided in Section E, the RSUs held by the Award Holder will vest, to the extent earned for the Performance Period, on the Vesting Date only if the Award Holder has not had a Separation from Service prior to such date. Once the Company’s Relative TSR Percentile Rank is determined by the Committee, the Company will confirm the number of Target Shares that will vest or be forfeited on the Vesting Date, and the number of Additional Shares, if any, that will be issued to the Award Holder on the Vesting Date consistent with the following provisions:

• If the Company’s Relative TSR Percentile Rank is at the Target Performance Level, 100% of the Target Shares will vest on the Vesting Date. If the Company’s Relative TSR Percentile Rank is above the Target Performance Level, Additional Shares will also be issued to the Award Holder on the Vesting Date. If the Company’s Relative TSR Percentile Rank is less than the Target Performance Level, some or all of the Target Shares will be forfeited.

• The number of the Target Shares that will vest on the Vesting Date, and the number of any Additional Shares that will be issued to the Award Holder on the Vesting Date, will be determined in accordance with the table set forth below. Any Target Shares that do not vest in accordance with the table will be forfeited on the Vesting Date.

If the Company’s Relative TSR Percentile Rank for the Performance Period falls between the percentile levels specified in the first column of the table, the number of Shares that will vest or be granted or forfeited on the Vesting Date shall equal the number corresponding to the percentage interpolated on a straight-line basis from the percentages specified in the second column of the table.

Company’s Relative TSR Percentile Rank	Total Shares to Vest (and/or to be Granted) on Vesting Date as Percentage of Target Shares
90th or Higher	200%
75th	150%
50th	100%
25th	50%
Below 25th	0%

E. Determination of Vesting in Case of Certain Terminations and Other Events:

Notwithstanding any contrary provisions of the Plan:

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(1)    Retirement Eligible. (a) Except as otherwise provided in (1)(b) or another subsection of this Section E, if the Award Holder is Retirement Eligible but not in Service on the last day of the Performance Period (“Vesting Date”), all RSUs held by the Award Holder will vest on the Vesting Date, to the extent earned for the Performance Period, in an amount equal to the number of Target Shares that would vest in accordance with the provisions of Sections A – D above, if any, multiplied by a fraction, the numerator of which is the number of full months in the Performance Period during which the Award Holder was actively in Service, and the denominator of which is the total number of months in the Performance Period. A partial month worked shall be counted as a full month if the Award Holder was actively working for fifteen (15) days or more in that month. All RSUs that do not vest in accordance with this provision shall be forfeited.

(b) If, on or prior to the Vesting Date, as defined in (1)(a) above, the Award Holder is Retirement Eligible and either (i) becomes an employee of a competitor of the Company or any of its Affiliates or otherwise engages in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion, or (ii) the Award Holder’s Service is terminated for Substantial Cause, then any of the RSUs that are restricted on the date of such employment, activity or termination shall be forfeited to the Company.

(2)    Termination on Death or Disability. The Vesting Date shall be the date of the Award Holder’s death or Disability if the Award Holder dies or becomes Disabled prior to the three-year anniversary of the Grant Date: (i) while in Service; or (ii) after terminating Service if the Award Holder (A) was Retirement Eligible on the date of such termination of Service for a reason other than Substantial Cause, and (B) had not, at any time prior to the date of the Award Holder’s death or Disability, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion. On such Vesting Date: (a) the Performance Period shall be deemed to have been completed; (b) a number of RSUs shall vest in an amount equal to thenumber of Target Shares multiplied by a fraction, the numerator of which is the number of full months in the Performance Period during which the Award Holder was actively in Service, and the denominator of which is the total number of months in the original Performance Period (a partial month worked shall be counted as a full month if the Award Holder was actively in Service for fifteen (15) days or more in that month); (c) no Additional Shares shall be issued to the Award Holder; and (d) all RSUs that do not vest in accordance with this provision shall be forfeited.

(3)Termination on Divestiture. In the event that, prior to the three-year anniversary of the Grant Date, the Award Holder is no longer employed by the Company or an Affiliate upon and as result of the divestiture by the Company of its controlling interest in the Award Holder’s Employer, or other cessation of the Company’s control of such Employer, the Performance Period and vesting determination set forth in Sections A – D above shall be deemed revised as follows, provided that the Award Holder does not otherwise continue in Service with the Company or another Affiliate:

• The Performance Period shall be deemed revised to end on the effective date of such divestiture or cessation of control (“Vesting Date”);

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• The Company’s Relative TSR Percentile Rank will be determined for such truncated Performance Period by the Committee in accordance with the methodology set forth above.

• The Target Shares will vest or be forfeited on the Vesting Date in accordance with the table set forth below, but no Additional Shares will be issued to the Award Holder; and

• If the Company’s Relative TSR Percentile Rank for the truncated Performance Period falls between the percentile levels specified in the first column of the table set forth below, the number of Target Shares that will vest on the Vesting Date shall equal the number corresponding to the percentage interpolated on a straight-line basis from the percentages specified in the second column of the table.

Company’s Relative TSR Percentile Rank	Total Shares to Vest on Vesting Date as Percentage of Target Shares
50th or Higher	100%
25th	50%
Below 25th	0%

(4)Other Termination of Service. If the Award Holder ceases to be in Service (including, without limitation, by reason of a divestiture or cessation of control of an Affiliate), and is not Retirement Eligible, under circumstances other than those set forth in the foregoing subsections (1) – (3) of this Section E, all unvested RSUs held by the Award Holder shall be forfeited to the Company on the date of such cessation of Service, and no Additional Shares shall be issued to the Award Holder.

(5)    Leave of Absence. In the event that the Award Holder is on an approved Leave of Absence (other than a short-term disability leave) at the end of the Performance Period or takes such a leave of absence at any time during the Performance Period, then the RSUs will vest, forfeit or be granted, as applicable, to the extent earned for the Performance Period, in an amount equal to the number of Target Shares that would vest and the number of Additional Shares that would be issued in accordance with the provisions of Sections A – D above, if any, multiplied by a fraction, the numerator of which is the number of full months in the Performance Period during which the Award Holder was an active Employee not on such leave of absence and the denominator of which is the total number of months in the Performance Period.

(6)    Change of Control. This Award may be subject to termination or early vesting in connection with a Change in Control in accordance with the provisions of Section 18.3 of the Plan.

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F. Interpretations Related to Calculations and Determinations Related to Performance:

(1)    Interpretations. TheCompany shall have the reasonable discretion to interpret or construe ambiguous, unclear or implied terms applicable to this Award Agreement, and to make any findings of fact necessary to make a calculation or determination hereunder.

(2)    Disagreements. A decision made in good faith by the Company shall govern and be binding in the event of any dispute regarding a method of calculation of performance or a determination of vesting or forfeiture in connection with this Award.

(3)    Method of Calculating Final Number of Vested or Forfeited Target Shares.

The following methods shall apply in determining the number of Target Shares that will vest or be forfeited on the Vesting Date pursuant to Section D above. As a general rule, the determination for performance that falls between Percentile Rank points in the table in Section D above would be interpolated on a straight-line basis, as stated in Section D.

Specifically, the formula to be used to calculate the final number of Target Shares that will vest or be forfeited is as follows:

• For TSR performance between the 25th & 50th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals: 50% + [(Actual Percentile Rank - 25)/50]%

• For TSR performance between the 50th & 75th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals: 100% + [(Actual Percentile Rank - 50)/50]%

• For TSR performance between the 75th & 90th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals: 150% + [(Actual Percentile Rank - 75)/30]%

Note that since the interval between the 75th & 90th Percentile Rank is shorter (15 percentiles) compared to the other quadrants (25 percentiles), the vesting result for this particular quadrant would be higher compared to the other quadrants.

(4)    Rounding Conventions.

• Regarding rounding of TSRs, percentages for each company in the Peer Group shall be computed to two decimal points, i.e., XX.XX%)

• Regarding TSR Percentile Rank, the percentile rankings for each company in the Peer Group shall be rounded to the nearest percentage (e.g., 85% rather than 85.4166666%) before calculating the linearly interpolated payout, and the final payout percentage shall be rounded to the nearest percentage (e.g., 183% rather than 183.333333%).

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• Target Shares that will vest and any Additional Shares that will result from the application of the methods and formula set forth in the foregoing subsection F(3) and Section D above shall only be paid out in whole shares. Any fractional shares that would otherwise result from such application shall be rounded down to the nearest whole number of shares.

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EX-10.32

Exhibit 10.32

KEMPER CORPORATION

2009 Performance Incentive Plan

Amended and Restated as of February 4, 2014

TABLE OF CONTENTS

			Page
Article	1	Establishment, Purpose, and Duration	1
	1.1	Establishment	1
	1.2	Purpose of this Plan	1
Article	2	Definitions	1
	2.1	“Affiliate”	1
	2.2	“Annual Incentive Award”	1
	2.3	“Award”	1
	2.4	“Award Instrument”	1
	2.5	“Board” or “Board of Directors”	1
	2.6	“Code”	2
	2.7	“Committee”	2
	2.8	“Company”	2
	2.9	“Corporate Performance Measures”	2
	2.10	“Disability or Disabled”	2
	2.11	“Effective Date”	2
	2.12	“Employee”	2
	2.13	“Employer”	2
	2.14	“Individual Performance Measures”	2
	2.15	“Multi-Year Incentive Award”	2
	2.16	“Participant”	2
	2.17	“Performance Measures”	2
	2.18	“Performance Period”	2
	2.19	“Plan”	2
	2.20	“Plan Year”	2
	2.21	“Retirement” or “Retires”	3
	2.22	“Section 409A”	3
	2.23	“Subject Employees”	3
Article	3	Eligibility and Participation	3
	3.1	Eligibility	3
	3.2	Actual Participation	3
Article	4	Grant, Earning and Payment of Awards	3
	4.1	Grant of Awards	3
	4.2	Award Instruments	3
	4.3	Determination of Any Pay Outs Under Awards to Subject Employees	4
	4.4	Determination of Any Pay Outs Under Awards to Other Participants	4
	4.5	Timing of Payments	4
Article	5	Performance Measures	4
	5.1	Performance Measures	4
	5.2	Individual Performance Measures	4
	5.3	Corporate Performance Measures	5
	5.4	Adjustments	6

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TABLE OF CONTENTS

(continued)

			Page
	5.5	Discretion	6
Article	6	Termination of Employment; Leave of Absence	7
	6.1	Death or Disability	7
	6.2	Retirement	7
	6.3	Divestiture of Employer	7
	6.4	Other Termination Provisions	8
	6.5	Leave of Absence	8
Article	7	Transferability of Awards	9
	7.1	Transferability	9
	7.2	Domestic Relations Orders	9
Article	8	Arbitration	9
Article	9	Compliance with Section 409A	9
Article	10	Rights of Participants	9
	10.1	Employment	9
	10.2	Participation	10
Article	11	Change of Control	10
Article	12	Administration	12
	12.1	General	12
	12.2	Authority of the Committee	13
Article	13	Amendment, Modification, Suspension, and Termination	13
	13.1	Amendment, Modification, Suspension, and Termination	13
	13.2	Awards Previously Granted	13
Article	14	Tax Withholding	13
Article	15	Successors	13
Article	16	General Provisions	14
	16.1	Forfeiture Events	14
	16.2	Severability	14
	16.3	Unfunded Plan	14
	16.4	Non-exclusivity of this Plan	14
	16.5	Governing Law	14
	16.6	Beneficiaries	14

ii

Kemper Corporation
2009 Performance Incentive Plan

Amended and Restated

Effective February 4, 2014

Article 1Establishment, Purpose, and Duration

1.1Establishment. Kemper Corporation, a Delaware corporation (hereinafter referred to as the “Company”), established the Kemper Corporation 2009 Performance Incentive Plan (the “Plan”) effective as of February 3, 2009 (“Effective Date”). The Company has amended and restated the Plan from time to time and most recently amended and restated the Plan effective February 4, 2014. This Plan permits the grant by the Company and its Affiliates of Annual Incentive Awards and Multi-Year Incentive Awards, as defined hereafter.

1.2Purpose of this Plan. The purpose of this Plan is to motivate and reward eligible executive-level Employees through annual and multi-year cash incentive awards tied to the results of performance measures established hereunder, and to attract and retain superior Employees through these incentives.

Article 2Definitions

Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

2.1“Affiliate” means any person or entity controlled directly or indirectly by the Company, whether by equity ownership, contract or otherwise and shall include direct or indirect subsidiaries of the Company and mutual companies the management of which is controlled by the Company and its subsidiaries.

2.2“Annual Incentive Award” means an arrangement under which a Participant is given the opportunity to earn a cash bonus based on the results of one or more performance measures assessed over a Performance Period of one year or less.

2.3    “Award” means, individually or collectively, a grant under this Plan of an Annual Incentive Award or a Multi-Year Incentive Award, in each case subject to the terms of this Plan.

2.4    “Award Instrument” means either: (a) a written agreement between a Participant and the Company or his or her Employer setting forth the terms and conditions applicable to an Award, or (b) a written or electronic statement issued by the Company or an Employer to a Participant describing the terms and conditions of such Award.

2.5    “Board” or “Board of Directors” means the Board of Directors of the Company.

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2.6    “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor statute.

2.7    “Committee” means the Compensation Committee of the Board or any subcommittee thereof, or any other committee designated by the Board to administer this Plan.

2.8    “Company” means Kemper Corporation, a Delaware corporation, and any successor thereto as provided in Article 15 herein.

2.9    “Corporate Performance Measures” is defined in Section 5.3.

2.10    “Disability or Disabled” when used with respect to a particular Participant, means a physical or mental condition that: (a) is of a type that would generally trigger benefits under the Company’s long-term disability plan (as in effect from time to time), whether or not such Participant is actually enrolled in such plan; or (b) in the absence of any such plan, would cause such Participant to be unable to substantially perform his or her duties as an Employee, as determined in the sole discretion of the Committee. Notwithstanding the foregoing, if an Award becomes subject to Section 409A, “Disability” and “Disabled” shall be defined as required thereunder.

2.11    “Effective Date” has the meaning set forth in Section 1.1.

2.12    “Employee” means any employee of the Company or any Affiliate of the Company.

2.13    “Employer” means, with respect to a given Employee, whichever of the Company or its Affiliates is the employer of such Employee.

2.14    “Individual Performance Measures” is defined in Section 5.2.

2.15    “Multi-Year Incentive Award” means an arrangement under which a Participant is given the opportunity to earn a cash award based on the results of one or more performance measures assessed over a Performance Period of more than one year.

2.16    “Participant” means any Employee to whom an Award is granted.

2.17    “Performance Measures” means measures described in Article 5 on which performance metrics for Awards are based.

2.18    “Performance Period” means the period of time with respect to which the results of performance measures are assessed to determine the amount of the payout, if any, of an Award.

2.19    “Plan” is defined in Section 1.1 above.

2.20    “Plan Year” means a calendar year.

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2.21    “Retirement” or “Retires” means, (a) for Awards granted prior to February 2013, the voluntary termination of employment by a Participant who has attained age 55, is eligible for early retirement under a retirement plan sponsored by the Company, and makes an election to begin receiving retirement benefits under such retirement plan, (b) for Awards granted beginning in February 2013 through January 2014, the termination of employment by a Participant who has attained age 65 and completed at least five years of service with the Company and/or one or more of its Affiliates, and (c) for Awards granted beginning in February 2014, the definition set forth in the applicable Award Agreement.

2.22    “Section 409A” means Section 409A of the Code, or any successor provision, and the regulations, rulings and other guidance issued thereunder by the Internal Revenue Service.

2.23“Subject Employees” means the individuals defined as Subject Employees under the Committee’s Charter as in effect from time to time.

Article 3    Eligibility and Participation

3.1    Eligibility. All executive-level and other key Employees, as determined in the discretion of the Committee or the Company’s Chief Executive Officer or other executive officer, shall be eligible to participate in this Plan. An Employee or Subject Employee who participates in the Kemper Corporation Executive Performance Plan shall be eligible to participate in this Plan.

3.2    Actual Participation. For Awards to Subject Employees, the Committee shall have the sole power and authority, in its discretion, to select Award recipients and determine the terms of Awards on its own initiative or to approve, modify or reject Award recommendations from the management of the Company or its Affiliates, and no such Awards shall be granted without the prior, express approval of the Committee. For Awards to other Employees, the Company’s Chief Executive Officer (and such other executive officers of the Company as determined appropriate by the Company’s Chief Executive Officer in his or her discretion), has the power and authority to select such additional Award recipients and to approve and determine the terms of such Awards.

Article 4    Grant, Earning and Payment of Awards

4.1    Grant of Awards. At any time and from time to time, Annual Awards and/or Multi-Year Awards may be granted to Participants under the terms and provisions of this Plan.

4.2    Award Instruments. Each Award to a Participant shall be evidenced by an Award Instrument that specifies the applicable Performance Period, Performance Measures, performance metrics or formulas, threshold, maximum and target payouts and such other provisions as have been approved for such Participant in accordance with this Plan, including, without limitation, such provisions as maybe determined necessary or advisable to comply with Article 9.

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4.3Determination of Any Payouts Under Awards to Subject Employees.

(a)    Data and Calculations. After each Performance Period, the Company shall compile data and perform calculations as may be necessary to assess results and achievements of any performance measures that were previously established for such Performance Period.

(b)    Review of Performance Results. After each Performance Period, the Company shall submit a written report to the Committee providing performance results under Awards granted to Subject Employees for such Performance Period, including such data and calculations necessary to enable the Committee to assess the results of any objective performance measures established for such Performance Period. The Committee shall review such report and make a determination to certify the actual performance results for such Awards, or the applicable portions thereof, that are based on objective performance measures.

(c)    Payout Amounts. Prior to the payout of an Award to a Subject Employee, the Committee shall review and approve the basis and amount of such payout. The Committee, in its sole discretion, may reduce or increase the amount of the payout that otherwise would be due under an Award to a Subject Employee.

4.4    Determination of Any Payouts Under Awards to Other Participants. With respect to Awards to Participants other than Subject Employees, data shall be provided by the Company and a determination shall be made by the Company’s Chief Executive Officer or other executive officer as to the performance results for the Performance Period and the amount of any payout.

4.5    Timing of Payments. Awards shall be paid, in cash, as soon as practicable after the end of a Performance Period in accordance with the terms of the Award Instrument, but in no event later than the earlier of (a) thirty (30) calendar days after the performance results have been made available pursuant to Section 4.3 or 4.4, as applicable, for the applicable Performance Period, or (b) two and one-half (2½) months after the close of the Plan Year in which Participant becomes vested in the Participant’s Award under the Plan.

Article 5    Performance Measures

5.1    Performance Measures. Performance metrics for Awards to Participants may be based on Individual Performance Measures, Corporate Performance Measures, or a combination of the two.

5.2    Individual Performance Measures. Performance metrics may be established for Awards to a Participant based on individual performance measures which may be quantitative or qualitative in nature (“Individual Performance Measures”). In the case of an Award based upon a combination of Individual Performance Measures and Corporate Performance Measures, specific limits may be imposed on the portion of the payout that is based upon Individual Performance Measures. Such limits may be expressed in terms of the total dollar amount or the percentage of

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the Award’s payout that may be attributable to the attainment of Individual Performance Measures.

5.3    Corporate Performance Measures. The corporate performance metrics upon which the payment of an Award may be conditioned include, but shall not be limited to, the following Performance Measures (“Corporate Performance Measures”):

(a) Net earnings or net income (before or after taxes);

(b) Operating earnings per share;

(c) Net sales or revenue growth;

(d) Operating income and/or average increase in dollars of operating income of the Company or any of its Affiliates or operating units;

(e) Return measures (including, but not limited to, return on assets, capital, invested capital, investment portfolio performance returns or yields, equity, sales, or revenue);

(f) Cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on equity);

(g) Earnings before or after taxes, interest, depreciation, and/or amortization;

(h) Gross or operating margins;

(i) Productivity ratios;

(j) Share price (including, but not limited to, growth measures and total shareholder return);

(k) Expense targets;

(l) Margins;

(m) Operating efficiency;

(n) Market share;

(o) Customer satisfaction;

(p) Working capital targets;

(q) Bad debt experience;

(r) Reduction in costs;

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(s) Income from continuing operations, before or after taxes;

(t) Value returned to shareholders, including or excluding dividends paid or share repurchases;

(u) Economic value added or EVA^® (net operating profit after tax minus the sum of capital multiplied by the cost of capital); and

(v) Insurance company underwriting income, combined ratios, loss ratios or expense ratios.

Any Corporate Performance Measure(s) may be defined in accordance with generally acceptable accounting principles or otherwise, and may be used to measure the performance of the Company and its Affiliates on a consolidated basis, or any Affiliate or business unit or segment of the Company individually, or any combination thereof, as the Committee may deem appropriate. Any Corporate Performance Measure may also be compared against similar measures for a group of comparator or peer companies, or against a published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may select Performance Measure (j) above as compared to various stock market indices. Any Corporate Performance Measure that refers to “income” may include or exclude catastrophe losses, catastrophe loss adjustment expenses, and/or gains or losses on investments.

5.4Adjustments. The Committee may, in its sole discretion, at the time that it approves the terms of an Award or any time thereafter, adjust any Corporate Performance Measures to exclude the impact of any unusual or non-recurring item the Committee deems not reflective of the Company’s core operating performance, which occurs during a Performance Period including, but not limited to: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting or tax principles, or other laws or provisions affecting reported results; (d) any reorganization, restructuring or discontinued operations; (e) extraordinary nonrecurring items as determined by reference to accounting principles generally accepted in the United States and/or as described in the Company’s reports filed with the Securities and Exchange Commission for periods within the applicable Performance Period; (f) acquisitions or divestitures; (g) catastrophes; (h) foreign exchange gains or losses; (i) extraordinary events; (j) financing activities; and (k) recapitalizations (including stock splits and dividends). In addition, the Committee may make, in its discretion, adjustments to the established performance metrics applicable to such Award to reflect changes to the job responsibilities of the Participant or the structure of the Company or its Affiliates that relate directly to such established performance metrics for all or a portion of the applicable Performance Period. The Chief Executive Officer may approve adjustments of the type set forth in this Section 5.4 for Awards to Employees other than Subject Employees to the extent applicable and within the scope of the authority provided to Chief Executive Officer in Section 3.2 above.

5.5    Discretion. The Committee or, with respect to Awards to Employees other than Subject Employees, the Chief Executive Officer to the extent applicable and within the scope of the authority provided to Chief Executive Officer in Section 3.2 above, shall have the authority

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in its or such officer’s discretion to alter the governing Performance Measures for outstanding Awards for any reason, including but not limited to applicable tax and/or securities laws changes subject to Section 13.2.

Article 6    Termination of Employment; Leave of Absence

6.1    Death or Disability.Upon termination of the employment of a Participant due to death or Disability, for each outstanding Award previously granted to the Participant, the Performance Period shall be deemed to have been completed and a payout of the Award shall be due to the Participant (or, in the case of death, to the Participant’s surviving spouse, or, if none, to the Participant’s estate) at the level defined in the Award Instrument as the “target” level as if the applicable performance goal(s) had been achieved at such target level, but reduced on a pro-rata basis by multiplying the amount that would have been payable under the Award at such target level for the original Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee and the denominator of which is the total number of months in the original Performance Period. A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month. The Award shall be paid, in cash, as soon as practicable after the termination of employment (but in no event later than March 15 of the calendar year immediately following the end of such completed Performance Period).

6.2    Retirement.

(a)for Awards granted beginning in February 2014, the vesting, forfeiture and other terms of payout for Awards that apply in the event that a Participant’s employment with the Company or any of its Affiliates terminates due to Retirement shall be determined as set forth in the applicable Award Agreement;

(b)for Awards granted prior to February 2014, the following terms apply:

In the event that a Participant’s employment terminates due to Retirement, for each outstanding Award previously granted to the Participant, a payout of the Award shall be due, to the extent earned, based upon the actual results relative to the applicable performance goal(s) for such Award for the original Performance Period, but reduced on a pro-rata basis by multiplying the amounts that would have been payable under the Award for the original Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee and the denominator of which is the total number of months in the original Performance Period. A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month. The Award shall be paid, in cash, as soon as practicable after the completion of the original Performance Period when Award payouts are made to active Employees (but in no event later than March 15 of the calendar year immediately following the end of the Performance Period).

6.3    Divestiture of Employer.In the event that a Participant’s employment terminates upon and as result of the sale or divestiture by the Company or any of its Affiliates of

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its controlling interest in any Employer (“Divestiture”), for each outstanding Award previously granted to such Participant, the term of the applicable Performance Period shall be deemed revised so that the Performance Period ends on the effective date of the Divestiture, and a payout of the Award shall be due, to the extent earned, based on the actual results relative to the applicable performance goal(s) for such Award for the revised Performance Period. The Award shall be paid, in cash, as soon as practicable after the termination of employment (but in no event later than March 15 of the calendar year immediately following the end of such completed Performance Period).

6.4    Other Termination Provisions.

(a)    Other Events. In the event a Participant’s employment terminates for any reason other than death, Disability, Retirement, Divestiture, or an Event as defined in Article 11, including but not limited to, termination with or without cause by his or her Employer, or voluntary termination by the Participant, any outstanding Award shall be canceled and the Participant shall receive no payment for such Award under this Plan, unless, subject to Section 16.1, the Performance Period associated with any such Award had been completed at the time of the Participant’s termination of employment, in which case the payout, if any, pursuant to such Award shall be computed and paid in accordance with the relevant performance measures as if the Participant’s employment had not terminated.

(b)    Other Provisions. The Committee may, in its discretion, approve termination provisions in connection with particular Awards or Participants that differ from the terms of this Article 6 to the extent such provisions do not adversely affect any Award previously granted under this Plan in any material way without the written consent of the Participant holding such Award.

6.5    Leave of Absence.In the event that the Participant is on an approved leave of absence (other than a short-term disability leave) at the end of the Performance Period, or takes such a leave of absence at any time during the Performance Period, a payout of the Award shall be due, to the extent earned, based upon the actual results relative to the applicable performance goal(s) for such Award for the Performance Period, but reduced on a pro-rata basis by multiplying the amount that would have been payable under the Award for the Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee not on such leave of absence and the denominator of which is the total number of months in the Performance Period. A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month. The Award shall be paid, in cash, as soon as practicable after the completion of the original Performance Period when Award payouts are made to active Employees, but in no event later than the earlier of (a) thirty (30) calendar days after the performance results have been made available pursuant to Section 4.3 or 4.4, as applicable, for the applicable Performance Period, or (b) two and one-half (2½) months after the close of the Plan Year in which Participant becomes vested in the Participant’s Award under the Plan.

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Article 7    Transferability of Awards

7.1    Transferability.Awards shall not be transferable other than by will or the laws of descent and distribution. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.

7.2    Domestic Relations Orders.Without limiting the generality of Section 7.1, no domestic relations order purporting to authorize a transfer of an Award or any interest in an Award shall be recognized as valid.

Article 8    Arbitration

As a condition to receiving an Award grant, a Participant may be required to agree in writing to submit all disputes or claims arising out of or relating to any such Award to binding arbitration in accordance with such terms as prescribed when the Award is approved.

Article 9    Compliance with Section 409A

Each Award that is granted under this Plan shall be designed and administered so that the Award is either exempt from the application of, or compliant with, the requirements of Section 409A. To the extent that the Committee determines that any Award granted under this Plan is subject to Section 409A, the Award Instrument shall include such terms and conditions as the Committee determines, in its discretion, are necessary or advisable to avoid the imposition on the Participant of an additional tax under Section 409A. Notwithstanding any other provision of this Plan or any Award Instrument (unless the Award Instrument provides otherwise with specific reference to this Section): (i) an Award shall not be granted, deferred, accelerated, extended, paid out, settled, substituted, adjusted or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A upon a Participant; and (ii) if an Award Instrument provides for the deferral of compensation within the meaning of Section 409A, no distribution or payment of any amount shall be made before a date that is six (6) months following the date of such participant’s separation from service (as defined in Section 409A) or, if earlier, the date of the Participant’s death. Although the Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Section 409A, the Company does not warrant that any Award under this Plan will qualify for favorable tax treatment under Section 409A or any other provision of federal, state, local, or non-United States law. Neither the Company, its Affiliates nor their respective directors, officers, employees or advisors shall be liable to any Participant (or any other individual claiming a benefit through the Participant) for any tax, interest or penalties the Participant may owe as a result of the grant, holding, vesting or payment of any Award under this Plan.

Article 10    Rights of Participants

10.1    Employment. Nothing in this Plan or an Award Instrument shall interfere with or limit in any way the right of an Employer to terminate any Participant’s employment at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue

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his or her employment for any specified period of time. Neither an Award, an Award Instrument, nor any benefit arising under this Plan shall constitute an employment contract with the Company or any of its Affiliates and, accordingly, subject to Articles 12 and 13, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates or their respective directors, officers, employees or advisors.

10.2    Participation. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

Article 11    Change in Control

(a)For Awards granted prior to February 2013. Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all the property or more than eighty percent (80%) of the then outstanding Shares of the Company to another corporation (any of the foregoing, an “Event”), the applicable Performance Period for each Award then outstanding under this Plan shall be deemed revised so that such Performance Period ends on the effective date of the Event, and a payout of each such Award shall be due to the respective Participant in the amount which is the greater of the payout that would be due: (i) based upon the actual results for such revised Performance Period relative to the applicable performance goal(s) for such Award; or (ii) at the level defined in the respective Award Instrument as the “target” level for such Award for such revised Performance Period. The Award shall be paid, in cash, as soon as practicable after the Event (but in no event later than March 15 of the calendar year immediately following the end of the revised Performance Period).

(b)For Awards granted beginning in February 2013. Upon a Change in Control, except as prohibited by applicable laws, rules, regulations or stock exchange requirements, as determined otherwise by the Committee in connection with particular Awards and set forth in the applicable Award Agreements, or as provided in any employment, change in control, severance or other plan or agreement between a Participant and the Company or an Affiliate, the Committee may provide, in its sole discretion, that the Plan shall be terminated and Participants paid out at a level prescribed by the Committee; provided that, absent a specific action or decision to the contrary by the Committee, if the employment of a Participant is terminated by the Company or an Affiliate without Substantial Cause or by the Participant for Good Reason within the twenty-four (24) month period following such Change in Control, the applicable Performance Period for each Award then outstanding under this Plan shall be deemed revised so that such Performance Period ends on the effective date of the termination of employment, and a payout of each such Award shall be due to the respective Participant in the amount which is the greater of the payout that would be due: (i) based upon the actual results for such revised Performance Period relative to the applicable performance goal(s) for such Award; or (ii) at the level defined in the respective Award Instrument as the “target” level for such Award for such revised Performance Period. The Award shall be paid, in cash, as soon as practicable after the termination of employment (but in no event later than March 15 of the calendar year immediately following the end of the revised Performance Period).

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For purposes of this Article 11(b):

“Change in Control” means that the event set forth in any one of the following paragraphs (i) – (iv) shall have occurred:

(i)    any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or any of its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (a) of paragraph (iii) below; or

(ii)    the following individuals cease for any reason to constitute a majority of the number of Directors then serving: individuals who, on the Effective Date, constitute the Board of Directors and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or

(iii)    there is consummated a merger or consolidation of the Company or any Affiliate with any other corporation, other than (a) a merger or consolidation which results in the Directors immediately prior to such merger or consolidation continuing to constitute at least a majority of the Board of Directors of the surviving entity or any parent thereof, or (b) a merger or consolidation effected to implement a recapitalization or reincorporation of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or any of its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(iv)    the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board of Directors immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof.

“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified in Sections 13(d)(3) and 14(d)(2) thereof, except that such term shall not include (i) the Company or any entity, more than 50% of the voting securities of which are Beneficially Owned by the Company, (ii) a trustee or other fiduciary holding securities under an employee benefit

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plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, (v) any individual, entity or group whose ownership of securities of the Company is reported on Schedule 13G pursuant to Rule 13d-1 promulgated under the Exchange Act (but only for so long as such ownership is so reported) or (vi) Singleton Group LLC or any successor in interest to such entity.

“Good Reason” shall mean any action taken by the Participant’s Employer which results in a material negative change to the Participant in the employment relationship, such as the duties to be performed, the conditions under which such duties are to be performed or the compensation to be received for performing such services. A termination by the Participant shall not constitute termination for Good Reason unless the Participant shall first have delivered to the Employer written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than ninety (90) calendar days after the occurrence of such event), and there shall have passed thirty (30) calendar days within which the Employer may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by the Participant.

“Substantial Cause” means the (i) commission of a criminal act against, an action in derogation of the interests of, or misconduct which results in a financial loss to, the Company or an Affiliate; (ii) misconduct which obligates the Company to prepare an accounting restatement due to material noncompliance with applicable financial reporting requirements; (iii) knowing disclosure of confidential information about the Company or an Affiliate in breach of the Company’s Essential Standards of Conduct or an applicable contractual or other obligation, or using such information for personal gain, including, without limitation, by trading in Company securities on the basis of material, non-public information; or (iv) performance of any other action that the Committee, in its sole discretion, may deem to be sufficiently injurious to the interests or reputation of the Company or an Affiliate to constitute substantial cause for the termination of a Participant’s employment. Nothing in the Plan shall be construed to imply that a Participant’s employment or other relationship with the Company or its Affiliates may only be terminated for Substantial Cause.

Article 12    Administration

12.1    General. The Committee shall be responsible for oversight of the administration of this Plan, subject to this Article 12 and the other provisions of this Plan. The Committee may retain attorneys, consultants, accountants, or other advisors, and the Committee, the Company and its Affiliates, and their respective officers and directors shall be entitled to rely upon the advice, opinions, or valuations of any such advisors. The fees of any such advisors shall be paid by the Company. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, beneficiaries, the Company, its Affiliates and all other interested individuals.

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12.2    Authority of the Committee.

(a)    Power and Discretion. The Committee shall have full and, except as otherwise expressly provided in this Plan, exclusive, power and discretion: (i) to interpret the terms and the intent of this Plan and any Award Instrument or other agreement or document ancillary to or in connection with this Plan, and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper; (ii) subject to Article 13, to adopt modifications and amendments to this Plan or any Award Instrument, including without limitation, any that are necessary to comply with the laws of the jurisdictions in which the Company and its Affiliates operate or may operate.

(b)    Delegation. Notwithstanding the other provisions of this Plan, including Section 12.2(a), the Committee may in its discretion delegate such administrative duties or powers as it may deem advisable to one or more of its members and, except to the extent inconsistent with the Committee’s charter or any legal or regulatory provision, to one or more officers of the Company or its Affiliates.

Article 13    Amendment, Modification, Suspension, and Termination

13.1Amendment, Modification, Suspension, and Termination. Subject to Article 9 and Section 13.2, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan in whole or in part; provided, however, that no amendment, modification, suspension or termination may impact the distribution of any Award that is subject to Section 409A.

13.2    Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary, no termination, amendment, suspension, or modification of this Plan or an Award Instrument shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.

Article 14    Tax Withholding

An Employer shall have the power and the right to deduct or withhold, or require a Participant to remit to the Employer, the amount of any taxes which the Employer may be required to withhold with respect to any taxable event arising from such Participant’s Awards.

Article 15    Successors

All obligations of the Company or any Affiliate under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company or such Affiliate, whether the existence of such successor is the result of a direct or indirect purchase, sale, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company or such Affiliate.

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Article 16    General Provisions

16.1    Forfeiture Events. An Award Instrument may specify that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for cause, violation of material Company and/or Affiliate policies, breach of non-competition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.

16.2    Severability.In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

16.3    Unfunded Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between any Participant and his or her Employer or the Company or any of its Affiliates. Participants shall have no right, title, or interest whatsoever in or to any assets of their Employers or of the Company or any of its Affiliates with respect to the obligations arising out of any Awards. To the extent that any person acquires a right to receive payments pursuant to an Award, such right shall be no greater than the right of a general unsecured creditor of the Participant’s Employer. No special or separate fund shall be established and no segregation of assets shall be made to assure payment of amounts payable under this Plan.

16.4    Non-exclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Company or any of its Affiliates to adopt such other compensation arrangements as it may deem desirable for any Employee.

16.5    Governing Law. This Plan and each Award Instrument shall be governed by the laws of the State of Illinois, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Instrument (or other written agreement related to arbitration pursuant to Article 8), each Participant is deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Illinois and the state in which such Participant’s regular office is located, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Instrument.

16.6Beneficiaries. In the event of a Participant’s death, any amounts remaining to be paid under this Plan shall be paid to the Participant’s surviving spouse, or, if none, to the Participant’s estate.

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EX-10.33

Exhibit 10.33

Kemper Corporation 2009 Performance Incentive Plan

ANNUAL INCENTIVE AWARD AGREEMENT

This ANNUAL INCENTIVE AWARDAGREEMENT (“Agreement”) is made as of this ______ day of ___________, 2___ (“Grant Date”) between [EMPLOYER NAME] (the “Company”), and «name» (the “Award Holder”).

SIGNATURES

As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.

COMPANY                PARTICIPANT

By: [E-SIGNATURE] _______________________

Name & Title                «name»

RECITALS

A.    The Compensation Committee of the Board of Directors of Kemper Corporation (the “Committee”) has adopted the 2009 Performance Incentive Plan, including any and all amendments to date (the “Plan”).

B.    The Plan provides for the granting of annual and multi-year incentive awards to selected employees of Kemper Corporation or any of its affiliates.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Grant. The Company grants to the Award Holder an annual incentive award on the terms and conditions hereinafter set forth (the “Award”), subject to the provisions set forth on Exhibit A.

2.    Vesting and Forfeiture.

(a)    Performance Period. The Performance Period (the “Performance Period”) for this Award shall be the period set forth in the attached Exhibit. Subject to

Annual PIP Award    February 2014

the forfeiture and early vesting provisions referenced in Section 2(b) below, the Award will vest on the last day of the Performance Period only to the extent set forth and in accordance with the terms of Exhibit A with regard to the performance condition(s) referenced therein.

(b)    Forfeiture or Early Vesting upon Retirement, Death, Disability or Other Events. During the Performance Period, the Award may be subject to forfeiture or early vesting upon the termination of the Award Holder’s employment due to retirement, death, disability or other events as provided in Section (d) below, or as otherwise provided in accordance with the provisions of Articles 6 or 11 of the Plan, which are incorporated in and made a part of this Agreement.

(c)     Certain Definitions.

(i) “Service” means that the Award Holder is employed by the Company or an Affiliate.

(ii) “Retirement Eligible” means that the Award Holder has either attained age 60 and completed 10 years of Service as an Employee or attained age 65 and completed 5 years of Service as an Employee.

(d)     Retirement Eligible. (i) Except as otherwise provided in (d)(ii), if the Award Holder is Retirement Eligible but not in Service on the last day of the Performance Period (“Vesting Date”), a payout of the Award shall be due, to the extent earned, based upon the actual results relative to the applicable performance goal(s) for such Award for the original Performance Period, but reduced on a pro-rata basis by multiplying the amounts that would have been payable under the Award for the original Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee and the denominator of which is the total number of months in the original Performance Period. A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month. The Award shall be paid, in cash, as soon as practicable after the completion of the original Performance Period when Award payouts are made to active Employees (but in no event later than March 15 of the calendar year immediately following the end of the Performance Period).

(ii) If, on or prior to the Vesting Date, as defined in (d)(i) above, the Award Holder is Retirement Eligible and either (A) becomes an employee of a competitor of the Company or any of its Affiliates or otherwise engages in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion, or (B) the Award Holder’s Service is terminated for Substantial Cause, then the Award shall be forfeited to the Company.

3.    Withholding of Taxes; Section 409A. The Company shall withhold from any payouts under the Award the amounts the Company is required to withhold to satisfy any applicable tax withholding requirements based on minimum statutory withholding rates for

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federal and state tax purposes, including any payroll taxes. The Company intends that the Award hereunder shall either be exempt from the application of, or compliant with, the requirements of Section 409A and this Award Agreement shall be interpreted and administered in accordance with such intent. In no event shall the Company and/or its Affiliates be liable for any tax, interest or penalties that may be imposed on the Award Holder (or the Award Holder’s estate) under Section 409A.

4.    No Assignment or Other Transfer. Neither this Agreement, the Award or any rights and privileges granted hereby may be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution. Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Agreement, the Award or any other rights or privileges granted hereby contrary to the provisions hereof shall be null and void and of no force or effect.

5.    Participation by Award Holder in Other Company Plans. Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit plan or program of the Company or of any subsidiary or affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.

6.    Not an Employment or Service Contract. Nothing herein contained shall be construed as an agreement by the Company or any of its subsidiaries or affiliates, expressed or implied, to employ the Award Holder, to restrict the right of the Company or any of its subsidiaries or affiliates to discharge the Award Holder or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement which may exist between the Award Holder and the Company or any of its subsidiaries or affiliates.

7.Agreement Subject to Award Plan. The Award hereby granted is subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder's rights under this Agreement without the prior written consent of the Award Holder. To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.

8.    Arbitration. Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time. A copy of the AAA Rules is available to the Award Holder upon written request to the Company’s Director of Human Resources at One East Wacker Drive,

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Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.

To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules. After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated. If mediation does not fully resolve the dispute or if neither party requests mediation, then the matter will be subject to arbitration before a single arbitrator who shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available. Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company. The parties agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.

9.    Governing Law. This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.

10.    Miscellaneous. This Agreement, together with the Plan, is the entire agreement of the parties with respect to the Award granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.

<ADD THE NEXT SECTION FOR ALL GRANTS TO ALL EXECUTIVE OFFICERS OF THE COMPANY>

11.    Clawbacks. Notwithstanding the terms regarding vesting and forfeiture or any other provision set forth in this Agreement, including (but not limited to) Section 2 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extentrequired by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements. Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.

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[CORPORATE VERSION]

Exhibit A

To Annual Incentive Award Agreement

Kemper Corporate – ___% Management Group

Overview: This Exhibit A sets forth the terms that will determine the amount of the cash payout, if any, that the Award Holder may be entitled to receive pursuant to the Award based on the outcome of the applicable performance measures over the Performance Period.

Performance Period: January 1, ____ through December 31, ____.

Table 1 Weighted Target Bonus Percentage
Type of Award	Weighted Target Bonus Percentage based on Individual Performance Measures	Weighted Target Percentage based on Corporate Performance Measures
Annual PIP Award	__%	__%

Weighted Target Bonus Percentage: The Target Bonus Percentage is expressed as a percentage of the Award Holder’s Base Salary, as defined below, and is weighted based on Corporate Performance Measures and Individual Performance Measures (if applicable) as shown in Table 1.

Base Salary: Base Salary is the Award Holder’s annual base salary in effect as of April 1 of the Performance Period.

Individual Performance Measures: Individual Performance Measures may be quantitative or qualitative in nature. If applicable, as shown in Table 1, Individual Performance Measures will be established by the CEO or the Award Holder’s Operating Company President or supervisor and evaluated in his or her sole discretion in determining the payout for the portion of the Award based upon Individual Performance Measures. In no event can the total payout under all portions of this Award exceed [ ]% of the Award Holder’s Base Salary.

Corporate Performance Measures: The Corporate Performance Measures applicable to this Award are Consolidated Operating Profit Margin (weighted 80%) and Earned Premium Revenue Growth (weighted 20%), as defined herein. The applicable performance measures are shown in the attached Performance Grid, which shows Consolidated Operating Profit Margin on the X axis and Earned Premium Revenue Growth on the Y axis.

ConsolidatedOperating Profit Margin: Consolidated OperatingProfit Margin (weighted 80%)is defined as Consolidated Net Operating Income (Loss) divided by Earned Premium Revenues. This measure will incorporate any adjustments made to applicable operating segment results for variances from estimated catastrophe losses and loss adjustment expenses in accordance with the “CAT Loss Collar” approved by the Compensation Committee.

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ConsolidatedNet Operating Income (Loss): Consolidated Net Operating Income (Loss) is computed by excluding from net income (loss) from continuing operations the after-tax impact of 1) net realized gains (losses) on sales of investments, 2) net impairment losses recognized in earnings related to investments and 3) other significant nonrecurring 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.

Earned Premium Revenue Growth: Earned Premium Revenue Growth (weighted 80%)is defined as the percentage increase in Earned Premium Revenues in ____ from such revenues in ____.

Earned Premium Revenues: Earned Premium Revenues is defined as earned premiums as reported in the Financial Analysis Summaries or its reporting equivalent for all insurance company operating segments.

Target Multiplier: At the end of the Performance Period, the Award Holder will be assigned a Target Multiplier, which is derived from the attached Performance Grids based on the outcome of the Corporate Performance Measures.

Threshold and Maximum Target Multiplier Levels under Corporate Performance Measures: Threshold and maximum Target Multiplier levels for Corporate Performance Measures under the Award are incorporated into the attached Performance Grids. The threshold Target Multiplier level is set at 25%, below which no payout will be made, and the maximum Target Multiplier level is set at 200%.

Corporate Award Percentage: The Target Multiplier will be applied against the Award Holder’s Weighted Target Bonus Percentage for Corporate Performance Measures to arrive at the Corporate Award Percentage.

Individual Award Percentage: If applicable, an Individual Multiplier will be determined from an evaluation of the Award Holder’s performance and will be applied against the Award Holder’s Weighted Target Bonus Percentage for Individual Performance Measures to arrive at the Individual Award Percentage.

Award Calculation: The determination of the amount of the payout, if any, under the Award will be calculated by adding the Award Holder's Corporate Award Percentage and Individual Award Percentage (if any), and multiplying the sum by the Award Holder's Base Salary.

Corporate Award Percentage = Target Multiplier * Weighted Target Bonus Percentage for Corporate Measures

Individual Award Percentage = Individual Multiplier * Weighted Target Bonus Percentage for Individual Measures

Total Award Payable = (Corporate Award Percentage + Individual Award Percentage) * Base Salary

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Annual PIP Award    February 2014

Illustrative Example: Below is an illustrative example of a calculation for a potential payout under the Award for a sample Award Holder with a Base Salary of $100,000 and a Target Bonus Percentage of 10% based on Corporate Performance Measures and of 10% based on Individual Performance Measures.

Table 2 Illustrative Example
Example of Weighted Target Bonus Percentage based on Corporate Performance Measures	Example of Target Multiplier interpolated from Performance Grid	Example of Corporate Award Percentage (AxB)	Example of Individual Award Percentage	Example of Total Award Percentage (C+D)	Sample Base Salary	Example of Estimated final Cash Award payable under the Plan (ExF)
A	B	C	D	E	F	G
10.0%	94.4%	9.4%	10%	19.4%	$100,000	$19,440

Interpretations and Decisions Related to Award Calculations and Determinations:

(i) Interpretations.   TheCompany shall have the reasonable discretion to interpret or construe ambiguous, unclear or implied terms applicable to this Award Agreement, and to make any findings of fact necessary to make a calculations or determination hereunder; and

(ii) Disagreements.     A decision made in good faith by the Company shall govern and be binding in the event of any dispute regarding a method of calculation of performance or a determination of vesting or forfeiture in connection with this Award.

Adjustments: This Award may be adjusted by the Compensation Committee of the Kemper Corporation Board of Directors, or by the Kemper Corporation’s Chief Executive Officer in accordance with the terms of the Plan, including without limitation, Sections 5.4, 5.5 and 12.2.

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Annual PIP Award    February 2014

EX-10.34

Exhibit 10.34

Kemper Corporation 2009 Performance Incentive Plan

MULTI-YEAR INCENTIVE AWARD AGREEMENT

This MULTI-YEAR INCENTIVE AWARDAGREEMENT (“Agreement”) is made as of this ______ day of ___________, 2___ (“Grant Date”) between [EMPLOYER NAME] (the “Company”), and «name» (the “Award Holder”).

SIGNATURES

As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.

COMPANY                PARTICIPANT

By: [E-SIGNATURE] _______________________

Name & Title            «name»

RECITALS

A.    The Compensation Committee of the Board of Directors of Kemper Corporation (the “Committee”) has adopted the 2009 Performance Incentive Plan, including any and all amendments to date (the “Plan”).

B.    The Plan provides for the granting of annual and multi-year incentive awards to selected employees of Kemper Corporation or any of its affiliates.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Grant. The Company grants to the Award Holder a multi-year incentive award on the terms and conditions hereinafter set forth (the “Award”), subject to the provisions set forth on Exhibit A.

2.    Vesting and Forfeiture.

(a)    Performance Period. The Performance Period (the “Performance Period”) for this Award shall be the period set forth on Exhibit A. Subject to the forfeiture and early vesting provisions referenced in Section 2(b) below, the Award will vest on the last day of the Performance Period only to the extent set forth and in

Multi-Year PIP Award    1

February 2014

accordance with the terms of Exhibit A with regard to the performance condition(s) referenced therein.

(b)    Forfeiture or Early Vesting upon Retirement, Death, Disability or Other Events. During the Performance Period, the Award may be subject to forfeiture or early vesting upon the termination of the Award Holder’s employment due to retirement, death, disability or other events as provided in Section (d) below, or as otherwise provided in accordance with the provisions of Articles 6 or 11 of the Plan, which are incorporated in and made a part of this Agreement.

(c)     Certain Definitions.

(i) “Service” means that the Award Holder is employed by the Company or an Affiliate.

(ii) “Retirement Eligible” means that the Award Holder has either attained age 60 and completed 10 years of Service as an Employee or attained age 65 and completed 5 years of Service as an Employee.

(d)     Retirement Eligible. (i) Except as otherwise provided in (d)(ii), if the Award Holder is Retirement Eligible but not in Service on the last day of the Performance Period (“Vesting Date”), a payout of the Award shall be due, to the extent earned, based upon the actual results relative to the applicable performance goal(s) for such Award for the original Performance Period, but reduced on a pro-rata basis by multiplying the amounts that would have been payable under the Award for the original Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee and the denominator of which is the total number of months in the original Performance Period. A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month. The Award shall be paid, in cash, as soon as practicable after the completion of the original Performance Period when Award payouts are made to active Employees (but in no event later than March 15 of the calendar year immediately following the end of the Performance Period).

(ii) If, on or prior to the Vesting Date, as defined in (d)(i) above, the Award Holder is Retirement Eligible and either (A) becomes an employee of a competitor of the Company or any of its Affiliates or otherwise engages in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion, or (B) the Award Holder’s Service is terminated for Substantial Cause, then the Award shall be forfeited to the Company.

3.    Withholding of Taxes; Section 409A. The Company shall withhold from any payouts under the Award the amounts the Company is required to withhold to satisfy any applicable tax withholding requirements based on minimum statutory withholding rates for federal and state tax purposes, including any payroll taxes. The Company intends that the Award hereunder shall either be exempt from the application of, or compliant with, the requirements of Section 409A and this Award Agreement shall be interpreted and administered in accordance with such intent. In no event shall the Company and/or its Affiliates be liable for any tax,

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February 2014

interest or penalties that may be imposed on the Award Holder (or the Award Holder’s estate) under Section 409A.

4.    No Assignment or Other Transfer. Neither this Agreement, the Award or any rights and privileges granted hereby may be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution. Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Agreement, the Award or any other rights or privileges granted hereby contrary to the provisions hereof shall be null and void and of no force or effect.

5.    Participation by Award Holder in Other Company Plans. Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit plan or program of the Company or of any subsidiary or affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.

6.    Not an Employment or Service Contract. Nothing herein contained shall be construed as an agreement by the Company or any of its subsidiaries or affiliates, expressed or implied, to employ the Award Holder, to restrict the right of the Company or any of its subsidiaries or affiliates to discharge the Award Holder or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement which may exist between the Award Holder and the Company or any of its subsidiaries or affiliates.

7.Agreement Subject to Award Plan. The Award hereby granted is subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder's rights under this Agreement without the prior written consent of the Award Holder. To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.

8.    Arbitration. Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time. A copy of the AAA Rules is available to the Award Holder upon written request to the Company’s Director of Human Resources at One East Wacker Drive, Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.

To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules. After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated. If mediation does not fully resolve the dispute or if neither party requests mediation, then the matter will be subject to arbitration before a single arbitrator who

Multi-Year PIP Award    3

February 2014

shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available. Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company. The parties agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.

9.    Governing Law. This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.

10.    Miscellaneous. This Agreement, together with the Plan, is the entire agreement of the parties with respect to the Award granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.

<ADD THE NEXT SECTION FOR ALL GRANTS TO ALL EXECUTIVE OFFICERS OF THE COMPANY>

11.    Clawbacks. Notwithstanding the terms regarding vesting and forfeiture or any other provision set forth in this Agreement, including (but not limited to) Section 2 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extentrequired by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements. Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.

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February 2014

[CORPORATE VERSION]

Exhibit A

To Multi-Year Incentive Award Agreement

Kemper Corporate – ___% Management Group

Overview: This Exhibit A sets forth the terms that will determine the amount of the cash payout, if any, that the Award Holder may be entitled to receive pursuant to the Award based on the outcome of the applicable performance measures over the Performance Period.

Performance Period: January 1, ____ through December 31, ____

Target Bonus Percentage	Weighting based on Corporate Performance Measures
__%	100%

Target Bonus Percentage: The applicable Target Bonus Percentage for the Award is set forth in Table 1 above. The Target Bonus Percentage is expressed as a percentage of the Award Holder’s Base Salary, as defined herein.

Base Salary: Base Salary shall be calculated by computing a simple average of the Award Holder’s annual base salary in effect as of April 1 during each year of the Performance Period.

Performance Measures: The performance measures applicable to this Award are consolidated Revenue Growth (weighted 20%) and Return on Equity (weighted 80%), as defined herein. The applicable performance measures are shown in the attached Performance Grids, which shows Return on Equity on the X axis and Revenue Growth on the Y axis.

Revenue Growth: Revenue Growth (weighted 20%) is defined as the three-year compound annual growth rate, calculated as [(A/B)^(1/3)-1], where A = Total Revenues excluding Net Realized Gains on Sales of Investments and Net Impairment Losses Recognized in Earnings (“Net Realized Investment Gains or Losses”) as reported in the ____ Kemper Annual Report on Form 10-K (“Annual Report”) and B = Total Revenues excluding Net Realized Investment Gains or Losses as reported in the ____ Annual Report.

Return on Equity: Return on Equity (weighted 80%) is defined as the return on average shareholders’ equity, which shall be computed by dividing the sum of GAAP Net Income as reported in the Annual Reports for each of the three years in the Performance Period by the sum of the Average Shareholders’ Equity for each of the three years. Average Shareholders’ Equity is defined as the simple average of Total Shareholders’ Equity as reported in the Annual Reports for the beginning and end of year for each year in the Performance Period. This will incorporate any adjustments made to applicable operating segment results for variances from estimated catastrophe losses and loss adjustment expenses in accordance with the “CAT Loss Collar” approved by the Compensation Committee.

Multi-Year PIP Award    5

February 2014

Target Multiplier: At the end of the Performance Period, the Award Holder will be assigned a Target Multiplier, which is derived from the attached Performance Grids based on the outcome of the performance measures.

Threshold and Maximum Target Multiplier Levels: Threshold and maximum Target Multiplier levels for the Award are incorporated into the attached Performance Grids. The threshold Target Multiplier level is set at 25%, below which no payout will be made, and the maximum Target Multiplier level is set at 200%.

Award Percentage: The Target Multiplier will be applied against the Award Holder’s Target Bonus Percentage to determine the Award Percentage for the Award Holder.

Award Calculation: The determination of the amount of the payout, if any, under the Award will be calculated by multiplying the Award Holder's Award Percentage by the Award Holder's Base Salary. The calculation formulas are illustrated below.

Target Multiplier * Award Holder’s applicable Target Bonus Percentage = Award Percentage

Award Percentage * Base Salary = Final Cash Award payable under the Plan

Illustrative Example: Below is an illustrative example of a calculation for a potential payout under the Award for a sample participant with a Base Salary of $100,000 and a Target Bonus Percentage of 50%.

Table 2 Illustrative Example
Example of Individual Target Bonus Percentage from Table 1	Example of Target Multiplier interpolated from Performance Grids	Example of Total Award Percentage (AxB)	Example of Base Salary	Example of Estimated final Cash Award payable under the Plan (CxD)
A	B	C	D	E
50.0%	120%	60%	$100,000	$60,000

Interpretations and Decisions Related to Award Calculations and Determinations:

(i) Interpretations.   TheCompany shall have the reasonable discretion to interpret or construe ambiguous, unclear or implied terms applicable to this Award Agreement, and to make any findings of fact necessary to make a calculations or determination hereunder; and

(ii) Disagreements.     A decision made in good faith by the Company shall govern and be binding in the event of any dispute regarding a method of calculation of performance or a determination of vesting or forfeiture in connection with this Award.

Adjustments: This Award may be adjusted by the Compensation Committee of the Kemper Corporation Board of Directors, or by the Kemper Corporation’s Chief Executive Officer in accordance with the terms of the Plan, including without limitation, Sections 5.4, 5.5 and 12.2.

Multi-Year PIP Award    6

February 2014

EX-10.35

Exhibit 10.35

Kemper Corporation Executive Performance Plan

Effective February 4, 2014

1. Purpose. The Kemper Corporation Executive Performance Plan (the “Plan”) is designed to attract and retain the services of selected employees of Kemper Corporation (the “Company”) and its Affiliates who are in a position to make a material contribution to the success of the enterprise. The Plan shall become effective February 4, 2014, subject to approval by shareholders of the provisions of the Plan that are required to be approved by shareholders in accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Definitions. The following definitions shall apply for purposes of the Plan:

2.1 “Affiliate” means any person or entity controlled directly or indirectly by the Company, whether by equity ownership, contract or otherwise and shall include direct or indirect subsidiaries of the Company and mutual companies the management of which is controlled by the Company and its subsidiaries.

2.2 “Award” means an amount payable to a Participant pursuant to Section 4 of the Plan, including Annual Awards and Multi-Year Awards.

2.3 “Annual Award” means an Award that is earned over one Plan Year, based on the Performance Formula that the Committee establishes for that Plan Year payable to a Participant pursuant to Section 4 of the Plan.

2.4 “Board of Directors” means the Board of Directors of the Company.

2.5 “Compensation Committee” or “Committee” means the Compensation Committee of the Board of Directors.

2.6 “Corporate Performance Measures” means the corporate performance goals upon which the payment of an Award may be conditioned, which are set forth in Exhibit A.

2.7 “Maximum Award Payout” means the actual share of the Bonus Pool designated to a Participant by the Committee for any Performance Period under any Annual Award or Multi-Year Award.

2.8 “Multi-Year Award” means an Award that is earned over more than one Plan Year, based on the Performance Formula that the Committee establishes (i) in the Plan Year the Award is granted or (ii) separately during each Plan Year of the Multi-Year Award, payable to a Participant pursuant to Section 4 of the Plan.

2.9 “Participant” means, for each Performance Period, each employee of the Company or an Affiliate who is a “covered employee” (as defined in Code Section 162(m)) for the last Plan Year within that Performance Period. Notwithstanding anything in the Plan to the contrary, (a) the Committee may, in its sole discretion, specify that an award to an employee of the Company or an Affiliate who is a “covered employee”

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under another compensation plan sponsored by the Company for a Performance Period be treated as an Award under the Plan.

2.10 “Performance Formula” shall mean, for a Performance Period, the one or more objective, performance-based formulas approved by the Committee under Section 3, which shall be applied against the relevant performance results for the Performance Period to determine, with regard to the Award of each Participant, whether all, some portion, or none of the Award has been earned for the Performance Period.

2.11 “Performance Period” consists of one or more Plan Years applicable to an Award.

2.12 “Plan Year” means a calendar year.

2.13 “Section 162(m)” means, Code Section 162(m), including any proposed or final regulations and other guidance issued thereunder by the U.S. Department of the Treasury and/ or the Internal Revenue Service.

3. Determination of Bonus Pool.

3.1 Not later than ninety (90) calendar days after the beginning of each Plan Year (or, if longer or shorter, within the maximum period allowed under Section 162(m)), the Committee shall approve in writing one or more Performance Formulas that the Committee expects to create one or more pools of funds (the “Bonus Pool(s)”) that will apply to Awards granted under the Plan. Any Performance Formulas so established by the Committee shall be based on one or more Corporate Performance Measures.

3.2 The Committee may, in its sole discretion, at the time that it determines any Performance Formulas or any time thereafter, adjust any Corporate Performance Measures to exclude the impact of any unusual or non-recurring item the Committee deems not reflective of the Company’s core operating performance, which occurs during a Performance Period including, but not limited to: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting or tax principles, or other laws or provisions affecting reported results; (d) any reorganization, restructuring or discontinued operations; (e) extraordinary nonrecurring items as determined by reference to accounting principles generally accepted in the United States and/or as described in the Company’s reports filed with the Securities and Exchange Commission for periods within the applicable Performance Period; (f) acquisitions or divestitures; (g) catastrophic losses; (h) foreign exchange gains or losses; (i) extraordinary events; (j) financing activities; and (k) recapitalizations (including stock splits and dividends).  In addition, the Committee may, in its discretion, make adjustments to the established performance metrics applicable to such Award to reflect changes to the job responsibilities of the Participant or the structure of the Company or its Affiliates that relate directly to such established performance metrics for all or a portion of the applicable Performance Period; provided, however, that the Committee shall not adjust any  Corporate Performance Measure to the extent that such action would cause any

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Award granted for the applicable Performance Period to fail to qualify as “performance-based compensation” under Section 162(m).

4. Awards.

4.1 When the Committee approves the Performance Formulas under which a Bonus Pool will be created for a Plan Year or other Performance Period, the Committee, in its sole discretion, shall assign shares of the Bonus Pool for that Performance Period to those individuals whom the Committee designates as Participants for that Plan Year or other Performance Period; provided that such shares shall not exceed, in the aggregate, one hundred percent (100%) of the Bonus Pool. The actual share of the Bonus Pool designated to a Participant by the Committee for any Performance Period shall be the Participant’s Maximum Award Payout. The Committee’s designation of shares of the Bonus Pool need not be uniform among Participant’s or Plan Years. The Maximum Award Payout to a Participant in any one Plan Year under an Annual Award may not exceed $3,000,000, and the Maximum Award Payout paid to a Participant in any one Plan Year under a Multi-Year Award may not exceed $3,000,000.

4.2 Notwithstanding the provisions of Section 4.1, in determining the actual amount payable to a Participant for a Performance Period the Committee may, in its sole discretion, reduce or eliminate the amount indicated by the Participant’s Maximum Award Payout at any time prior to the payment of an Award to a Participant; provided, however, that in no event shall the exercise of such negative discretion with respect to a Participant result in an increase in the amount payable to another Participant.

4.3 The Committee shall not have the discretion to (a) provide payment or delivery in respect of any Awards for a Performance Period in excess of the Bonus Pool or any Participant’s Maximum Performance Award for such Performance Period, or (b) increase a Participant’s Maximum Award Payout above the limitations set forth in Section 4.1 above.

5. Eligibility for Payment of Awards. No Participant shall be entitled to payment of an Award hereunder until the Committee certifies in writing the total amount in the Bonus Pool created by achievement of the Performance Formulas for that Performance Period, the Maximum Award Payout for each Participant for the Performance Period, and any other material terms of the Plan have in fact been satisfied. (Such written certification may take the form of minutes of a meeting of the Committee.)

6.    Form and Timing of Payment of Awards.

6.1 Award payouts shall be made in cash and may be subject to such additional restrictions as the Committee, in its sole discretion, shall impose.

6.2 Subject to Sections 4 and 5, Awards shall be paid at such time as the Committee may determine, but no later than two and one-half (2½) months after the end of the last Plan Year of the Performance Period.

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7. Administration.

7.1 The Plan shall be administered by the Compensation Committee.

7.2 Subject to the provisions of the Plan, the Committee shall have exclusive power to determine the amounts that shall be available for Awards each Plan Year and to establish the guidelines under which the Awards payable to each Participant shall be determined.

7.3 The Committee’s interpretation of the Plan, grant of any Award pursuant to the Plan, and all actions taken within the scope of its authority under the Plan, shall be final and binding on all Participants (or former Participants) and their executors.

7.4 The Committee shall have the authority to establish, adopt or revise such rules or regulations relating to the Plan as it may deem necessary or advisable for the administration of the Plan.

8. Amendment and Termination. The Committee may amend any provision of the Plan at any time; provided that no amendment that requires shareholder approval in order for Award payouts made pursuant to the Plan to be deductible under the Code, as amended, may be made without the approval of the shareholders of the Company. The Committee shall also have the right to terminate the Plan at any time.

9. Miscellaneous.

9.1 The fact that an employee has been designated a Participant shall not confer on the Participant any right to be retained in the employ of the Company or one or more of its Affiliates, or to be designated a Participant in any subsequent Plan Year.

9.2 The Plan shall not be deemed the exclusive method of providing incentive compensation for an employee of the Company and its Affiliates, nor shall it preclude the Committee or the Board of Directors from authorizing or approving other forms of incentive compensation.

9.3 All expenses and costs in connection with the operation of the Plan shall be borne by the Company and its subsidiaries.

9.4 The Company or Affiliate making a payment under the Plan shall withhold therefrom such amounts as may be required by federal, state or local law, and the amount payable under the Plan to the person entitled thereto shall be reduced by the amount so withheld.

9.5 The Plan and the rights of all persons under the Plan shall be construed and administered in accordance with the laws of the State of Illinois to the extent not superseded by federal law.

9.6 If the Committee so determines, the provisions of the Plan that are subject to shareholder approval in accordance with Section 162(m) shall be submitted for re-

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approval by the shareholders of the Company no later than the first shareholder meeting that occurs in the fifth (5^th) year following the year that shareholders previously approved such provisions following the date of initial shareholder approval, for purposes of exempting certain Awards granted after such time from the deduction limitations of Section 162(m). Nothing in this Section, however, shall affect the validity of Awards granted after such time if such shareholder approval has not been obtained.

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EXHIBIT A

Corporate Performance Measures

The corporate performance goals upon which the payment of an Award may be conditioned shall be limited to the following “Corporate Performance Measures”:

(a) Net earnings or net income (before or after taxes);

(b) Operating earnings per share;

(c) Net sales or revenue growth;

(d) Operating income and/or average increase in dollars of operating income of the Company or any of its Affiliates or operating units;

(e) Return measures (including, but not limited to, return on assets, capital, invested capital, investment portfolio performance returns or yields, equity, sales, or revenue);

(f) Cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on equity);

(g) Earnings before or after taxes, interest, depreciation, and/or amortization;

(h) Gross or operating margins;

(i) Productivity ratios;

(j) Share price (including, but not limited to, growth measures and total shareholder return);

(k) Expense targets;

(l) Margins;

(m) Operating efficiency;

(n) Market share;

(o) Customer satisfaction;

(p) Working capital targets;

(q) Bad debt experience;

(r) Reduction in costs;

(s) Income from continuing operations, before or after taxes;

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(t) Value returned to shareholders, including or excluding dividends paid or share repurchases;

(u) Economic value added or EVA^® (net operating profit after tax minus the sum of capital multiplied by the cost of capital); and

(v) Insurance company underwriting income, combined ratios, loss ratios or expense ratios.

Any Corporate Performance Measure(s) may be defined in accordance with generally acceptable accounting principles or otherwise, and may be used to measure the performance of the Company and its Affiliates on a consolidated basis, or any Affiliate or business unit or segment of the Company individually, or any combination thereof, as the Committee may deem appropriate. Any Corporate Performance Measure may also be compared against similar measures for a group of comparator or peer companies, or against a published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may select Corporate Performance Measure (j) above as compared to various stock market indices. Any Corporate Performance Measure that refers to “income” may include or exclude all or a portion of catastrophe losses, catastrophe loss adjustment expenses, and/or gains or losses on investments.

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EX-12

Exhibit 12

KEMPER CORPORATION AND SUBSIDIARIES

COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES

(Dollars in Millions)

	Years Ended December 31,
	2013			2012			2011			2010			2009
Income from Continuing Operations before Income Taxes	$	314.4		$	122.4		$	68.3		$	226.3		$	219.2
Less Equity in Earnings of Equity Method Limited Liability Investments	(26.4		)	(9.3		)	(9.6		)	(48.8		)	(47.8		)
Plus Distribution of Accumulated Earnings in Equity Method Limited Liability Investments	15.4			15.4			—			—			—
Plus Fixed Charges	44.3			45.1			45.1			39.7			38.8
Less Capitalized Interest	(0.9		)	(1.8		)	(2.6		)	(1.8		)	(0.7		)
Total Earnings	$	346.8		$	171.8		$	101.2		$	215.4		$	209.5
Interest	$	41.7		$	41.4		$	40.6		$	36.0		$	36.1
Rental Factor	1.7			1.9			1.9			1.9			2.0
Capitalized Interest	0.9			1.8			2.6			1.8			0.7
Total Fixed Charges	$	44.3		$	45.1		$	45.1		$	39.7		$	38.8
Ratio of Earnings to Fixed Charges (a)	7.8 x			3.8 x			2.2 x			5.4 x			5.4 x

(a) The ratios of earnings to fixed charges have been computed on a consolidated basis by dividing (a) Income from Continuing Operations before Income Taxes less Equity in Earnings of Equity Method Limited Liability Investments, plus Distribution of Accumulated Earnings of Equity Method Limited Liability Investments, plus fixed charges, and less capitalized interest, by (b) fixed charges. Fixed charges consist of interest on debt and a factor for interest included in rent expense. Income from Continuing Operations before Income Taxes has the meaning as set forth in the Consolidated Statements of Income included in our Annual Report on Form 10-K for the year ended December 31, 2013. Equity in Earnings of Equity Method Limited Liability Investments and Distribution of Accumulated Earnings of Equity Method Limited Liability Investments have the meanings as set forth in the Consolidated Statements of Cash Flows included in our Annual Report on Form 10-K for the year ended December 31, 2013.

EX-21

Exhibit 21

Subsidiaries of KEMPER CORPORATION

Subsidiaries of Kemper Corporation, with their states of incorporation in parentheses, are as follows:

1. 301 Oxford Valley Insurance Agency, Inc. (Pennsylvania)

2. Alpha Property & Casualty Insurance Company (Wisconsin)

3. Capitol County Mutual Fire Insurance Company (Texas)*

4. Charter Indemnity Company (Texas)

5. Connecticut Casualty Insurance Agency, Inc. (Connecticut)

6. Direct Response Corporation (Delaware)

7. Family Security Funerals Company (Texas)

8. Financial Indemnity Company (California)

9. KAHG LLC (Illinois)

10. Kemper Corporate Services, Inc. (Illinois)

11. Kemper Direct General Agency, Inc. (Texas)

12. Kemper General Agency, Inc. (Texas)

13. Kemper Independence Insurance Company (Illinois)

14. Merastar Industries LLC (Delaware)

15. Merastar Insurance Company (Illinois)

16. Mutual Savings Fire Insurance Company (Alabama)

17. Mutual Savings Life Insurance Company (Alabama)

18. National Merit Insurance Company (Illinois)

19. NCM Management Corporation (Delaware)

20. Old Reliable Casualty Company (Missouri)*

21. One East Wacker LLC (Illinois)

22. The Reliable Life Insurance Company (Missouri)

23. Reserve National Insurance Company (Oklahoma)

24. Response General Agency of Texas, Inc. (Connecticut)

25. Response Insurance Company (Illinois)

26. Response Worldwide Direct Auto Insurance Company (Illinois)

27. Response Worldwide Insurance Company (Illinois)

28. Security One Insurance Agency (Tennessee)

29. Trinity Universal Insurance Company (Texas)

30. UICA Investment Holdings LLC (Delaware)

31. Union National Fire Insurance Company (Louisiana)

32. Union National Life Insurance Company (Louisiana)

33. United Casualty Insurance Company of America (Illinois)

34. United Insurance Company of America (Illinois)

35. Unitrin Advantage Insurance Company (New York)

36. Unitrin Auto and Home Insurance Company (New York)

37. Unitrin County Mutual Insurance Company (Texas)*

38. Unitrin Direct Insurance Company (Illinois)

39. Unitrin Direct Property & Casualty Company (Illinois)

40. Unitrin Preferred Insurance Company (New York)

41. Unitrin Safeguard Insurance Company (Wisconsin)

42. Valley Insurance Company (California)

43. Valley Property & Casualty Insurance Company (Oregon)

44. Warner Insurance Company (Illinois)

* May be deemed to be an affiliate pursuant to Rule 1-02 of SEC Regulation S-X.

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 33-58300, 333-4530, 333-38981, 333-86935, 333-76076, 333-87898, 333-127216 and 333-173877 on Form S-8 and Nos. 333-127215, 333-142722 and 333-170297 on Form S-3 of our report, dated February 14, 2014, relating to the consolidated financial statements and the financial statement schedules of Kemper Corporation and subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting (which report expresses an unqualified opinion), appearing in this Annual Report on Form 10-K of the Company for the year endedDecember 31, 2013.

/s/ Deloitte & Touche LLP

Chicago, Illinois

February 14, 2014

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Donald G. Southwell, certify that:

1. I have reviewed this annual report on Form 10-K of Kemper Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2014

/S/    DONALD G. SOUTHWELL

Donald G. Southwell

Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Frank J. Sodaro, certify that:

1. I have reviewed this annual report on Form 10-K of Kemper Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2014

/S/    FRANK J. SODARO

Frank J. Sodaro

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of CEO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of Kemper Corporation (the “Company”) for the year endedDecember 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Donald G. Southwell, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/S/    DONALD G. SOUTHWELL
Name:	Donald G. Southwell
Title:	Chairman, President and Chief Executive Officer
Date:	February 14, 2014

EX-32.2

Exhibit 32.2

Certification of CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of Kemper Corporation (the “Company”) for the year endedDecember 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Frank J. Sodaro, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/S/    FRANK J. SODARO
Name:	Frank J. Sodaro
Title:	Senior Vice President and Chief Financial Officer
Date:	February 14, 2014

XML

Goodwill (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Goodwill balances by business segment at December 31, 2013 and December 31, 2012 were:

DOLLARS IN MILLIONS	2013		2012
Kemper Preferred	$	49.6	$	49.6
Kemper Specialty	42.8		42.8
Life and Health Insurance	219.4		219.4
Total	$	311.8	$	311.8

XML

Postretirement Benefits Other Than Pensions - Benefit Payments Net, Modernization Act Subsidy (Details) (Other Postretirement Benefit Plan, Defined Benefit [Member], USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Other Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Excluding Modernization Act Subsidy Year One	$ 4.1
Expected Modernization Act Subsidy, Year One	(0.4)
Net OPEB Benefits Year One	3.7
Excluding Modernization Act Subsidy Year Two	4.2
Expected Modernization Act Subsidy, Year Two	(0.4)
Net OPEB Benefits Year Two	3.8
Excluding Modernization Act Subsidy Year Three	4.2
Expected Modernization Act Subsidy, Year Three	(0.4)
Net OPEB Benefits Year Three	3.8
Excluding Modernization Act Subsidy Year Four	4.1
Expected Modernization Act Subsidy, Year Four	(0.4)
Net OPEB Benefits Year Four	3.7
Excluding Modernization Act Subsidy Year Five	3.9
Expected Modernization Act Subsidy, Year Five	(0.4)
Net OPEB Benefits Year Five	3.5
Excluding Modernization Act Subsidy Five Fiscal Years Thereafter	16.4
Expected Modernization Act Subsidy, Five Fiscal Years Thereafter	(2.0)
Net OPEB Benefits Five Fiscal Years Thereafter	$ 14.4

XML

Catatrophe Reinsurance (Tables)

12 Months Ended

Dec. 31, 2013

Reinsurance Transactions [Abstract]

Reinsurance Retention Policy

Coverage for each catastrophe reinsurance program effective January 1, 2012 to December 31, 2012 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred, Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
4th Layer of Coverage	350.0		450.0		50.0
Life and Health Segment—Property Insurance Operations:
Retained	$	—	$	8.0	—	%
1st Layer of Coverage	8.0		15.0		70.0
2nd Layer of Coverage	15.0		40.0		70.0

Coverage for each catastrophe reinsurance program effective January 1, 2013 to December 31, 2013 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred, Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
4th Layer of Coverage	350.0		450.0		50.0

Coverage for each catastrophe reinsurance program effective January 1, 2011 to December 31, 2011 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred Segment:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	3.0	—	%
1st Layer of Coverage	3.0		16.0		100.0
Life and Health Segment—Property Insurance Operations:
Retained	$	—	$	8.0	—	%
1st Layer of Coverage	8.0		15.0		70.0
2nd Layer of Coverage	15.0		40.0		100.0

Catastrophe Reinsurance Premiums

Reinsurance premiums for the Company’s primary catastrophe reinsurance programs, the Kemper Preferred NC Program and the FHCF Program reduced earned premiums for the years ended December 31, 2013, 2012 and 2011 by the following:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	23.2	$	24.6	$	20.0
Kemper Specialty	0.1		0.1		0.1
Kemper Direct	0.3		0.4		0.8
Life and Health Insurance	—		2.0		2.3
Total Ceded Catastrophe Reinsurance Premiums	$	23.6	$	27.1	$	23.2

Catastrophe Losses and LAE, Net Reinsurance Recoveries

Catastrophe losses and LAE (including reserve development), net of reinsurance recoveries, for the years ended December 31, 2013, 2012 and 2011 by business segment are presented below.

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	29.2	$	99.2	$	138.7
Kemper Specialty	3.7		4.9		3.9
Kemper Direct	1.7		8.0		7.2
Life and Health Insurance	1.6		6.1		7.6
Total Catastrophe Losses and LAE	$	36.2	$	118.2	$	157.4

XML

Insurance Expenses (Tables)

12 Months Ended

Dec. 31, 2013

Insurance Expenses [Abstract]

Schedule of Insurance Expenses

Insurance Expenses for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Commissions	$	345.7		$	366.1		$	363.5
General Expenses	257.1			262.9			270.1
Taxes, Licenses and Fees	42.8			44.7			46.4
Total Costs Incurred	645.6			673.7			680.0
Policy Acquisition Costs:
Deferred	(253.4		)	(266.4		)	(268.5		)
Amortized	253.9			257.0			260.7
Net Policy Acquisition Costs Amortized (Deferred)	0.5			(9.4		)	(7.8		)
Life VIF and P&C Customer Relationships Amortized	8.3			8.0			11.4
Insurance Expenses	$	654.4		$	672.3		$	683.6

XML

Catatrophe Reinsurance (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Reinsurance Transactions [Abstract]
Catastrophic Events Classification	$ 25.0

XML

Notes Payable - Interest Paid on Notes Payable (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Interest Paid	$ 37.7	$ 39.3	$ 38.4
Notes Payable under Revolving Credit Agreement
Debt Instrument [Line Items]
Interest Paid	0.8	2.3	1.2
Senior Notes [Member] | Senior Notes, 6% Due May 15, 2017 [Member]
Debt Instrument [Line Items]
Interest Paid	21.6	21.6	21.6
Senior Notes [Member] | Senior Notes, 6% Due November 30, 2015 [Member]
Debt Instrument [Line Items]
Interest Paid	15.0	15.0	15.2
Mortgage Note Payable [Member]
Debt Instrument [Line Items]
Interest Paid	$ 0.3	$ 0.4	$ 0.4

XML

Catatrophe Reinsurance - Catastrophe Losses and LAE (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Liability for Catastrophe Claims [Line Items]
Catastrophe Loss and LAE Reserves, (Unfavorable) Favorable Developement	$ (64.6)	$ (31.5)	$ (33.1)
Catastrophe Losses and LAE	991.9	1,221.6	1,305.4
Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Loss and LAE Reserves, (Unfavorable) Favorable Developement	(14.5)	(6.3)	(6.4)
Catastrophe Losses and LAE	36.2	118.2	157.4
Catastrophe [Member] | Superstorm Sandy [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Losses and LAE		48.5
Catastrophe [Member] | Hurricane Irene [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Losses and LAE			23.0
Kemper Preferred [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Loss and LAE Reserves, (Unfavorable) Favorable Developement	(11.9)	(6.2)	(5.5)
Catastrophe Losses and LAE	29.2	99.2	138.7
Kemper Preferred [Member] | Catastrophe [Member] | Superstorm Sandy [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Losses and LAE		44.0
Kemper Preferred [Member] | Catastrophe [Member] | Hurricane Irene [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Losses and LAE			22.1
Kemper Specialty [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Losses and LAE	3.7	4.9	3.9
Kemper Direct [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Losses and LAE	1.7	8.0	7.2
Life and Health Insurance [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Catastrophe Loss and LAE Reserves, (Unfavorable) Favorable Developement	(2.0)	0.1	(1.5)
Catastrophe Losses and LAE	$ 1.6	$ 6.1	$ 7.6

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheet at December 31, 2013 is summarized below:

DOLLARS IN MILLIONS	Fair Value Measurements						Fair Value
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	121.2	$	241.0	$	—	$	362.2
States and Political Subdivisions	—		1,361.0		—		1,361.0
Corporate Securities:
Bonds and Notes	—		2,429.6		364.1		2,793.7
Redeemable Preferred Stocks	—		—		7.4		7.4
Mortgage and Asset-backed	—		1.5		49.2		50.7
Total Investments in Fixed Maturities	121.2		4,033.1		420.7		4,575.0
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		80.8		5.0		85.8
Other Industries	—		10.5		13.9		24.4
Common Stocks:
Manufacturing	95.1		7.3		2.2		104.6
Other Industries	71.7		2.2		11.0		84.9
Other Equity Interests:
Exchange Traded Funds	124.9		—		—		124.9
Limited Liability Companies and Limited Partnerships	—		—		173.9		173.9
Total Investments in Equity Securities	291.7		100.8		206.0		598.5
Other Investments:
Trading Securities	5.0		—		—		5.0
Total	$	417.9	$	4,133.9	$	626.7	$	5,178.5

At December 31, 2013, the Company had unfunded commitments to invest an additional $121.1 million in certain limited liability companies and limited partnerships that are reportable as Other Equity Interests.

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheet at December 31, 2012 is summarized below:

DOLLARS IN MILLIONS	Fair Value Measurements						Fair Value
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	135.8	$	293.1	$	—	$	428.9
States and Political Subdivisions	—		1,401.4		—		1,401.4
Corporate Securities:
Bonds and Notes	—		2,632.4		361.0		2,993.4
Redeemable Preferred Stocks	—		27.9		4.7		32.6
Mortgage and Asset-backed	—		3.8		0.1		3.9
Total Investments in Fixed Maturities	135.8		4,358.6		365.8		4,860.2
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		79.2		—		79.2
Other Industries	—		15.3		6.0		21.3
Common Stocks:
Manufacturing	79.6		6.0		1.9		87.5
Other Industries	60.1		1.2		5.4		66.7
Other Equity Interests:
Exchange Traded Funds	125.9		—		—		125.9
Limited Liability Companies and Limited Partnerships	—		—		141.3		141.3
Total Investments in Equity Securities	265.6		101.7		154.6		521.9
Other Investments:
Trading Securities	4.5		—		—		4.5
Total	$	405.9	$	4,460.3	$	520.4	$	5,386.6

Fair Value Inputs, Assets, Quantitative Information

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in determining fair values for investments in corporate bonds and notes classified as Level 3 at December 31, 2013.

DOLLARS IN MILLIONS	Unobservable Input	Total Fair Value		Range of Unobservable Inputs					Weighted Average Yield
Investment Grade	Market Yield	$	108.5	1.0	%	-	6.0	%	4.3	%
Non-investment Grade:
Senior Debt	Market Yield	93.9		4.2		-	15.6		8.6
Junior Debt	Market Yield	153.5		8.8		-	26.6		14.2
Other Debt	Various	8.2
Bonds and Notes Classified as Level 3		$	364.1

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in determining fair values for investments in corporate bonds and notes classified as Level 3 at December 31, 2012.

DOLLARS IN MILLIONS	Unobservable Input	Total Fair Value		Range of Unobservable Inputs					Weighted Average Yield
Investment Grade	Market Yield	$	94.6	1.3	%	-	6.3	%	4.0	%
Non-investment Grade:
Senior Debt	Market Yield	77.7		5.7		-	18.0		9.1
Junior Debt	Market Yield	173.2		8.8		-	21.4		14.8
Other Debt	Various	15.5
Bonds and Notes Classified as Level 3		$	361.0

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the year ended December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Fixed Maturities									Equity Securities
	Corporate Bonds and Notes			Redeemable Preferred Stocks			Mortgage and Asset- backed			Preferred and Common Stocks			Other Equity Interests			Total
Balance at Beginning of Year	$	361.0		$	4.7		$	0.1		$	13.3		$	141.3		$	520.4
Total Gains (Losses):
Included in Consolidated Statement of Income	(7.9		)	0.2			0.3			(1.0		)	(1.6		)	(10.0		)
Included in Other Comprehensive Income	(7.8		)	(1.3		)	(0.1		)	4.6			5.6			1.0
Purchases	145.1			5.1			48.6			15.9			55.4			270.1
Settlements	(123.2		)	(1.3		)	(0.1		)	—			(26.8		)	(151.4		)
Sales	(0.1		)	—			(2.0		)	(0.7		)	—			(2.8		)
Transfers into Level 3	5.8			—			2.4			—			—			8.2
Transfers out of Level 3	(8.8		)	—			—			—			—			(8.8		)
Balance at End of Year	$	364.1		$	7.4		$	49.2		$	32.1		$	173.9		$	626.7

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the year ended December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Fixed Maturities									Equity Securities						Total
	Corporate Bonds and Notes			Redeemable Preferred Stocks			Mortgage and Asset- backed			Preferred and Common Stocks			Other Equity Interests
Balance at Beginning of Year	$	235.1		$	6.1		$	0.3		$	13.5		$	93.1		$	348.1
Total Gains (Losses):
Included in Consolidated Statement of Income	4.0			(0.4		)	—			3.2			—			6.8
Included in Other Comprehensive Income	1.4			0.5			—			(1.3		)	8.3			8.9
Purchases	199.7			0.1			—			1.6			52.0			253.4
Settlements	(73.1		)	(1.6		)	(0.2		)	—			(12.1		)	(87.0		)
Sales	(0.9		)	—			—			(3.7		)	—			(4.6		)
Transfers into Level 3	0.9			—			—			—			—			0.9
Transfers out of Level 3	(6.1		)	—			—			—			—			(6.1		)
Balance at End of Year	$	361.0		$	4.7		$	0.1		$	13.3		$	141.3		$	520.4

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Long-term Equity-based Compensation - Activity Related to Nonvested Restricted Stock (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended						0 Months Ended	36 Months Ended
	Dec. 31, 2013 Restricted Stock [Member]	Dec. 31, 2012 Restricted Stock [Member]	Dec. 31, 2011 Restricted Stock [Member]	Dec. 31, 2013 Time Vested Restricted Stock [Member]	Dec. 31, 2013 Performance Based Restricted Stock [Member]	Dec. 31, 2013 Performance Period, 2012 to 2014 [Member] Performance Based Restricted Stock [Member]	Feb. 01, 2014 Performance Period, 2011 to 2013 [Member] Performance Based Restricted Stock [Member]	Dec. 31, 2013 Performance Period, 2011 to 2013 [Member] Performance Based Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested Balance at Beginning of Year, Restricted Shares				126,349	187,075
Nonvested at Beginning of Year, Weighted Average Grant Date Fair Value				$ 26.19	$ 36.70
Grants in Period				75,625	70,675
Grants in Period, Weighted Average Grant Date Fair Value				$ 33.33	$ 42.12
Vested in Period				(59,065)	(53,118)
Vested in Period, Weighted Average Grant Date Fair Value				$ 24.99	$ 33.14
Forfeited in Period				(41,282)	(27,832)
Forfeited in Period, Weighted Average Grant Date Fair Value				$ 27.98	$ 39.16
Nonvested Balance at End of Year, Restricted Shares				101,627	176,800
Nonvested at End of Year, Weighted Average Grant Date Fair Value				$ 31.48	$ 39.54
Number of Additional Shares To Be Granted If Maximum Perfornance Level Is Met or Exceeded						59,775
Reduction in Share Authorization if Maximum Performance Level is Met or Exceeded					390,486	179,325
Payout Percentage for Exceeding Performance Target								118.00%
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures							9,014
Vested in Period, Total Fair Value	$ 4.1	$ 4.0	$ 1.4
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation	$ 1.4	$ 1.4	$ 0.5

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Pension Benefits - Components Of Comprehensive OPEB (Income) Expense (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Unrecognized Pension Loss Arising During the Year	$ (61.6)	$ 29.4	$ 53.9
Amortization of Unrecognized Postretirement Benefit Costs	(25.0)	(16.2)	(8.7)
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost Earned During the Year	10.8	10.8	10.2
Interest Cost on Projected Benefit Obligation	22.4	22.4	22.9
Expected Return on Plan Assets	(29.7)	(29.8)	(24.4)
Net Amortization and Deferral	26.2	18.8	9.4
Settlement Benefits	0	0.3	0
Pension Expense Recognized	29.7	22.5	18.1
Unrecognized Pension Loss Arising During the Year	(53.8)	34.8	52.4
Amortization of Unrecognized Postretirement Benefit Costs	(26.2)	(18.8)	(9.4)
Comprehensive Pension Expense	(50.3)	38.5	61.1
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year	9.2
Pension Plans, Defined Benefit [Member] | Segment, Discontinued Operations [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Expense Recognized		$ 0.5	$ 0.6

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Other Comprehensive Income And Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2013

Statement of Comprehensive Income [Abstract]

Schedule of Comprehensive Income (Loss)

The components of Other Comprehensive Income (Loss) Before Income Taxes for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Other Comprehensive Income (Loss) Before Income Taxes:
Unrealized Holding Gains (Losses) Arising During the Period Year Reclassification Adjustment	$	(324.9	)	$	157.9		$	232.1
Reclassification Adjustment for Amounts Included in Net Income	(37.9		)	(61.2		)	(30.9		)
Unrealized Holding Gains (Losses)	(362.8		)	96.7			201.2
Foreign Currency Translation Adjustments Arising During the Year Before Reclassification Adjustment	0.2			1.6			0.4
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Unrecognized Postretirement Benefit Costs Arising During the Year	61.6			(29.4		)	(53.9		)
Amortization of Unrecognized Postretirement Benefit Costs	25.0			16.2			8.7
Net Unrecognized Postretirement Benefit Costs	86.6			(13.2		)	(45.2		)
Other Comprehensive Income (Loss) Before Income Taxes	$	(276.0	)	$	85.1		$	156.4

The components of Other Comprehensive Income Tax Benefit (Expense) for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year Before Reclassification Adjustment	$	115.9		$	(55.9	)	$	(82.5	)
Reclassification Adjustment for Amounts Included in Net Income	13.2			21.5			10.9
Unrealized Holding Gains and Losses	129.1			(34.4		)	(71.6		)
Foreign Currency Translation Adjustments Arising During the Year Before Reclassification Adjustment	(0.1		)	(0.6		)	(0.1		)
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustment	(0.1		)	(0.6		)	(0.1		)
Unrecognized Postretirement Benefit Costs Arising During the Year	(21.6		)	10.3			19.0
Amortization of Unrecognized Postretirement Benefit Costs	(8.8		)	(5.7		)	(3.1		)
Net Unrecognized Postretirement Benefit Costs	(30.4		)	4.6			15.9
Other Comprehensive Income Tax Benefit (Expense)	$	98.6		$	(30.4	)	$	(55.8	)

Schedule of Accumulated Other Comprehensive Income (Loss)

The components of AOCI at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013			2012
Unrealized Gains on Investments, Net of Income Taxes:
Available for Sale Fixed Maturities with Portion of OTTI Recognized in Earnings	$	0.3		$	1.4
Other Net Unrealized Gains on Investments	175.5			408.1
Foreign Currency Translation Adjustments, Net of Income Taxes	0.8			0.7
Net Unrecognized Postretirement Benefit Costs, Net of Income Taxes	(41.3		)	(97.5		)
Accumulated Other Comprehensive Income	$	135.3		$	312.7

Reclassification out of Accumulated Other Comprehensive Income

DOLLARS IN MILLIONS	2013			2012			2011
Reclassification of AOCI from Unrealized Gains and Losses on Available For Sale Securities to:
Net Realized Gains on Sales of Investments	$	51.8		$	65.0		$	35.0
Net Impairment Losses Recognized in Earnings	(13.9		)	(3.8		)	(4.1		)
Total Before Income Taxes	37.9			61.2			30.9
Income Tax Expense	(13.2		)	(21.5		)	(10.9		)
Reclassification from AOCI, Net of Income Taxes	24.7			39.7			20.0
Reclassification of AOCI from Amortization of Unrecognized Postretirement Benefit Costs to:
Interest and Other Expenses	(25.0		)	(16.2		)	(8.7		)
Income Tax Benefit	8.8			5.7			3.1
Reclassification from AOCI, Net of Income Taxes	(16.2		)	(10.5		)	(5.6		)
Total Reclassification from AOCI to Net Income	$	8.5		$	29.2		$	14.4

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Schedule 1 - Investments Other Than Investments in Related Parties

12 Months Ended

Dec. 31, 2013

Summary of Investments, Other than Investments in Related Parties [Abstract]

Schedule of Investments Other than Investments in Related Parties

SCHEDULE I

KEMPER CORPORATION AND SUBSIDIARIES

INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES

DECEMBER 31, 2013

(Dollars in Millions)

	Amortized Cost		Fair Value		Amount Carried in Balance Sheet
Fixed Maturities:
Bonds and Notes:
United States Government and Government Agencies and Authorities	$	351.1	$	362.2	$	362.2
States and Political Subdivisions	1,327.4		1,361.0		1,361.0
Corporate Securities:
Other Bonds and Notes	2,685.4		2,844.4		2,844.4
Redeemable Preferred Stocks	6.6		7.4		7.4
Total Investments in Fixed Maturities	4,370.5		4,575.0		4,575.0
Equity Securities:
Preferred Stocks	105.5		110.2		110.2
Common Stocks	152.2		189.5		189.5
Other Equity Interests	272.3		298.8		298.8
Total Investments in Equity Securities	530.0		598.5		598.5
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	245.1		XXX.X		245.1
Loans, Real Estate and Other Investments	448.0		XXX.X		448.0
Short-term Investments	284.7		XXX.X		284.7
Total Investments	$	5,878.3			$	6,151.3

See Accompanying Report of Independent Registered Public Accounting Firm.

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Restructuring Expenses (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Restructuring Reserve [Roll Forward]
Restructuring Reserve at Beginning of Year	$ 4.9	$ 1.7	$ 0.7
Restructuring Reserve, Expenses Incurred	1.8	7.2	3.6
Restructuring Reserve, Paid	4.2	4.0	2.6
Restructuring Reserve at End of Year	2.5	4.9	1.7
Employee Termination Costs [Member]
Restructuring Reserve [Roll Forward]
Restructuring Reserve at Beginning of Year	2.6	0.7	0.6
Restructuring Reserve, Expenses Incurred	1.8	5.1	2.1
Restructuring Reserve, Paid	2.8	3.2	2.0
Restructuring Reserve at End of Year	1.6	2.6	0.7
Early Lease Termination Costs [Member]
Restructuring Reserve [Roll Forward]
Restructuring Reserve at Beginning of Year	2.3	1.0	0.1
Restructuring Reserve, Expenses Incurred	0	2.0	1.4
Restructuring Reserve, Paid	1.4	0.7	0.5
Restructuring Reserve at End of Year	0.9	2.3	1.0
Other Associated Costs [Member]
Restructuring Reserve [Roll Forward]
Restructuring Reserve at Beginning of Year	0	0	0
Restructuring Reserve, Expenses Incurred	0	0.1	0.1
Restructuring Reserve, Paid	0	0.1	0.1
Restructuring Reserve at End of Year	$ 0	$ 0	$ 0

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Business Segments - Amortization of Deferred Policy Acquistions Costs By Segment (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Amortization of Deferred Policy Acquisition Costs	$ 253.9	$ 257.0	$ 260.7
Operating Segments [Member]
Segment Reporting Information [Line Items]
Amortization of Deferred Policy Acquisition Costs	253.9	257.0	260.7
Kemper Preferred [Member]
Segment Reporting Information [Line Items]
Amortization of Deferred Policy Acquisition Costs	148.3	147.8	144.4
Kemper Specialty [Member]
Segment Reporting Information [Line Items]
Amortization of Deferred Policy Acquisition Costs	54.3	58.7	62.6
Kemper Direct [Member]
Segment Reporting Information [Line Items]
Amortization of Deferred Policy Acquisition Costs	4.6	6.1	8.8
Life and Health Insurance [Member]
Segment Reporting Information [Line Items]
Amortization of Deferred Policy Acquisition Costs	$ 46.7	$ 44.4	$ 44.9

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Fair Value Measurements - Valuation of Assets Measured at Fair Value (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities, Fair Value Disclosure	$ 5.0	$ 4.5
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities, Fair Value Disclosure	5.0	4.5
Investments, Fair Value Disclosure	417.9	405.9
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities, Fair Value Disclosure	0	0
Investments, Fair Value Disclosure	4,133.9	4,460.3
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities, Fair Value Disclosure	0	0
Investments, Fair Value Disclosure	626.7	520.4
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading Securities, Fair Value Disclosure	5.0	4.5
Investments, Fair Value Disclosure	5,178.5	5,386.6
US Government and Government Agencies and Authorities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	121.2	135.8
US Government and Government Agencies and Authorities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	241.0	293.1
US Government and Government Agencies and Authorities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
US Government and Government Agencies and Authorities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	362.2	428.9
States and Political Subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
States and Political Subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	1,361.0	1,401.4
States and Political Subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
States and Political Subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	1,361.0	1,401.4
Corporate Bonds and Notes [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Corporate Bonds and Notes [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	2,429.6	2,632.4
Corporate Bonds and Notes [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	364.1	361.0
Corporate Bonds and Notes [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	2,793.7	2,993.4
Redeemable Preferred Stocks [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Redeemable Preferred Stocks [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	27.9
Redeemable Preferred Stocks [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	7.4	4.7
Redeemable Preferred Stocks [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	7.4	32.6
Mortgage and Asset Backed [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Mortgage and Asset Backed [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	1.5	3.8
Mortgage and Asset Backed [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	49.2	0.1
Mortgage and Asset Backed [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	50.7	3.9
Investments in Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	121.2	135.8
Investments in Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	4,033.1	4,358.6
Investments in Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	420.7	365.8
Investments in Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	4,575.0	4,860.2
Preferred Stocks Finance, Insurance and Real Estate [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Preferred Stocks Finance, Insurance and Real Estate [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	80.8	79.2
Preferred Stocks Finance, Insurance and Real Estate [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	5.0	0
Preferred Stocks Finance, Insurance and Real Estate [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	85.8	79.2
Preferred Stocks Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Preferred Stocks Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	10.5	15.3
Preferred Stocks Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	13.9	6.0
Preferred Stocks Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	24.4	21.3
Common Stocks Manufacturing [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	95.1	79.6
Common Stocks Manufacturing [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	7.3	6.0
Common Stocks Manufacturing [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	2.2	1.9
Common Stocks Manufacturing [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	104.6	87.5
Common Stock Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	71.7	60.1
Common Stock Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	2.2	1.2
Common Stock Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	11.0	5.4
Common Stock Other Industries [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	84.9	66.7
Exchange Traded Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	124.9	125.9
Exchange Traded Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Exchange Traded Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Exchange Traded Funds [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	124.9	125.9
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	0	0
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	173.9	141.3
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	173.9	141.3
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	291.7	265.6
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	100.8	101.7
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	206.0	154.6
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	598.5	521.9
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments	$ 121.1

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Schedule 2 - Parent Company Financial Statements - Balance Sheets (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
ASSETS
Investments in Subsidiaries	$ 245,100,000	$ 253,000,000
Fixed Maturities at Fair Value (Cost: )	4,575,000,000	4,860,200,000
Equity Securities at Fair Value (Cost: 2013 – $4.7; 2012 – $4.9)	5,000,000	4,500,000
Short-term Investments	284,700,000	327,500,000
Cash	66,500,000	96,300,000	251,200,000	117,200,000
Other Receivables	193,100,000	206,100,000
Deferred Income Taxes	294,600,000	388,300,000
Other Assets	267,400,000	256,700,000
Total Assets	7,656,400,000	8,009,100,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes Payable	606,900,000	611,400,000
Liabilities for Income Taxes	8,300,000	21,500,000
Accrued Expenses and Other Liabilities	329,800,000	431,400,000
Total Liabilities	5,604,900,000	5,847,400,000
Shareholders’ Equity:
Additional Paid-in Capital	694,800,000	725,000,000
Retained Earnings	1,215,800,000	1,118,200,000
Accumulated Other Comprehensive Income	135,300,000	312,700,000
Total Shareholders’ Equity	2,051,500,000	2,161,700,000	2,116,600,000	2,023,100,000
Total Liabilities and Shareholders’ Equity	7,656,400,000	8,009,100,000
Parent Company [Member]
ASSETS
Investments in Subsidiaries	2,614,000,000	2,744,000,000
Equity Securities at Fair Value (Cost: 2013 – $4.7; 2012 – $4.9)	5,000,000	4,500,000
Short-term Investments	130,800,000	183,500,000
Cash	20,800,000	2,200,000	122,400,000	400,000
Other Receivables	4,900,000	7,200,000
Deferred Income Taxes	35,000,000	75,400,000
Other Assets	7,300,000	6,300,000
Total Assets	2,817,800,000	3,023,100,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities for Income Taxes	90,500,000	77,600,000
Liabilities for Benefit Plans	63,900,000	172,800,000
Accrued Expenses and Other Liabilities	5,000,000	5,100,000
Total Liabilities	766,300,000	861,400,000
Shareholders’ Equity:
Common Stock	5,600,000	5,800,000
Additional Paid-in Capital	694,800,000	725,000,000
Retained Earnings	1,215,800,000	1,118,200,000
Accumulated Other Comprehensive Income	135,300,000	312,700,000
Total Shareholders’ Equity	2,051,500,000	2,161,700,000
Total Liabilities and Shareholders’ Equity	2,817,800,000	3,023,100,000
Parent Company [Member] | Senior Notes, 6% Due May 15, 2017 [Member]
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes Payable	357,900,000	357,300,000
Parent Company [Member] | Senior Notes, 6% Due November 30, 2015 [Member]
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes Payable	$ 249,000,000	$ 248,600,000

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Shareholders' Equity (Details) (USD $)	0 Months Ended	12 Months Ended
	Aug. 04, 2004 years	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Schedule of Capitalization, Equity [Line Items]
Preferred Stock, Shares Authorized		20,000,000
Preferred Stock, Par or Stated Value Per Share		$ 0.1
Preferred Stock, Shares Issued		0	0
Common Stock, Shares Authorized		100,000,000	100,000,000
Common Stock, Par Value		$ 0.1	$ 0.1
Preferred Stock, Shares Outstanding		0	0
Common Stock, Shares Outstanding		55,653,437	58,454,390
Common Stock, Dividends, Per Share, Declared, Preferred Stock Purchase Right, Number	$ 1.0
Common Stock, Dividends, Per Share, Declared, Preferred Stock Purchase Right, Term	10
Stock Repurchased and Retired During Period, Shares		(3,000,000)	(2,000,000)	(900,000)
Repurchases of Common Stock		$ (100,400,000)	$ (60,700,000)	$ (27,400,000)
Company Action Level RBC, as Percentage of Authorized Control Level RBC		200.00%
Payments of Ordinary Dividends, Common Stock		54,900,000	56,900,000	58,200,000
Line of Credit Facility, Amount Available for Dividend Payment		407,000,000
Kemper's Insurance Subsidiaries [Member]
Schedule of Capitalization, Equity [Line Items]
Cash Dividends Paid by Kemper's Insurance Subsidiaries to Kemper		95,000,000
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments		217,000,000
Amount of Restricted Net Assets for Consolidated and Unconsolidated Subsidiaries		2,400,000,000
Life and Health [Member]
Schedule of Capitalization, Equity [Line Items]
Statutory Accounting Practices, Statutory Capital and Surplus, Balance		430,200,000	457,800,000
Statutory Accounting Practices, Statutory Net Income Amount		81,500,000	102,000,000	116,200,000
Statutory Accounting Practices, Statutory Capital and Surplus Required		123,700,000
Property and Casualty Insurance [Member]
Schedule of Capitalization, Equity [Line Items]
Statutory Accounting Practices, Statutory Capital and Surplus, Balance		989,700,000	844,800,000
Statutory Accounting Practices, Statutory Net Income Amount		138,800,000	40,600,000	30,600,000
Statutory Accounting Practices, Statutory Capital and Surplus Required		$ 286,400,000
Restricted Stock [Member]
Schedule of Capitalization, Equity [Line Items]
Common Stock, Shares Outstanding		278,427	313,424

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Income Taxes - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Paid	$ 42.4	$ 52.2	$ 57.1
Income Taxes Refunded, Net			4.1
Unrecognized Tax Benefits, Interest on Income Taxes Expense	(0.4)	0.4	0.4
Mutual Savings Life [Member]
Deferred Tax Liability Not Recognized, Cumulative Amount of Temporary Difference	14.7
Deferred Tax Liability Not Recognized, Amount of Unrecognized Deferred Tax Liability	5.1
Fireside [Member] | State and Local Jurisdiction [Member]
Valuation Allowance, Deferred Tax Asset, Change in Amount	$ (6.6)

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Summary Of Accounting Policies And Accounting Changes (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounting Policy Disclosures [Line Items]
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)	$ 1.4
Traditional Life, Interest Rate, Low End	3.00%
Traditional Life, Interest Rate, High End	7.00%
Impairment of P&C Customer Relationships Acquired	0	0	13.5
Life Insurance Product Line [Member]
Accounting Policy Disclosures [Line Items]
Present Value of Future Insurance Profits	41.2	46.4
Expected Amortization Expense of Ending Present Value of Future Insurance Profits, Year One	4.6
Expected Amortization Expense of Ending Present Value of Future Insurance Profits, Year Two	4.2
Expected Amortization Expense of Ending Present Value of Future Insurance Profits, Year Three	3.7
Expected Amortization Expense of Ending Present Value of Future Insurance Profits, Year Four	3.2
Expected Amortization Expense of Ending Present Value of Future Insurance Profits, Year Five	2.9
Property and Casualty Insurance [Member]
Accounting Policy Disclosures [Line Items]
Present Value of Future Insurance Profits	$ 15.8	$ 18.7

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Postretirement Benefits Other Than Pensions - Actuarial Assumptions of OPEB Accumulated Benefit Obligation (Details) (Other Postretirement Benefit Plan, Defined Benefit [Member])	Dec. 31, 2013	Dec. 31, 2012
Other Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	4.00%	3.15%
Rate of Increase in Future Compensation Levels	2.10%	2.10%

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Schedule 2 - Parent Company Financial Statements - Balance Sheets (Parenthetical) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Amortized Cost of Fixed Maturity Securities	$ 4,370.5	$ 4,283.8
Fair Value of Notes Payable	667.1	675.5
Senior Notes [Member] | Senior Notes Payable, 6.00% due 2017 [Member]
Senior Notes Payable, Interest Rate	6.00%
Senior Notes [Member] | Senior Notes Payable, 6.00% due 2015 [Member]
Senior Notes Payable, Interest Rate	6.00%
Parent Company [Member]
Amortized Cost of Fixed Maturity Securities	0	0
Trading Securities, Cost	4.7	4.9
Parent Company [Member] | Senior Notes [Member] | Senior Notes Payable, 6.00% due 2017 [Member]
Fair Value of Notes Payable	395.5	393.7
Senior Notes Payable, Interest Rate	6.00%	6.00%
Parent Company [Member] | Senior Notes [Member] | Senior Notes Payable, 6.00% due 2015 [Member]
Fair Value of Notes Payable	$ 271.6	$ 276.3
Senior Notes Payable, Interest Rate	6.00%	6.00%

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Long-term Equity-based Compensation - Option and SAR Activity (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Shares Subject to Options at Beginning of Year	3,192,054
Weighted Average Exercise Price Per Share at Beginning of Year	$ 40.53
Grants in Period	283,750
Grants in Period, Weighted Average Exercise Price	$ 33.20
Exercises in Period	(364,750)
Exercises in Period, Weighted Average Exercise Price	$ 25.32
Forfeitures and Expirations in Period	(567,381)
Forfeitures and Expirations in Period, Weighted Average Exercise Price	$ 42.83
Shares Subject to Options at End of Year	2,543,673	3,192,054
Weighted Average Exercise Price Per Share at End of Year	$ 41.38	$ 40.53
Outstanding at End of Year, Weighted Average Remaining Contractual Term	3 years 6 months 26 days
Outstanding at End of Year, Intrinsic Value	$ 9.3
Vested and Expected to Vest, Outstanding at End of Year	2,512,512
Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 41.51
Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	3 years 6 months 4 days
Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	9.0
Vested and Expected to Vest, Exercisable at End of Year	2,226,795
Vested and Expected to Vest, Exercisable at End of Year, Weighted Average Exercise Price	$ 42.81
Vested and Expected to Vest, Exercisable at End of Year, Weighted Average Remaining Contractual Term	2 years 10 months 13 days
Vested and Expected to Vest, Exercisable at End of Year, Aggregate Intrinsic Value	6.3
Option Grants in Period, Weighted Average Grant Date Fair Value	$ 10.20	$ 9.40	$ 9.11
Option Exercises in Period, Total Intrinsic Value	4.1	3.0	0.3
Proceeds from Stock Options Exercised	1.7	1.3	0.2
Tax Benefit from Stock Options Exercised	$ 1.4	$ 1.0	$ 0.1

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Income From Investments - Net Realized Gains on Sales of Investments (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net Investment Income [Line Items]
Realized Investment Gains									$ 99.5	$ 65.4	$ 48.3
Realized Investment Losses									(1.0)	(0.3)	(13.7)
Trading Securities Net Gains (Losses)									0.6	0.3	(0.9)
Net Realized Gains (Losses) on Sales of Investments	20.8	49.1	2.3	26.9	5.5	50.9	4.1	4.9	99.1	65.4	33.7
Fixed Maturities [Member]
Net Investment Income [Line Items]
Gains on Sales									30.9	56.9	14.2
Losses on Sales									(0.4)	(0.1)	(0.1)
Equity Securities [Member]
Net Investment Income [Line Items]
Gains on Sales									21.8	8.3	34.0
Losses on Sales									(0.5)	(0.2)	(13.5)
Investee [Member]
Net Investment Income [Line Items]
Equity Method Limited Liability Investment, Gains on Sales									2.5	0	0
Real Estate Investment [Member]
Net Investment Income [Line Items]
Real Estate, Gain on Sales									44.2	0.2	0.1
Other Investment [Member]
Net Investment Income [Line Items]
Realized Investment Gains									0.1	0	0
Realized Investment Losses									$ (0.1)	$ 0	$ (0.1)

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Income From Continuing Operations Per Unrestricted Share - Antidilutive Securities (Details) (Stock Options [Member]) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Options Excluded from Computation of Earnings Per Share, Amount	2.1	2.8	3.3

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Income From Investments - Net Impairment Losses Recognized in Earnings (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net Investment Income [Line Items]
Net Impairment Losses Recognized in Earnings	$ (7.6)	$ (3.4)	$ (1.0)	$ (1.9)	$ (2.8)	$ (3.2)	$ (0.4)	$ (0.5)	$ (13.9)	$ (6.9)	$ (11.3)
Fixed Maturities [Member]
Net Investment Income [Line Items]
Net Impairment Losses Recognized in Earnings									(10.3)	(1.9)	(2.2)
Equity Securities [Member]
Net Investment Income [Line Items]
Net Impairment Losses Recognized in Earnings									(3.6)	(1.9)	(1.9)
Real Estate [Member]
Net Investment Income [Line Items]
Net Impairment Losses Recognized in Earnings									$ 0	$ (3.1)	$ (7.2)

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Long-term Equity-based Compensation - Schedule of Outstanding Options (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding Shares Subject to Options	2,543,673	3,192,054
Outstanding Weighted Average Exercise Price	$ 41.38	$ 40.53
Outstanding Weighted Average Remaining Contractual Life	3 years 6 months 26 days
Range of Exercise Prices $10.00 - $15.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 10.00
Range of Exercise Prices, Upper Range Limit	$ 15.00
Outstanding Shares Subject to Options	16,750
Outstanding Weighted Average Exercise Price	$ 13.55
Outstanding Weighted Average Remaining Contractual Life	5 years 1 month 6 days
Exercisable Shares Subject to Options	16,750
Exercisable Weighted Average Exercise Price	$ 13.55
Range of Exercise Prices $15.01 - $20.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 15.01
Range of Exercise Prices, Upper Range Limit	$ 20.00
Outstanding Shares Subject to Options	8,000
Outstanding Weighted Average Exercise Price	$ 16.48
Outstanding Weighted Average Remaining Contractual Life	5 years 4 months 6 days
Exercisable Shares Subject to Options	8,000
Exercisable Weighted Average Exercise Price	$ 16.48
Range of Exercise Prices $20.01 - $25.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 20.01
Range of Exercise Prices, Upper Range Limit	$ 25.00
Outstanding Shares Subject to Options	38,250
Outstanding Weighted Average Exercise Price	$ 23.43
Outstanding Weighted Average Remaining Contractual Life	6 years 0 months 26 days
Exercisable Shares Subject to Options	38,250
Exercisable Weighted Average Exercise Price	$ 23.43
Range of Exercise Prices $25.01 - $30.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 25.01
Range of Exercise Prices, Upper Range Limit	$ 30.00
Outstanding Shares Subject to Options	404,000
Outstanding Weighted Average Exercise Price	$ 28.87
Outstanding Weighted Average Remaining Contractual Life	7 years 6 months 29 days
Exercisable Shares Subject to Options	250,812
Exercisable Weighted Average Exercise Price	$ 28.77
Range of Exercise Prices $30.01 - $35.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 30.01
Range of Exercise Prices, Upper Range Limit	$ 35.00
Outstanding Shares Subject to Options	255,375
Outstanding Weighted Average Exercise Price	$ 33.19
Outstanding Weighted Average Remaining Contractual Life	9 years 0 months 29 days
Exercisable Shares Subject to Options	91,685
Exercisable Weighted Average Exercise Price	$ 32.72
Range of Exercise Prices $35.01 - $40.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 35.01
Range of Exercise Prices, Upper Range Limit	$ 40.00
Outstanding Shares Subject to Options	314,500
Outstanding Weighted Average Exercise Price	$ 37.22
Outstanding Weighted Average Remaining Contractual Life	3 years 11 months 19 days
Exercisable Shares Subject to Options	314,500
Exercisable Weighted Average Exercise Price	$ 37.22
Range of Exercise Prices $40.01 - $45.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 40.01
Range of Exercise Prices, Upper Range Limit	$ 45.00
Outstanding Shares Subject to Options	311,868
Outstanding Weighted Average Exercise Price	$ 43.57
Outstanding Weighted Average Remaining Contractual Life	0 years 8 months 16 days
Exercisable Shares Subject to Options	311,868
Exercisable Weighted Average Exercise Price	$ 43.57
Range of Exercise Prices $45.01 - $50.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 45.01
Range of Exercise Prices, Upper Range Limit	$ 50.00
Outstanding Shares Subject to Options	958,222
Outstanding Weighted Average Exercise Price	$ 48.64
Outstanding Weighted Average Remaining Contractual Life	1 year 10 months 6 days
Exercisable Shares Subject to Options	958,222
Exercisable Weighted Average Exercise Price	$ 48.64
Range of Exercise Prices $50.01 - $55.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 50.01
Range of Exercise Prices, Upper Range Limit	$ 55.00
Outstanding Shares Subject to Options	236,708
Outstanding Weighted Average Exercise Price	$ 50.51
Outstanding Weighted Average Remaining Contractual Life	0 years 4 months 10 days
Exercisable Shares Subject to Options	236,708
Exercisable Weighted Average Exercise Price	$ 50.51
Range of Exercise Prices $10.00 - $55.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Lower Range Limit	$ 10.00
Range of Exercise Prices, Upper Range Limit	$ 55.00
Outstanding Shares Subject to Options	2,543,673
Outstanding Weighted Average Exercise Price	$ 41.38
Outstanding Weighted Average Remaining Contractual Life	3 years 6 months 26 days
Exercisable Shares Subject to Options	2,226,795
Exercisable Weighted Average Exercise Price	$ 42.81

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Notes Payable (Details) (USD $)		12 Months Ended			12 Months Ended			12 Months Ended		0 Months Ended
	Dec. 31, 2013	Dec. 31, 2012 Notes Payable under Revolving Credit Agreement 2016 Credit Agreement [Member]	Dec. 31, 2013 Notes Payable under Revolving Credit Agreement 2016 Credit Agreement [Member]	Mar. 07, 2012 Notes Payable under Revolving Credit Agreement 2016 Credit Agreement [Member]	Dec. 31, 2011 Notes Payable under Revolving Credit Agreement Former Credit Agreement [Member]	Dec. 31, 2013 Notes Payable under Revolving Credit Agreement Former Credit Agreement [Member]	Mar. 07, 2012 Notes Payable under Revolving Credit Agreement Former Credit Agreement [Member]	Dec. 31, 2007 Senior Notes [Member] Senior Notes, 6% Due May 15, 2017 [Member]	Dec. 31, 2013 Senior Notes [Member] Senior Notes, 6% Due May 15, 2017 [Member]	Nov. 24, 2010 Senior Notes [Member] Senior Notes, 6% Due November 30, 2015 [Member]	Dec. 31, 2013 Senior Notes [Member] Senior Notes, 6% Due November 30, 2015 [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Length of Agreement		4 years
Line of Credit Facility, Maximum Borrowing Capacity			$ 225,000,000	$ 325,000,000		$ 245,000,000.0
Increase in Maximum Indebtedness Related to Advances from FHLB and Issuance of Surplus Notes	150,000,000
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	250,000,000
Maximum Indebtedness, Issuance of Surplus Notes	100,000,000
Line of Credit Facility, Reduction of Borrowing Capacity			100,000,000
Line of Credit Facility, Amount Outstanding			0		0		0
Line of Credit Facility, Remaining Borrowing Capacity			225,000,000
Revolving Credit Agreement					95,000,000
Debt Instrument, Interest Rate, Stated Percentage									6.00%		6.00%
Debt Instrument, Face Amount								360,000,000		250,000,000
Proceeds from Debt, Net of Issuance Costs								$ 354,800,000		$ 247,800,000
Debt Instrument, Interest Rate, Effective Percentage								6.19%		6.21%

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Business Segments

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Business Segments

NOTE 18. 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 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.

It is 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 $39.7 million, $31.7 million and $33.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. The Company does not allocate Net Realized Gains on Sales of Investments, Net Impairment Losses Recognized in Earnings, interest expense on debt or postretirement benefit plans, and actuarial gains and losses on its postretirement benefit plans to its operating segments.

Segment Assets at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
SEGMENT ASSETS
Kemper Preferred	$	1,600.9	$	1,562.0
Kemper Specialty	655.4		684.6
Kemper Direct	392.3		453.3
Life and Health Insurance	4,545.6		4,781.8
Corporate and Other, Net	462.2		527.4
Total Assets	$	7,656.4	$	8,009.1

NOTE 18. BUSINESS SEGMENTS (Continued)

Segment Revenues for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
REVENUES
Kemper Preferred:
Earned Premiums	$	876.7		$	879.4		$	859.8
Net Investment Income	55.7			45.0			48.8
Other Income	0.2			0.4			0.3
Total Kemper Preferred	932.6			924.8			908.9
Kemper Specialty:
Earned Premiums	392.8			419.8			445.2
Net Investment Income	21.8			19.0			22.8
Other Income	0.3			0.3			0.5
Total Kemper Specialty	414.9			439.1			468.5
Kemper Direct:
Earned Premiums	123.4			168.0			222.7
Net Investment Income	13.4			13.9			17.4
Other Income	—			—			0.1
Total Kemper Direct	136.8			181.9			240.2
Life and Health Insurance:
Earned Premiums	632.9			639.9			645.9
Net Investment Income	209.9			204.3			200.5
Other Income	0.2			0.1			0.1
Total Life and Health Insurance	843.0			844.3			846.5
Total Segment Revenues	2,327.3			2,390.1			2,464.1
Net Realized Gains on the Sales of Investments	99.1			65.4			33.7
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)
Other	14.0			13.7			8.5
Total Revenues	$	2,426.5		$	2,462.3		$	2,495.0

NOTE 18. BUSINESS SEGMENTS (Continued)

Segment Operating Profit for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
SEGMENT OPERATING PROFIT (LOSS)
Kemper Preferred	$	87.7		$	(28.0	)	$	(40.6	)
Kemper Specialty	12.3			(2.8		)	24.2
Kemper Direct	39.6			(4.8		)	(47.2		)
Life and Health Insurance	136.9			140.4			152.3
Total Segment Operating Profit	276.5			104.8			88.7
Corporate and Other Operating Loss	(47.3		)	(40.9		)	(42.8		)
Total Operating Profit	229.2			63.9			45.9
Net Realized Gains on Sales of Investments	99.1			65.4			33.7
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)
Income from Continuing Operations before Income Taxes	$	314.4		$	122.4		$	68.3

Segment Net Operating Income for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
SEGMENT NET OPERATING INCOME (LOSS)
Kemper Preferred	$	63.1		$	(11.2	)	$	(17.6	)
Kemper Specialty	10.4			1.2			19.8
Kemper Direct	27.1			(0.9		)	(27.5		)
Life and Health Insurance	89.3			90.8			98.9
Total Segment Net Operating Income	189.9			79.9			73.6
Unallocated Net Operating Loss	(30.7		)	(26.1		)	(26.5		)
Consolidated Net Operating Income	159.2			53.8			47.1
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	64.4			42.5			21.9
Net Impairment Losses Recognized in Earnings	(9.1		)	(4.5		)	(7.3		)
Income from Continuing Operations	$	214.5		$	91.8		$	61.7

Amortization of Deferred Policy Acquisition Costs by Operating Segment for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	148.3	$	147.8	$	144.4
Kemper Specialty	54.3		58.7		62.6
Kemper Direct	4.6		6.1		8.8
Life and Health Insurance	46.7		44.4		44.9
Total Amortization	$	253.9	$	257.0	$	260.7

NOTE 18. BUSINESS SEGMENTS (Continued)

Earned Premiums by product line for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013		2012		2011
EARNED PREMIUMS
Life	$	392.7	$	393.4	$	395.1
Accident and Health	161.4		165.2		166.3
Property and Casualty:
Personal Lines:
Automobile	959.1		1,050.1		1,129.4
Homeowners	326.2		318.0		304.1
Other Personal	134.1		136.9		138.7
Total Personal Lines	1,419.4		1,505.0		1,572.2
Commercial Automobile	52.3		43.5		40.0
Total Earned Premiums	$	2,025.8	$	2,107.1	$	2,173.6

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Pension Benefits (Tables) (Pension Plans, Defined Benefit [Member])

12 Months Ended

Dec. 31, 2013

Defined Benefit Plan Disclosure [Line Items]

Schedule of Changes in Fair Value of Plan Assets

Changes in Fair Value of Plan Assets and Changes in Projected Benefit Obligation for the years ended December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS
	2013			2012
Fair Value of Plan Assets at Beginning of Year	$	457.6		$	441.3
Actual Return on Plan Assets	34.5			38.0
Employer Contributions	55.0			—
Benefits Paid	(22.6		)	(21.5		)
Settlement Benefits	—			(0.2		)
Fair Value of Plan Assets at End of Year	524.5			457.6
Projected Benefit Obligation at Beginning of Year	553.9			499.2
Service Cost	10.8			10.8
Interest Cost	22.4			22.4
Benefits Paid	(22.6		)	(21.5		)
Settlement Benefits	—			(0.2		)
Actuarial Losses (Gains)	(49.0		)	43.2
Projected Benefit Obligation at End of Year	515.5			553.9
Funded Status—Plan Assets in Excess (Deficit) of Projected Benefit Obligation	$	9.0		$	(96.3	)
Amount Recognized in Accumulated Other Comprehensive Income:
Accumulated Actuarial Loss	$	(86.3	)	$	(166.4	)
Prior Service Cost	—			0.1
Amount Recognized in Accumulated Other Comprehensive Income	$	(86.3	)	$	(166.3	)
Accumulated Benefit Obligation	$	496.2		$	531.3

Schedule of Assumptions Used

The weighted-average discount rate and rate of increase in future compensation levels used to estimate the components of the Projected Benefit Obligation at December 31, 2013 and 2012 were:

	2013		2012
Discount Rate	4.90	%	4.05	%
Rate of Increase in Future Compensation Levels	3.05		3.08

used to develop the components of the Pension Expense for the years ended December 31, 2013, 2012 and 2011 were:

	2013		2012		2011
Discount Rate	4.05	%	4.60	%	5.35	%
Rate of Increase in Future Compensation Levels	3.08		3.27		2.47
Expected Long Term Rate of Return on Plan Assets	7.00		7.00		7.00

Schedule of Allocation of Plan Assets

Weighted-average asset allocations at December 31, 2013 and 2012 by asset category were:

ASSET CATEGORY	2013		2012
Cash and Short-term Investments	8	%	12	%
Corporate Bonds and Notes	27		33
Common and Preferred Stocks	34		31
Exchange Traded Funds	22		17
Other Assets	9		7
Total	100	%	100	%

Fair Value, Measurement Inputs, Disclosure

Fair value measurements for the Pension Plan’s assets at December 31, 2013 are summarized below:

DOLLARS IN MILLIONS	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	12.1	$	—	$	—	$	12.1
States and Political Subdivisions	—		3.1		—		3.1
Corporate Bonds and Notes	—		127.0		—		127.0
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		4.0		—		4.0
Common Stocks:
Manufacturing	97.5		7.8		—		105.3
Other Industries	67.2		1.8		—		69.0
Other Equity Interests:
Exchange Traded Funds	111.7		—		—		111.7
Limited Liability Companies and Limited Partnerships	—		—		46.9		46.9
Short-term Investments	42.6		—		—		42.6
Receivables and Other	2.3		—		0.5		2.8
Total	$	333.4	$	143.7	$	47.4	$	524.5

Fair value measurements for the Pension Plan’s assets at December 31, 2012 are summarized below:

DOLLARS IN MILLIONS	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	6.1	$	—	$	—	$	6.1
States and Political Subdivisions	—		3.3		—		3.3
Corporate Bonds and Notes	—		142.7		—		142.7
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		3.4		—		3.4
Common Stocks:
Manufacturing	82.2		5.6		—		87.8
Other Industries	48.2		0.7		—		48.9
Other Equity Interests:
Exchange Traded Funds	79.6		—		—		79.6
Limited Liability Companies and Limited Partnerships	—		—		26.9		26.9
Short-term Investments	55.8		—		—		55.8
Receivables and Other	2.5		—		0.6		3.1
Total	$	274.4	$	155.7	$	27.5	$	457.6

Schedule of Expected Benefit Payments

The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are expected to be paid:

DOLLARS IN MILLIONS	Years Ending December 31,
	2014		2015		2016		2017		2018		2019-2023
Pension Benefits	$	24.4	$	25.4	$	26.7	$	27.9	$	29.1	$	163.4

Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss)

The components of Comprehensive Pension (Income) Expense for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Service Cost Earned During the Year	$	10.8		$	10.8		$	10.2
Interest Cost on Projected Benefit Obligation	22.4			22.4			22.9
Expected Return on Plan Assets	(29.7		)	(29.8		)	(24.4		)
Amortization of Actuarial Loss	26.2			18.8			9.4
Settlements	—			0.3			—
Pension Expense Recognized in Consolidated Statements of Income	29.7			22.5			18.1
Unrecognized Pension (Gain) Loss Arising During the Year	(53.8		)	34.8			52.4
Amortization of Accumulated Unrecognized Pension Loss	(26.2		)	(18.8		)	(9.4		)
Comprehensive Pension (Income) Expense	$	(50.3	)	$	38.5		$	61.1

Fair Value, Inputs, Level 3 [Member]

Defined Benefit Plan Disclosure [Line Items]

Schedule of Changes in Fair Value of Plan Assets

Additional information pertaining to the changes in the fair value of the Pension Plan’s assets classified as Level 3 for the year ended December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Other Equity Interests		Receivables and Other			Total
Balance at Beginning of Year	$	26.9	$	0.6		$	27.5
Return on Plan Assets Held	3.5		—			3.5
Purchases, Sales and Settlements, Net	16.5		(0.1		)	16.4
Balance at December 31, 2013	$	46.9	$	0.5		$	47.4

Additional information pertaining to the changes in the fair value of the Pension Plan’s assets classified as Level 3 for the year ended December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Corporate Bonds			Other Equity Interests			Receivables and Other			Total
Balance at Beginning of Year	$	1.0		$	37.2		$	3.2		$	41.4
Return on Plan Assets Held	—			1.7			0.1			1.8
Purchases, Sales and Settlements, Net	—			(12.0		)	(2.7		)	(14.7		)
Transfers out of Level 3	(1.0		)	—			—			(1.0		)
Balance at December 31, 2012	$	—		$	26.9		$	0.6		$	27.5

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Leases (Tables)

12 Months Ended

Dec. 31, 2013

Leases [Abstract]

Schedule of Rent Expense

Net rental expense for operating leases for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Minimum Rental Expense	$	28.3		$	33.2		$	31.5
Less Sublease Rental Income	(1.8		)	(2.5		)	(2.1		)
Net Rental Expense	$	26.5		$	30.7		$	29.4

Schedule of Future Minimum Lease Payments for Capital and Operating Leases

Future minimum lease payments under capital and operating leases at December 31, 2013 were:

DOLLARS IN MILLIONS	Capital Leases			Operating Leases
2014	$	4.7		$	25.1
2015	2.2			18.7
2016	2.1			16.7
2017	1.5			15.1
2018	0.1			8.9
2019 and Thereafter	—			15.3
Total Future Payments	$	10.6		$	99.8
Less Imputed Interest	(1.1		)
Present Value of Minimum Capital Lease Payments	$	9.5

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Long-term Equity-based Compensation - Black-Scholes Pricing Model For Options (Details) (Stock Options [Member])	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility Rate, Minimum	39.10%	29.36%	41.26%
Expected Volatility Rate, Maximum	48.23%	53.84%	55.16%
Risk Free Interest Rate, Minimum	0.62%	0.16%	1.30%
Risk Free Interest Rate, Maximum	1.38%	1.26%	2.87%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Dividend Yield Rate	2.83%	2.92%	3.15%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Dividend Yield Rate	3.00%	3.26%	3.38%
Employee [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term	4 years	1 year	3 years 6 months
Employee [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term	7 years	7 years	7 years
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term	6 years	6 years	6 years

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Income Taxes - Comprehensive Income Tax Benefit and Expense (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Benefit (Expense) [Abstract]
Income Tax Expense	$ (26.6)	$ (33.4)	$ (13.9)	$ (26.0)	$ 4.3	$ (25.9)	$ 5.1	$ (14.1)	$ (99.9)	$ (30.6)	$ (6.6)
Income Tax Expense - Discontinued Operations									(1.7)	(7.3)	(6.7)
Unrealized Appreciation on Securities									129.1	(34.4)	(71.6)
Foreign Currency Translation Adjustments on Investments									(0.1)	(0.6)	(0.1)
Tax Effects from Postretirement Benefit Plans									(30.4)	4.6	15.9
Tax Effects from Long-Term Equity-based Compensation included in Pain-in Capital									0.2	(0.1)	(1.0)
Comprehensive Income Tax Expense									$ 2.8	$ 68.4	$ 70.1

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Summary Of Accounting Policies And Accounting Changes (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Investments

Investments

Investments in Fixed Maturities include bonds, notes and redeemable preferred stocks. Investments in Fixed Maturities are classified as available for sale and reported at fair value. Net Investment Income, including amortization of purchased premiums and accretion of market discounts, on Investments in Fixed Maturities is recognized as interest earned using the effective yield method.

Investments in Equity Securities include common and non-redeemable preferred stocks and other equity interests and are reported at fair value. Investments in common and non-redeemable preferred stocks with readily determinable fair values are classified as available for sale. Dividend income on investments in common and non-redeemable preferred stocks is recognized on the ex-dividend date. Other equity interests primarily consist of exchange traded funds and interests in limited liability companies and limited partnerships in which the Company’s interests are deemed minor. The Company’s share of distributed earnings from other equity interests is recognized as dividend income when received.

Unrealized appreciation or depreciation, net of applicable deferred income taxes, on fixed maturities and equity securities is reported in AOCI included in Shareholders’ Equity.

Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting.

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Short-term Investments include fixed maturities that mature within one year from the date of purchase, U.S. Treasury bills, money market mutual funds and repurchase agreements. Short-term Investments are reported at cost, which approximates fair value.

Other Investments primarily include loans to policyholders and real estate. Loans to policyholders are carried at unpaid principal balance. Real estate is carried at cost, net of accumulated depreciation. Real estate is depreciated over the estimated useful life of the asset using the straight-line method of depreciation. Real estate is evaluated for impairment when events or circumstances indicate the carrying value may not be recoverable. An impairment on real estate is recognized when the carrying value exceeds the sum of undiscounted projected future cash flows.

Gains and losses on sales of investments are computed on the specific identification method and are reported in the Consolidated Statements of Income in the period in which the sales occur. The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. Losses are computed on the specific identification method and reported in the Consolidated Statements of Income in the period that the decline is determined to be other than temporary. The portion of an impairment of an investment in a fixed maturity attributed to a credit loss is reported in Net Impairment Losses Recognized in Earnings in the Consolidated Statement of Income, with the portion of the impairment that is not attributed to a credit loss reported in AOCI.

Fair Value Measurements

Fair Value Measurements

The Company uses a hierarchal framework which prioritizes and ranks the market observability of inputs used in fair value measurements. Market price observability is affected by a number of factors, including the type of asset or liability and the characteristics specific to the asset or liability being measured. Assets and liabilities with readily available, active, quoted market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The Company classifies the inputs used to measure fair value into one of three levels as follows:

• Level 1 — Quoted prices in an active market for identical assets or liabilities;

• Level 2 — Observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

• Level 3 — Unobservable inputs for the asset or liability being measured.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant to the entire measurement. Such determination requires significant management judgment. In accordance with GAAP, the Company is not permitted to adjust quoted market prices in an active market.

Deferred Policy Acquisition Costs

Deferred Policy Acquisition Costs

Costs directly associated with the successful acquisition of business, principally commissions and certain premium taxes and policy issuance costs, are deferred. Costs deferred on property and casualty insurance contracts and short duration health insurance contracts are amortized over the period in which premiums are earned. Costs deferred on traditional life insurance products and other long-duration insurance contracts are primarily amortized over the anticipated premium-paying period of the related policies in proportion to the ratio of the annual premiums to the total premiums anticipated, which is estimated using the same assumptions used in calculating policy reserves.

Goodwill

Goodwill

The cost of an acquired entity over the fair value of net assets acquired is reported as Goodwill. Goodwill is not amortized, but rather is tested annually for recoverability or when certain triggering events require testing.

Insurance Reserves

Insurance Reserves

Reserves for losses and LAE on property and casualty insurance coverage and health insurance coverage represent the estimated claim cost and loss adjustment expense necessary to cover the ultimate net cost of investigating and settling all losses incurred and unpaid. Such estimates are based on individual case estimates for reported claims and estimates for incurred but not reported losses. These estimates are adjusted in the aggregate for ultimate loss expectations based on historical experience patterns and current economic trends, with any change in the estimated ultimate liabilities being reported in the Consolidated Statements of Income in the period of change. Changes in such estimates may be material.

For traditional life insurance products, the reserves for future policy benefits are estimated on the net level premium method based on rates for expected mortality, lapse rates and interest rates, including provisions for adverse mortality. These assumptions vary by such characteristics as plan, age at issue and policy duration. Mortality assumptions are based on the Company’s historical experience and industry standards. Interest rate assumptions principally range from 3% to 7%. Lapse rate assumptions are based on actual and industry experience.

Other Receivables

Other Receivables

Other Receivables primarily include reinsurance recoverables and accrued investment income.

Other Assets

Other Assets

Other Assets primarily include property and equipment, internal use software, insurance licenses acquired in business combinations, the value of other intangible assets acquired and prepaid expenses. Property and equipment is depreciated over the useful lives of the assets, generally using the straight-line or double declining balance methods of depreciation depending on the asset involved. Internal use software is primarily amortized over the useful life of the asset using the straight-line method of amortization. Insurance licenses acquired in business combinations and other indefinite life intangibles are not amortized, but rather tested periodically for recoverability. Insurance Expenses for the year endedDecember 31, 2013 includes a charge of $1.4 million to write down the value of insurance licenses acquired for one of Kemper’s insurance subsidiaries to its estimated fair value.

The Company accounts for the present value of the future profits embedded in life insurance in force acquired (“Life VIF”) based on actuarial estimates of the present value of estimated net cash flows. Life VIF was $41.2 million and $46.4 million at December 31, 2013 and 2012, respectively. Life VIF is amortized using the effective interest method using interest rates consistent with the rates in the underlying insurance contracts. The Company estimates that it will record Life VIF amortization, net of interest, of $4.6 million in 2014, $4.2 million in 2015, $3.7 million in 2016, $3.2 million in 2017 and $2.9 million in 2018. The Company evaluates the Life VIF for recoverability annually.

The Company accounts for the present value of the future profits embedded in Property and Casualty Insurance Customer Relationships Acquired (“P&C Customer Relationships”) based on the present value of estimated future cash flows from the customer relationships acquired. P&C Customer Relationships was $15.8 million and $18.7 million at December 31, 2013 and 2012, respectively. P&C Customer Relationships is amortized using the effective interest method. P&C Customer Relationships is tested for recoverability using undiscounted projections of future cash flows and written down to estimated fair value if the carrying value exceeds the sum of such projections of undiscounted cash flows. The Company recorded a loss of $13.5 million before tax for the year ended December 31, 2011 to write down the carrying value of P&C Customer Relationships related to the acquisition of Direct Response to its estimated fair value.

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities primarily include accrued salaries and commissions, pension benefits, postretirement medical benefits and accrued taxes, licenses and fees.

Recognition of Earned Premiums and Related Expenses

Recognition of Earned Premiums and Related Expenses

Property and casualty insurance and short duration health insurance premiums are deferred when written and recognized and earned ratably over the periods to which the premiums relate. Unearned Premiums represent the portion of the premiums written related to the unexpired portion of policies in force which has been deferred and is reported as a liability. A premium deficiency reserve is established if the sum of expected claim costs, claim adjustment expenses, unamortized deferred policy acquisition costs and

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

maintenance costs exceeds the related unearned premiums. For each business segment, the analysis is performed at a product line level, namely automobile insurance, homeowners insurance and other insurance, which is consistent with the manner in which the Company acquires, services and measures profitability. Anticipated investment income is excluded from such analysis.

Traditional life insurance premiums are recognized as revenue when due. Policyholders’ benefits are associated with related premiums to result in recognition of profits over the periods for which the benefits are provided using the net level premium method.

Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses include provisions for future policy benefits under life and certain accident and health insurance contracts and provisions for reported claims, estimates for claims incurred but not reported and loss adjustment expenses. Benefit payments in excess of policy account balances are expensed.

Reinsurance

Reinsurance

In the normal course of business, Kemper’s insurance subsidiaries reinsure certain risks above certain retention levels with other insurance enterprises. These reinsurance agreements do not relieve Kemper’s insurance subsidiaries of their legal obligations to the policyholder. Amounts recoverable from reinsurers are included in Other Receivables.

Gains related to long-duration reinsurance contracts are deferred and amortized over the life of the underlying reinsured policies. Losses related to long-duration reinsurance contracts are recognized immediately. Any gain or loss associated with reinsurance agreements for which Kemper’s insurance subsidiaries have been legally relieved of their obligations to the policyholder is recognized in the period of relief.

Income Tax

Income Taxes

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is maintained for the portion of deferred income tax assets that the Company does not expect to recover. Increases in the valuation allowance for deferred income tax assets are recognized as

income tax expense. Decreases in the valuation allowance for deferred income tax assets are recognized as income tax benefit. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period in which the change is enacted.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

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Business Segments (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Assets

Segment Assets at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
SEGMENT ASSETS
Kemper Preferred	$	1,600.9	$	1,562.0
Kemper Specialty	655.4		684.6
Kemper Direct	392.3		453.3
Life and Health Insurance	4,545.6		4,781.8
Corporate and Other, Net	462.2		527.4
Total Assets	$	7,656.4	$	8,009.1

Segment Revenues

Segment Revenues for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
REVENUES
Kemper Preferred:
Earned Premiums	$	876.7		$	879.4		$	859.8
Net Investment Income	55.7			45.0			48.8
Other Income	0.2			0.4			0.3
Total Kemper Preferred	932.6			924.8			908.9
Kemper Specialty:
Earned Premiums	392.8			419.8			445.2
Net Investment Income	21.8			19.0			22.8
Other Income	0.3			0.3			0.5
Total Kemper Specialty	414.9			439.1			468.5
Kemper Direct:
Earned Premiums	123.4			168.0			222.7
Net Investment Income	13.4			13.9			17.4
Other Income	—			—			0.1
Total Kemper Direct	136.8			181.9			240.2
Life and Health Insurance:
Earned Premiums	632.9			639.9			645.9
Net Investment Income	209.9			204.3			200.5
Other Income	0.2			0.1			0.1
Total Life and Health Insurance	843.0			844.3			846.5
Total Segment Revenues	2,327.3			2,390.1			2,464.1
Net Realized Gains on the Sales of Investments	99.1			65.4			33.7
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)
Other	14.0			13.7			8.5
Total Revenues	$	2,426.5		$	2,462.3		$	2,495.0

Segment Operating Profit

Segment Operating Profit for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
SEGMENT OPERATING PROFIT (LOSS)
Kemper Preferred	$	87.7		$	(28.0	)	$	(40.6	)
Kemper Specialty	12.3			(2.8		)	24.2
Kemper Direct	39.6			(4.8		)	(47.2		)
Life and Health Insurance	136.9			140.4			152.3
Total Segment Operating Profit	276.5			104.8			88.7
Corporate and Other Operating Loss	(47.3		)	(40.9		)	(42.8		)
Total Operating Profit	229.2			63.9			45.9
Net Realized Gains on Sales of Investments	99.1			65.4			33.7
Net Impairment Losses Recognized in Earnings	(13.9		)	(6.9		)	(11.3		)
Income from Continuing Operations before Income Taxes	$	314.4		$	122.4		$	68.3

Segment Net Income (Loss)

Segment Net Operating Income for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
SEGMENT NET OPERATING INCOME (LOSS)
Kemper Preferred	$	63.1		$	(11.2	)	$	(17.6	)
Kemper Specialty	10.4			1.2			19.8
Kemper Direct	27.1			(0.9		)	(27.5		)
Life and Health Insurance	89.3			90.8			98.9
Total Segment Net Operating Income	189.9			79.9			73.6
Unallocated Net Operating Loss	(30.7		)	(26.1		)	(26.5		)
Consolidated Net Operating Income	159.2			53.8			47.1
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	64.4			42.5			21.9
Net Impairment Losses Recognized in Earnings	(9.1		)	(4.5		)	(7.3		)
Income from Continuing Operations	$	214.5		$	91.8		$	61.7

Segment Amortization of Deferred Policy Acquisition Costs

Amortization of Deferred Policy Acquisition Costs by Operating Segment for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	148.3	$	147.8	$	144.4
Kemper Specialty	54.3		58.7		62.6
Kemper Direct	4.6		6.1		8.8
Life and Health Insurance	46.7		44.4		44.9
Total Amortization	$	253.9	$	257.0	$	260.7

Earned Premiums by Product Line

Earned Premiums by product line for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013		2012		2011
EARNED PREMIUMS
Life	$	392.7	$	393.4	$	395.1
Accident and Health	161.4		165.2		166.3
Property and Casualty:
Personal Lines:
Automobile	959.1		1,050.1		1,129.4
Homeowners	326.2		318.0		304.1
Other Personal	134.1		136.9		138.7
Total Personal Lines	1,419.4		1,505.0		1,572.2
Commercial Automobile	52.3		43.5		40.0
Total Earned Premiums	$	2,025.8	$	2,107.1	$	2,173.6

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Property and Casualty Insurance Reserves (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Beginning Property and Casualty Insurance Reserves: [Abstract]
Property and Casualty Insurance Reserves, Gross of Reinsurance at Beginning of Year	$ 970.6	$ 1,029.1	$ 1,118.7
Less Reinsurance Recoverables and Indemnification at Beginning of Year	66.2	74.5	78.1
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at Beginning of Year	904.4	954.6	1,040.6
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(64.6)	(31.5)	(33.1)
Total Incurred Losses and LAE	991.9	1,221.6	1,305.4
Paid Losses and LAE related to:
Prior Years - Paid Losses and LAE	434.0	470.4	503.7
Total Paid Losses and LAE	1,116.2	1,271.8	1,391.4
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at End of Year	780.1	904.4	954.6
Plus Reinsurance and Indemnifcation Recoverables at End of Year	63.4	66.2	74.5
Property and Casualty Insurance Reserves, Gross of Reinsurance at End of Year	843.5	970.6	1,029.1
Personal Lines [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(56.8)	(12.6)	(29.3)
Commercial Lines [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(7.8)	(18.9)	(3.8)
Segment, Continuing Operations [Member]
Incurred Losses and LAE related to:
Current Year - Incurred Losses and LAE	1,056.5	1,253.1	1,338.5
Prior Years - Incurred Losses and LAE	(59.8)	(25.2)	(35.0)
Paid Losses and LAE related to:
Current Year - Paid Losses and LAE	682.2	801.4	887.7
Prior Years - Paid Losses and LAE	421.7	451.2	472.9
Segment, Continuing Operations [Member] | Commercial Lines [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(3.0)	(12.6)
Segment, Discontinued Operations [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(4.8)	(6.3)	1.9
Paid Losses and LAE related to:
Prior Years - Paid Losses and LAE	12.3	19.2	30.8
Segment, Discontinued Operations [Member] | Commercial Lines [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(4.8)	(6.3)
Personal Automobile [Member] | Personal Lines [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(30.1)	2.2
Homeowners [Member] | Personal Lines [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	(20.1)	(11.7)
Other Personal Lines [Member] | Personal Lines [Member]
Incurred Losses and LAE related to:
Prior Years - Incurred Losses and LAE	$ (6.6)	$ (3.1)

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Postretirement Benefits Other Than Pensions - Actuarial Assumptions of OPEB Expense (Details) (Other Postretirement Benefit Plan, Defined Benefit [Member])	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Other Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	3.15%	4.25%	4.40%
Rate of Increase in Future Compensation Levels	2.10%	2.10%	1.50%

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Investments - Aging of Unrealized Losses on Investments in Fixed Maturities and Equity Securities (Details) (USD $)	12 Months Ended
	Dec. 31, 2012 issuer	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Other Receivables	$ 206,100,000	$ 193,100,000
Less than Twelve Months, Fair Value	343,900,000	1,199,100,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(7,600,000)	(76,000,000)
Twelve Months or Longer, Fair Value	54,600,000	119,600,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(3,800,000)	(9,900,000)
Available-for-sale-Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Securities that have had Recognized Credit Losses in Earnings, Aggregate Losses	(300,000)	0
Available For Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Securities that have had Recognized Credit Losses in Earnings, Aggregate Losses	0	(300,000)
Fair Value	398,500,000	1,318,700,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(11,400,000)	(85,900,000)
Available For Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Related to Securities that have Previously Recognized Foregin Currency Impairment	100,000
US Government and Government Agencies and Authorities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	40,800,000	95,800,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(200,000)	(10,900,000)
Twelve Months or Longer, Fair Value	0	4,400,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	0	(800,000)
Fair Value	40,800,000	100,200,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(200,000)	(11,700,000)
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	6,300,000	222,900,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(100,000)	(20,100,000)
Twelve Months or Longer, Fair Value	300,000	2,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	0	(100,000)
Fair Value	6,600,000	224,900,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(100,000)	(20,200,000)
Corporate Bonds and Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	268,500,000	699,800,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(5,200,000)	(39,400,000)
Twelve Months or Longer, Fair Value	38,100,000	103,200,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(2,300,000)	(8,300,000)
Fair Value	306,600,000	803,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(7,500,000)	(47,700,000)
Investments in Fixed Maturities [Member]
Schedule of Available-for-sale Securities [Line Items]
Other Receivables	0	2,500,000
Less than Twelve Months, Fair Value	315,600,000	1,032,400,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(5,500,000)	(70,500,000)
Twelve Months or Longer, Fair Value	40,500,000	110,700,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(2,600,000)	(9,200,000)
Fair Value	356,100,000	1,143,100,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(8,100,000)	(79,700,000)
Redeemable Preferred Stocks [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	0
Twelve Months or Longer, Fair Value	400,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	0
Fair Value	400,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	0
Mortgage and Asset Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	0	13,900,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	0	(100,000)
Twelve Months or Longer, Fair Value	1,700,000	1,100,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(300,000)	0
Fair Value	1,700,000	15,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(300,000)	(100,000)
Preferred Stocks Finance, Insurance and Real Estate [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	0	22,500,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	0	(2,500,000)
Twelve Months or Longer, Fair Value	2,400,000	2,500,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(100,000)	0
Fair Value	2,400,000	25,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(100,000)	(2,500,000)
Preferred Stocks Other Industries [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	2,300,000	4,300,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(800,000)	(100,000)
Twelve Months or Longer, Fair Value	3,700,000	700,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(100,000)	0
Fair Value	6,000,000	5,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(900,000)	(100,000)
Common Stocks Manufacturing [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	6,300,000	5,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(400,000)	(100,000)
Twelve Months or Longer, Fair Value	0	200,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	0	0
Fair Value	6,300,000	5,200,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(400,000)	(100,000)
Common Stock Other Industries [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	14,200,000	14,200,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(400,000)	(900,000)
Twelve Months or Longer, Fair Value	1,300,000	500,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(100,000)	0
Fair Value	15,500,000	14,700,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(500,000)	(900,000)
Exchange Traded Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value		67,600,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments		(1,000,000)
Twelve Months or Longer, Fair Value		0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments		0
Fair Value		67,600,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments		(1,000,000)
Limited Liability Companies and Limited Partnerships [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	5,500,000	53,100,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(500,000)	(900,000)
Twelve Months or Longer, Fair Value	6,700,000	5,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(900,000)	(700,000)
Fair Value	12,200,000	58,100,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(1,400,000)	(1,600,000)
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	28,300,000	166,700,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses Accumulated in Investments	(2,100,000)	(5,500,000)
Twelve Months or Longer, Fair Value	14,100,000	8,900,000
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses Accumulated in Investments	(1,200,000)	(700,000)
Fair Value	42,400,000	175,600,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(3,300,000)	(6,200,000)
External Credit Rating, Investment Grade [Member] | Investments in Fixed Maturities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(3,800,000)	(74,200,000)
External Credit Rating, Non Investment Grade [Member] | Investments in Fixed Maturities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses Accumulated in Investments	(4,300,000)	(5,500,000)
Available For Sale Securities Continuous Unrealized Loss Position Aggregate Losses Related to Securities that have Previously Recognized Foregin Currency Impairment	$ (100,000)
Number of Issuers of Available for Sales Securities Continuous Unrealized Loss Possition Aggregate Losses Related to Securities that have Previously Recognized Foreign Currency impairment	1
Percentage of Unrealized Loss Postion to Amortized Cost Basis of Available for Sale Security Average	3.00%	5.00%

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Income From Investments (Tables)

12 Months Ended

Dec. 31, 2013

Investment Income, Net [Abstract]

Investment Income

Net Investment Income for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Investment Income:
Interest and Dividends on Fixed Maturities	$	235.5	$	246.1	$	246.6
Dividends on Equity Securities	38.0		25.7		25.2
Equity Method Limited Liability Investments	26.4		9.3		9.6
Short-term Investments	0.1		0.2		0.1
Real Estate	20.8		27.4		26.0
Loans to Policyholders	19.8		18.9		17.7
Other	—		0.1		0.3
Total Investment Income	340.6		327.7		325.5
Investment Expenses:
Real Estate	18.3		26.1		25.9
Other Investment Expenses	7.6		5.7		1.6
Total Investment Expenses	25.9		31.8		27.5
Net Investment Income	$	314.7	$	295.9	$	298.0

Realized Gain (Loss) on Investments

The components of Net Realized Gains on Sales of Investments for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities:
Gains on Sales	$	30.9		$	56.9		$	14.2
Losses on Sales	(0.4		)	(0.1		)	(0.1		)
Equity Securities:
Gains on Sales	21.8			8.3			34.0
Losses on Sales	(0.5		)	(0.2		)	(13.5		)
Equity Method Limited Liability Investments:
Gains on Sales	2.5			—			—
Real Estate:
Gains on Sales	44.2			0.2			0.1
Other Investments:
Gains on Sales	0.1			—			—
Losses on Sales	(0.1		)	—			(0.1		)
Net Gains (Losses) on Trading Securities	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7
Gross Gains on Sales	$	99.5		$	65.4		$	48.3
Gross Losses on Sales	(1.0		)	(0.3		)	(13.7		)
Net Gains (Losses) on Trading Securities	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7

Other than Temporary Impairment, Credit Losses Recognized in Earnings

The following table sets forth the pre-tax amount of OTTI credit losses, recognized in Retained Earnings for Investments in Fixed Maturities held by the Company as of December 31, 2013, 2012 and 2011, for which a portion of the OTTI loss has been recognized in Accumulated Other Comprehensive Income, and the corresponding changes in such amounts.

DOLLARS IN MILLIONS	2013			2012			2011
Balance at Beginning of Year	$	4.6		$	3.9		$	2.4
Additions for Previously Unrecognized OTTI Credit Losses	1.8			1.1			2.2
Increases to Previously Recognized OTTI Credit Losses	7.3			—			—
Reductions to Previously Recognized OTTI Credit Losses	—			(0.1		)	(0.7		)
Reductions for Change in Impairment Status:
From Status of Credit Loss to Status of Intent-to-sell or Required-to-sell	(3.2		)	—			—
Reductions for Investments Sold During Period	(0.6		)	(0.3		)	—
Balance at End of Year	$	9.9		$	4.6		$	3.9

The components of Net Impairment Losses Recognized in Earnings reported in the Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities	$	(10.3	)	$	(1.9	)	$	(2.2	)
Equity Securities	(3.6		)	(1.9		)	(1.9		)
Real Estate	—			(3.1		)	(7.2		)
Net Impairment Losses Recognized in Earnings	$	(13.9	)	$	(6.9	)	$	(11.3	)

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Summary Of Accounting Policies And Accounting Changes

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Summary Of Accounting Policies And Accounting Changes

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES

Investments

Investments in Fixed Maturities include bonds, notes and redeemable preferred stocks. Investments in Fixed Maturities are classified as available for sale and reported at fair value. Net Investment Income, including amortization of purchased premiums and accretion of market discounts, on Investments in Fixed Maturities is recognized as interest earned using the effective yield method.

Investments in Equity Securities include common and non-redeemable preferred stocks and other equity interests and are reported at fair value. Investments in common and non-redeemable preferred stocks with readily determinable fair values are classified as available for sale. Dividend income on investments in common and non-redeemable preferred stocks is recognized on the ex-dividend date. Other equity interests primarily consist of exchange traded funds and interests in limited liability companies and limited partnerships in which the Company’s interests are deemed minor. The Company’s share of distributed earnings from other equity interests is recognized as dividend income when received.

Unrealized appreciation or depreciation, net of applicable deferred income taxes, on fixed maturities and equity securities is reported in AOCI included in Shareholders’ Equity.

Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting.

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Short-term Investments include fixed maturities that mature within one year from the date of purchase, U.S. Treasury bills, money market mutual funds and repurchase agreements. Short-term Investments are reported at cost, which approximates fair value.

Other Investments primarily include loans to policyholders and real estate. Loans to policyholders are carried at unpaid principal balance. Real estate is carried at cost, net of accumulated depreciation. Real estate is depreciated over the estimated useful life of the asset using the straight-line method of depreciation. Real estate is evaluated for impairment when events or circumstances indicate the carrying value may not be recoverable. An impairment on real estate is recognized when the carrying value exceeds the sum of undiscounted projected future cash flows.

Gains and losses on sales of investments are computed on the specific identification method and are reported in the Consolidated Statements of Income in the period in which the sales occur. The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. Losses are computed on the specific identification method and reported in the Consolidated Statements of Income in the period that the decline is determined to be other than temporary. The portion of an impairment of an investment in a fixed maturity attributed to a credit loss is reported in Net Impairment Losses Recognized in Earnings in the Consolidated Statement of Income, with the portion of the impairment that is not attributed to a credit loss reported in AOCI.

Fair Value Measurements

The Company uses a hierarchal framework which prioritizes and ranks the market observability of inputs used in fair value measurements. Market price observability is affected by a number of factors, including the type of asset or liability and the characteristics specific to the asset or liability being measured. Assets and liabilities with readily available, active, quoted market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The Company classifies the inputs used to measure fair value into one of three levels as follows:

• Level 1 — Quoted prices in an active market for identical assets or liabilities;

• Level 2 — Observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

• Level 3 — Unobservable inputs for the asset or liability being measured.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant to the entire measurement. Such determination requires significant management judgment. In accordance with GAAP, the Company is not permitted to adjust quoted market prices in an active market.

Deferred Policy Acquisition Costs

Costs directly associated with the successful acquisition of business, principally commissions and certain premium taxes and policy issuance costs, are deferred. Costs deferred on property and casualty insurance contracts and short duration health insurance contracts are amortized over the period in which premiums are earned. Costs deferred on traditional life insurance products and other long-duration insurance contracts are primarily amortized over the anticipated premium-paying period of the related policies in proportion to the ratio of the annual premiums to the total premiums anticipated, which is estimated using the same assumptions used in calculating policy reserves.

Goodwill

The cost of an acquired entity over the fair value of net assets acquired is reported as Goodwill. Goodwill is not amortized, but rather is tested annually for recoverability or when certain triggering events require testing.

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Insurance Reserves

Reserves for losses and LAE on property and casualty insurance coverage and health insurance coverage represent the estimated claim cost and loss adjustment expense necessary to cover the ultimate net cost of investigating and settling all losses incurred and unpaid. Such estimates are based on individual case estimates for reported claims and estimates for incurred but not reported losses. These estimates are adjusted in the aggregate for ultimate loss expectations based on historical experience patterns and current economic trends, with any change in the estimated ultimate liabilities being reported in the Consolidated Statements of Income in the period of change. Changes in such estimates may be material.

For traditional life insurance products, the reserves for future policy benefits are estimated on the net level premium method based on rates for expected mortality, lapse rates and interest rates, including provisions for adverse mortality. These assumptions vary by such characteristics as plan, age at issue and policy duration. Mortality assumptions are based on the Company’s historical experience and industry standards. Interest rate assumptions principally range from 3% to 7%. Lapse rate assumptions are based on actual and industry experience.

Other Receivables

Other Receivables primarily include reinsurance recoverables and accrued investment income.

Other Assets

Other Assets primarily include property and equipment, internal use software, insurance licenses acquired in business combinations, the value of other intangible assets acquired and prepaid expenses. Property and equipment is depreciated over the useful lives of the assets, generally using the straight-line or double declining balance methods of depreciation depending on the asset involved. Internal use software is primarily amortized over the useful life of the asset using the straight-line method of amortization. Insurance licenses acquired in business combinations and other indefinite life intangibles are not amortized, but rather tested periodically for recoverability. Insurance Expenses for the year endedDecember 31, 2013 includes a charge of $1.4 million to write down the value of insurance licenses acquired for one of Kemper’s insurance subsidiaries to its estimated fair value.

The Company accounts for the present value of the future profits embedded in life insurance in force acquired (“Life VIF”) based on actuarial estimates of the present value of estimated net cash flows. Life VIF was $41.2 million and $46.4 million at December 31, 2013 and 2012, respectively. Life VIF is amortized using the effective interest method using interest rates consistent with the rates in the underlying insurance contracts. The Company estimates that it will record Life VIF amortization, net of interest, of $4.6 million in 2014, $4.2 million in 2015, $3.7 million in 2016, $3.2 million in 2017 and $2.9 million in 2018. The Company evaluates the Life VIF for recoverability annually.

The Company accounts for the present value of the future profits embedded in Property and Casualty Insurance Customer Relationships Acquired (“P&C Customer Relationships”) based on the present value of estimated future cash flows from the customer relationships acquired. P&C Customer Relationships was $15.8 million and $18.7 million at December 31, 2013 and 2012, respectively. P&C Customer Relationships is amortized using the effective interest method. P&C Customer Relationships is tested for recoverability using undiscounted projections of future cash flows and written down to estimated fair value if the carrying value exceeds the sum of such projections of undiscounted cash flows. The Company recorded a loss of $13.5 million before tax for the year ended December 31, 2011 to write down the carrying value of P&C Customer Relationships related to the acquisition of Direct Response to its estimated fair value.

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities primarily include accrued salaries and commissions, pension benefits, postretirement medical benefits and accrued taxes, licenses and fees.

Recognition of Earned Premiums and Related Expenses

Property and casualty insurance and short duration health insurance premiums are deferred when written and recognized and earned ratably over the periods to which the premiums relate. Unearned Premiums represent the portion of the premiums written related to the unexpired portion of policies in force which has been deferred and is reported as a liability. A premium deficiency reserve is established if the sum of expected claim costs, claim adjustment expenses, unamortized deferred policy acquisition costs and

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

maintenance costs exceeds the related unearned premiums. For each business segment, the analysis is performed at a product line level, namely automobile insurance, homeowners insurance and other insurance, which is consistent with the manner in which the Company acquires, services and measures profitability. Anticipated investment income is excluded from such analysis.

Traditional life insurance premiums are recognized as revenue when due. Policyholders’ benefits are associated with related premiums to result in recognition of profits over the periods for which the benefits are provided using the net level premium method.

Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses include provisions for future policy benefits under life and certain accident and health insurance contracts and provisions for reported claims, estimates for claims incurred but not reported and loss adjustment expenses. Benefit payments in excess of policy account balances are expensed.

Reinsurance

In the normal course of business, Kemper’s insurance subsidiaries reinsure certain risks above certain retention levels with other insurance enterprises. These reinsurance agreements do not relieve Kemper’s insurance subsidiaries of their legal obligations to the policyholder. Amounts recoverable from reinsurers are included in Other Receivables.

Gains related to long-duration reinsurance contracts are deferred and amortized over the life of the underlying reinsured policies. Losses related to long-duration reinsurance contracts are recognized immediately. Any gain or loss associated with reinsurance agreements for which Kemper’s insurance subsidiaries have been legally relieved of their obligations to the policyholder is recognized in the period of relief.

Income Taxes

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is maintained for the portion of deferred income tax assets that the Company does not expect to recover. Increases in the valuation allowance for deferred income tax assets are recognized as

income tax expense. Decreases in the valuation allowance for deferred income tax assets are recognized as income tax benefit. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period in which the change is enacted.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

Adoption of New Accounting Standard

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The new standard amends and enhances disclosure requirements by requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in a statement of income. The Company adopted the standard in the first quarter of 2013. Except for the additional disclosure requirements, the initial application of the standard did not have an impact on the Company.

Accounting Standards Not Yet Adopted

The FASB issues ASUs to amend the authoritative literature in ASC. There were twelve ASUs issued in 2013 that amend the original text of the ASC. Except as described in the following paragraph and also under the caption “Adoption of New Accounting Standard” above, the ASUs are not expected to have a material impact on the Company.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The standard is effective for the first interim or annual period beginning on or after December 15, 2013 with early adoption permitted. The standard amends ASC Topic 740, Income Taxes, to provide guidance and reduce diversity in practice on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Except for the changes, if any, in the Company’s presentation, the initial application of the standard will not impact the Company.

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Schedule 4 - Reinsurance Schedule (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Ceded to Other Companies									$ 33.9	$ 42.5	$ 40.7
Assumed Premiums Earned									52.7	44.0	43.7
Assumed Premiums, Life Insurance in Force									229.5	242.9	256.9
Premiums, Net, Life Insurance in Force									20,659.1	20,972.9	21,222.7
Net Amount	495.6	507.5	512.8	509.9	520.8	527.3	529.8	529.2	2,025.8	2,107.1	2,173.6
Life Insurance in Force Premiums, Percentage Assumed to Net									1.10%	1.20%	1.20%
Direct Premiums Earned									2,007.0	2,105.6	2,170.6
Premiums, Percentage Assumed to Net									2.60%	2.10%	2.00%
Direct Premiums, Life Insurance in Force									21,006.0	21,340.4	21,627.8
Ceded Premiums, Life Insurance in Force									576.4	610.4	662.0
Life Insurance Product Line [Member]
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Ceded to Other Companies									1.5	1.4	1.5
Assumed Premiums Earned									1.8	2.0	2.3
Net Amount									392.7	393.4	395.1
Direct Premiums Earned									392.4	392.8	394.3
Premiums, Percentage Assumed to Net									0.50%	0.50%	0.60%
Accident and Health Insurance [Member]
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Ceded to Other Companies									0.6	0.4	0.3
Assumed Premiums Earned									0.1	0.1	0.1
Net Amount									161.4	165.2	166.3
Direct Premiums Earned									161.9	165.5	166.5
Premiums, Percentage Assumed to Net									0.10%	0.10%	0.10%
Property, Liability and Casualty Insurance [Member]
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Ceded to Other Companies									31.8	40.7	38.9
Assumed Premiums Earned									50.8	41.9	41.3
Net Amount									1,471.7	1,548.5	1,612.2
Direct Premiums Earned									$ 1,452.7	$ 1,547.3	$ 1,609.8
Premiums, Percentage Assumed to Net									3.50%	2.70%	2.60%

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Business Segments - Segment Operating Profit (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Operating Income (Loss)									$ 229.2	$ 63.9	$ 45.9
Net Realized Gains on Sales of Investments	20.8	49.1	2.3	26.9	5.5	50.9	4.1	4.9	99.1	65.4	33.7
Net Impairment Losses Recognized in Earnings	(7.6)	(3.4)	(1.0)	(1.9)	(2.8)	(3.2)	(0.4)	(0.5)	(13.9)	(6.9)	(11.3)
Income from Continuing Operations before Income Taxes	81.4	102.0	46.4	84.6					314.4	122.4	68.3
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)									276.5	104.8	88.7
Kemper Preferred [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)									87.7	(28.0)	(40.6)
Kemper Specialty [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)									12.3	(2.8)	24.2
Kemper Direct [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)									39.6	(4.8)	(47.2)
Life and Health Insurance [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)									136.9	140.4	152.3
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)									$ (47.3)	$ (40.9)	$ (42.8)

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Investments - OTTI losses Recognized in Accumulated Other Comprehensive Income (Details) (Fixed Maturities [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Fixed Maturities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Balance at Beginning of Year	$ 4.6	$ 3.9	$ 2.4
Additions for Previously Unrecognized OTTI Credit Losses	1.8	1.1	2.2
Increases to Previously Recognized OTTI Credit Losses	7.3	0	0
Reductions to Previously Recognized OTTI Credit Losses	0	(0.1)	(0.7)
Reduction due to Intent to Sell Investments	(3.2)	0	0
Reductions for Investments Sold During Period	(0.6)	(0.3)	0
Balance at End of Year	$ 9.9	$ 4.6	$ 3.9

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Fair Value Measurements - Quantitative Information about Significant Unobservable Inputs (Details) (Market Approach Valuation Technique [Member], Fair Value, Inputs, Level 3 [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Other Debt Obligations [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure	$ 8.2	$ 15.5
Investments in Fixed Maturities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure	364.1	361.0
External Credit Rating, Investment Grade [Member] | Private Placement [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure	108.5	94.6
External Credit Rating, Investment Grade [Member] | Private Placement [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	1.00%	1.30%
External Credit Rating, Investment Grade [Member] | Private Placement [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	6.00%	6.30%
External Credit Rating, Investment Grade [Member] | Private Placement [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	4.30%	4.00%
External Credit Rating, Non Investment Grade [Member] | Senior Debt Obligations [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure	93.9	77.7
External Credit Rating, Non Investment Grade [Member] | Senior Debt Obligations [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	4.20%	5.70%
External Credit Rating, Non Investment Grade [Member] | Senior Debt Obligations [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	15.60%	18.00%
External Credit Rating, Non Investment Grade [Member] | Senior Debt Obligations [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	8.60%	9.10%
External Credit Rating, Non Investment Grade [Member] | Junior Subordinated Debt [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure	$ 153.5	$ 173.2
External Credit Rating, Non Investment Grade [Member] | Junior Subordinated Debt [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	8.80%	8.80%
External Credit Rating, Non Investment Grade [Member] | Junior Subordinated Debt [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	26.60%	21.40%
External Credit Rating, Non Investment Grade [Member] | Junior Subordinated Debt [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate	14.20%	14.80%

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Schedule 2 - Parent Company Financial Statements - Statements of Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
Net Income	$ 55.2	$ 70.1	$ 34.0	$ 58.4	$ 1.9	$ 55.6	$ 2.3	$ 43.6	$ 217.7	$ 103.4	$ 74.5
Unrealized Holding Gains (Losses) Arising During the Year:
Securities Held by Parent									(324.9)	157.9	232.1
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Parent									(37.9)	(61.2)	(30.9)
Unrealized Holding Gains (Losses)									362.8	(96.7)	(201.2)
Unrecognized Postretirement Benefit Costs Arising During the Year									61.6	(29.4)	(53.9)
Net Unrecognized Postretirement Benefit Costs									86.6	(13.2)	(45.2)
Foreign Currency Translation Adjustments									0.2	1.6	0.4
Reclassification Adjustment for Amounts Included in Net Income									0	0	0
Foreign Currency Translation Adjustments									0.2	1.6	0.4
Other Comprehensive Income (Loss) Before Income Taxes									(276.0)	85.1	156.4
Income Tax Benefit (Expense):
Securities Held by Parent									(115.9)	55.9	82.5
Securities Held by Parent									(13.2)	(21.5)	(10.9)
Unrealized Holding Gains and Losses									129.1	(34.4)	(71.6)
Unrecognized Postretirement Benefit Costs Arising During the Year									(21.6)	10.3	19.0
Net Unrecognized Postretirement Benefit Costs									(30.4)	4.6	15.9
Foreign Currency Translation Adjustments									(0.1)	(0.6)	(0.1)
Reclassification Adjustment for Amounts Included in Net Income									0	0	0
Foreign Currency Translation Adjustment									(0.1)	(0.6)	(0.1)
Other Comprehensive Income Tax Benefit (Expense)									98.6	(30.4)	(55.8)
Other Comprehensive Income (Loss)									(177.4)	54.7	100.6
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Net Income									217.7	103.4	74.5
Unrealized Holding Gains (Losses) Arising During the Year:
Securities Held by Subsidiaries									(324.9)	157.9	231.5
Securities Held by Parent									0	0	0.6
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries									(37.9)	(61.2)	(30.2)
Securities Held by Parent									0	0	(0.7)
Unrealized Holding Gains (Losses)									362.8	(96.7)	(201.2)
Unrecognized Postretirement Benefit Costs Arising During the Year									61.6	(29.4)	(53.9)
Amortization of Unrecognized Postretirement Benefit Costs									25.0	16.2	8.7
Net Unrecognized Postretirement Benefit Costs									86.6	(13.2)	(45.2)
Foreign Currency Translation Adjustments									0.2	1.6	0.4
Reclassification Adjustment for Amounts Included in Net Income									0	0	0
Foreign Currency Translation Adjustments									0.2	1.6	0.4
Other Comprehensive Income (Loss) Before Income Taxes									(276.0)	85.1	156.4
Income Tax Benefit (Expense):
Securities Held by Subsidiaries									115.9	(55.9)	(82.3)
Securities Held by Parent									0	0	0.2
Securities Held by Subsidiaries									13.2	21.5	10.7
Securities Held by Parent									0	0	(0.2)
Unrealized Holding Gains and Losses									129.1	(34.4)	(71.6)
Unrecognized Postretirement Benefit Costs Arising During the Year									(21.6)	10.3	19.0
Amortization of Unrecognized Postretirement Benefit Costs									(8.8)	(5.7)	(3.1)
Net Unrecognized Postretirement Benefit Costs									(30.4)	4.6	15.9
Foreign Currency Translation Adjustments									(0.1)	(0.6)	(0.1)
Reclassification Adjustment for Amounts Included in Net Income									0	0	0
Foreign Currency Translation Adjustment									(0.1)	(0.6)	(0.1)
Other Comprehensive Income Tax Benefit (Expense)									98.6	(30.4)	(55.8)
Other Comprehensive Income (Loss)									(177.4)	54.7	100.6
Total Comprehensive Income									$ 40.3	$ 158.1	$ 175.1

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Long-term Equity-based Compensation (Tables)

12 Months Ended

Dec. 31, 2013

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The assumptions used in the Black-Scholes pricing model for options granted during the years endedDecember 31, 2013, 2012 and 2011, were as follows:

	2013					2012					2011
RANGE OF VALUATION ASSUMPTIONS
Expected Volatility	39.10	%	-	48.23	%	29.36	%	-	53.84	%	41.26	%	-	55.16	%
Risk Free Interest Rate	0.62		-	1.38		0.16		-	1.26		1.30		-	2.87
Expected Dividend Yield	2.83		-	3.00		2.92		-	3.26		3.15		-	3.38
WEIGHTED-AVERAGE EXPECTED LIFE IN YEARS
Employee Grants	4		-	7		1		-	7		3.5		-	7
Director Grants	6					6					6

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

Option and SAR activity for the year endedDecember 31, 2013 is presented below:

	Shares Subject to Options		Weighted- average Exercise Price Per Share ($)		Weighted- average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value ($ In Millions)
Outstanding at Beginning of the Year	3,192,054		$	40.53
Granted	283,750		33.20
Exercised	(364,750	)	25.32
Forfeited or Expired	(567,381	)	42.83
Outstanding at December 31, 2013	2,543,673		41.38		3.57	$	9.3
Vested and Expected to Vest at December 31, 2013	2,512,512		$	41.51	3.51	$	9.0
Exercisable at December 31, 2013	2,226,795		$	42.81	2.87	$	6.3

Schedule of Options Outstanding

Information pertaining to options outstanding at December 31, 2013 is presented below:

					Outstanding				Exercisable
Range of Exercise Prices ($)					Shares Subject to Options	Weighted- average Exercise Price Per Share ($)		Weighted- average Remaining Contractual Life (in Years)	Shares Subject to Options	Weighted- average Exercise Price Per Share ($)
$	10.00	-	$	15.00	16,750	$	13.55	5.10	16,750	$	13.55
15.01		-	20.00		8,000	16.48		5.35	8,000	16.48
20.01		-	25.00		38,250	23.43		6.07	38,250	23.43
25.01		-	30.00		404,000	28.87		7.58	250,812	28.77
30.01		-	35.00		255,375	33.19		9.08	91,685	32.72
35.01		-	40.00		314,500	37.22		3.97	314,500	37.22
40.01		-	45.00		311,868	43.57		0.71	311,868	43.57
45.01		-	50.00		958,222	48.64		1.85	958,222	48.64
50.01		-	55.00		236,708	50.51		0.36	236,708	50.51
10.00		-	55.00		2,543,673	41.38		3.57	2,226,795	42.81

Time Vested Restricted Stock [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

Activity related to nonvested time-based restricted stock for the year endedDecember 31, 2013 was as follows:

	Time-based Restricted Shares		Weighted- average Grant-date Fair Value Per Share
Nonvested Balance at Beginning of the Year	126,349		$	26.19
Granted	75,625		33.33
Vested	(59,065	)	24.99
Forfeited	(41,282	)	27.98
Nonvested Balance at End of Period	101,627		$	31.48

Performance Based Restricted Stock [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

Activity related to nonvested performance-based restricted stock for the year endedDecember 31, 2013 was as follows:

	Performance-based Restricted Shares		Weighted- average- Grant-date Fair Value Per Share
Nonvested Balance at Beginning of the Year	187,075		$	36.70
Granted	70,675		42.12
Vested	(53,118	)	33.14
Forfeited	(27,832	)	39.16
Nonvested Balance at End of Period	176,800		$	39.54

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Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures

NOTE 22. FAIR VALUE MEASUREMENTS

The Company classifies its Investments in Fixed Maturities and Equity Securities as available for sale and reports these investments at fair value. The Company classifies certain investments in mutual funds included in Other Investments as trading securities and reports these investments at fair value. The Company has no material liabilities that are measured and reported at fair value.

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheet at December 31, 2013 is summarized below:

DOLLARS IN MILLIONS	Fair Value Measurements						Fair Value
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	121.2	$	241.0	$	—	$	362.2
States and Political Subdivisions	—		1,361.0		—		1,361.0
Corporate Securities:
Bonds and Notes	—		2,429.6		364.1		2,793.7
Redeemable Preferred Stocks	—		—		7.4		7.4
Mortgage and Asset-backed	—		1.5		49.2		50.7
Total Investments in Fixed Maturities	121.2		4,033.1		420.7		4,575.0
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		80.8		5.0		85.8
Other Industries	—		10.5		13.9		24.4
Common Stocks:
Manufacturing	95.1		7.3		2.2		104.6
Other Industries	71.7		2.2		11.0		84.9
Other Equity Interests:
Exchange Traded Funds	124.9		—		—		124.9
Limited Liability Companies and Limited Partnerships	—		—		173.9		173.9
Total Investments in Equity Securities	291.7		100.8		206.0		598.5
Other Investments:
Trading Securities	5.0		—		—		5.0
Total	$	417.9	$	4,133.9	$	626.7	$	5,178.5

At December 31, 2013, the Company had unfunded commitments to invest an additional $121.1 million in certain limited liability companies and limited partnerships that are reportable as Other Equity Interests.

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheet at December 31, 2012 is summarized below:

DOLLARS IN MILLIONS	Fair Value Measurements						Fair Value
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	135.8	$	293.1	$	—	$	428.9
States and Political Subdivisions	—		1,401.4		—		1,401.4
Corporate Securities:
Bonds and Notes	—		2,632.4		361.0		2,993.4
Redeemable Preferred Stocks	—		27.9		4.7		32.6
Mortgage and Asset-backed	—		3.8		0.1		3.9
Total Investments in Fixed Maturities	135.8		4,358.6		365.8		4,860.2
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		79.2		—		79.2
Other Industries	—		15.3		6.0		21.3
Common Stocks:
Manufacturing	79.6		6.0		1.9		87.5
Other Industries	60.1		1.2		5.4		66.7
Other Equity Interests:
Exchange Traded Funds	125.9		—		—		125.9
Limited Liability Companies and Limited Partnerships	—		—		141.3		141.3
Total Investments in Equity Securities	265.6		101.7		154.6		521.9
Other Investments:
Trading Securities	4.5		—		—		4.5
Total	$	405.9	$	4,460.3	$	520.4	$	5,386.6

The Company’s investments in Fixed Maturities that are classified as Level 1 in the two preceding tables primarily consist of U.S. Treasury Bonds and Notes. The Company’s investments in Equity Securities that are classified as Level 1 in the two preceding tables consist of either investments in publicly-traded common stocks or exchange traded funds. The Company’s investments in Fixed Maturities that are classified as Level 2 in the two preceding tables primarily consist of investments in corporate bonds and redeemable preferred stocks, states and political subdivisions, and bonds and mortgage-backed securities of U.S. government agencies. The Company’s investments in Equity Securities that are classified as Level 2 in the two preceding tables primarily consist of investments in preferred stocks. The Company uses a leading, nationally recognized provider of market data and analytics to price the vast majority of the Company’s Level 2 measurements. The provider utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information. Because many fixed maturity securities do not trade on a daily basis, the provider’s evaluated pricing applications apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing to prepare evaluations. In addition, the provider uses model processes to develop prepayment and interest rate scenarios. The pricing provider’s models and processes also take into account market convention. For each asset class, teams of its evaluators gather information from market sources and integrate relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models. The Company generally validates the measurements obtained from its primary pricing provider by comparing them with measurements obtained from one additional pricing provider that provides either prices from recent market transactions or quotes in inactive markets or evaluations based on its own proprietary models.

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

The Company investigates significant differences related to the values provided. On completion of its investigation, management exercises judgment to determine the price selected and whether adjustments, if any, to the price obtained from the Company’s primary pricing provider would warrant classification of the price as Level 3. In instances where a measurement cannot be obtained from either pricing provider, the Company generally will evaluate bid prices from one or more binding quotes obtained from market makers to value investments in inactive markets and classified by the Company as Level 2. The Company generally classifies securities when it receives non-binding quotes or indications as Level 3 securities unless the Company can validate the quote or indication against recent transactions in the market. For securities classified as Level 3, the Company either uses valuations provided by third party fund managers, third party appraisers, the Company’s own internal valuations or net asset values provided for Limited Liability Companies and Limited Partnerships. These valuations typically employ various valuation techniques, including earnings multiples based on comparable public securities, comparable market yields as well as industry specific non-earnings based multiples or discounted cash flow models. Valuations classified as Level 3 by the Company generally consist of investments in various private placement securities of non-rated entities. In rare cases, if the private placement security has only been outstanding for a short amount of time, the Company, after considering the initial assumptions used in acquiring an investment, considers the original purchase price as representative of the fair value.

The majority of Investments in Fixed Maturities that are classified as Level 3 are priced using a market yield approach. A market yield approach uses a risk-free rate plus a credit spread depending on the underlying credit profile of the security. For floating rate securities, the risk free rate used in the market yield is the contractual floating rate of the security. For each individual security, the Company or the Company’s third party appraiser gathers information from market sources, relevant credit information, perceived market movements and sector news and determines an appropriate market yield for each security. The market yield selected is then used to discount the estimated future cash flows of the security to determine the fair value. The Company separately evaluates market yields based upon asset class to assess the reasonableness of the recorded fair value. For Investments in Fixed Maturities, corporate bonds and notes makes up the majority of the Company’s investments classified as Level 3. For corporate bonds and notes, the primary asset classes are investment grade private placements, non-investment grade senior debt, non-investment grade junior debt and other debt. Non-investment grade senior debt includes those securities that receive first priority in a liquidation and non-investment grade junior debt includes any fixed maturity security with other than first priority in a liquidation.

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in determining fair values for investments in corporate bonds and notes classified as Level 3 at December 31, 2013.

DOLLARS IN MILLIONS	Unobservable Input	Total Fair Value		Range of Unobservable Inputs					Weighted Average Yield
Investment Grade	Market Yield	$	108.5	1.0	%	-	6.0	%	4.3	%
Non-investment Grade:
Senior Debt	Market Yield	93.9		4.2		-	15.6		8.6
Junior Debt	Market Yield	153.5		8.8		-	26.6		14.2
Other Debt	Various	8.2
Bonds and Notes Classified as Level 3		$	364.1

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in determining fair values for investments in corporate bonds and notes classified as Level 3 at December 31, 2012.

DOLLARS IN MILLIONS	Unobservable Input	Total Fair Value		Range of Unobservable Inputs					Weighted Average Yield
Investment Grade	Market Yield	$	94.6	1.3	%	-	6.3	%	4.0	%
Non-investment Grade:
Senior Debt	Market Yield	77.7		5.7		-	18.0		9.1
Junior Debt	Market Yield	173.2		8.8		-	21.4		14.8
Other Debt	Various	15.5
Bonds and Notes Classified as Level 3		$	361.0

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

For an investment in a fixed maturity security, an increase in the yield used to determine the fair value of the security will decrease the fair value of the security. A decrease in the yield used to determine fair value will increase the fair value of the security, but the fair value increase is generally limited to par if the security is currently callable.

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the year ended December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Fixed Maturities									Equity Securities
	Corporate Bonds and Notes			Redeemable Preferred Stocks			Mortgage and Asset- backed			Preferred and Common Stocks			Other Equity Interests			Total
Balance at Beginning of Year	$	361.0		$	4.7		$	0.1		$	13.3		$	141.3		$	520.4
Total Gains (Losses):
Included in Consolidated Statement of Income	(7.9		)	0.2			0.3			(1.0		)	(1.6		)	(10.0		)
Included in Other Comprehensive Income	(7.8		)	(1.3		)	(0.1		)	4.6			5.6			1.0
Purchases	145.1			5.1			48.6			15.9			55.4			270.1
Settlements	(123.2		)	(1.3		)	(0.1		)	—			(26.8		)	(151.4		)
Sales	(0.1		)	—			(2.0		)	(0.7		)	—			(2.8		)
Transfers into Level 3	5.8			—			2.4			—			—			8.2
Transfers out of Level 3	(8.8		)	—			—			—			—			(8.8		)
Balance at End of Year	$	364.1		$	7.4		$	49.2		$	32.1		$	173.9		$	626.7

The Company’s policy is to recognize transfers between levels as of the end of the reporting period. There were no transfers between Levels 1 and 2 or Levels 1 and 3 for the year ended December 31, 2013. The transfers into Level 3 and out of Level 3 for the year ended December 31, 2013 were due to changes in the availability of market observable inputs.

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the year ended December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Fixed Maturities									Equity Securities						Total
	Corporate Bonds and Notes			Redeemable Preferred Stocks			Mortgage and Asset- backed			Preferred and Common Stocks			Other Equity Interests
Balance at Beginning of Year	$	235.1		$	6.1		$	0.3		$	13.5		$	93.1		$	348.1
Total Gains (Losses):
Included in Consolidated Statement of Income	4.0			(0.4		)	—			3.2			—			6.8
Included in Other Comprehensive Income	1.4			0.5			—			(1.3		)	8.3			8.9
Purchases	199.7			0.1			—			1.6			52.0			253.4
Settlements	(73.1		)	(1.6		)	(0.2		)	—			(12.1		)	(87.0		)
Sales	(0.9		)	—			—			(3.7		)	—			(4.6		)
Transfers into Level 3	0.9			—			—			—			—			0.9
Transfers out of Level 3	(6.1		)	—			—			—			—			(6.1		)
Balance at End of Year	$	361.0		$	4.7		$	0.1		$	13.3		$	141.3		$	520.4

The Company’s policy is to recognize transfers between levels as of the end of the reporting period. There were no transfers between Levels 1 and 2 or Levels 1 and 3 for the year ended December 31, 2012. The transfers into Level 3 and out of Level 3 for the year ended December 31, 2012 were due to changes in the availability of market observable inputs.

NOTE 22. FAIR VALUE MEASUREMENTS (Continued)

The fair value of Notes Payable is estimated using quoted prices in markets that are not active. The inputs used in the valuation are considered Level 2 measurements. The fair value of Short-term Investments is estimated using inputs that are considered Level 1 or Level 2 measurements.

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Other Reinsurance

12 Months Ended

Dec. 31, 2013

Reinsurance Disclosures [Abstract]

Other Reinsurance

NOTE 21. OTHER REINSURANCE

In addition to the reinsurance programs described in Note 20, “Catastrophe Reinsurance,” to the Consolidated Financial Statements, Kemper’s insurance subsidiaries utilize other reinsurance arrangements to limit their maximum loss, provide greater diversification of risk and to minimize exposures on larger risks. The ceding of insurance does not discharge the primary liability of the original insurer. Accordingly, insurance reserve liabilities are reported gross of any estimated recovery from reinsurers in the Consolidated Balance Sheets. Amounts recoverable from reinsurers are estimated in a manner consistent with the insurance reserve liability and are included in Other Receivables in the Consolidated Balance Sheets.

Earned Premiums ceded on long-duration and short-duration policies were $33.9 million, $42.5 million and $40.7 million for the years ended December 31, 2013, 2012 and 2011, respectively. Certain insurance subsidiaries assume business from other insurance companies and involuntary pools. Earned Premiums assumed on long-duration and short-duration policies were $52.7 million, $44.0 million and $43.7 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Trinity and Capitol are parties to a quota share reinsurance agreement whereby Trinity assumes 100% of the business written by Capitol. Earned Premiums assumed by Trinity from Capitol were $22.4 million, $25.0 million and $27.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. Capitol is a mutual insurance company and, accordingly, is owned by its policyholders. In the second quarter of 2012, Capitol requested regulatory approval to amend such agreement with Trinity, effective April 1, 2012, whereby ceded losses for dwelling coverage were capped. In the third quarter of 2012, Capitol received such regulatory approval. Incurred losses and LAE assumed by Trinity were reduced by $2.6 million in the third quarter of 2012 in conjunction with such amendment. Trinity and ORCC, a subsidiary of Capitol, are also parties to a quota share reinsurance agreement whereby prior to 2013, Trinity assumed 100% of the business written by ORCC. Earned Premiums assumed by Trinity from ORCC were $7.2 million, $8.2 million and $9.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. In the second quarter of 2013, ORCC received regulatory approval to amend its agreement with Trinity, effective January 1, 2013, whereby Trinity continues to assume 100% of the business written by ORCC, subject to a cap for ceded losses for dwelling coverage.

Five employees of the Company serve as directors of Capitol’s five member board of directors. Nine employees of the Company also serve as directors of ORCC’s nine member board of directors. Kemper’s subsidiary, United Insurance, provides claims and administrative services to Capitol and ORCC. In addition, agents appointed by Kemper’s subsidiary, The Reliable Life Insurance Company, and who are employed by United Insurance, are also appointed by Capitol and ORCC to sell property insurance products for the Company’s Life and Health Insurance segment. The Company also provides certain investment services to Capitol and ORCC.

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Pension Benefits - Actuarial Assumptions for Project Benefit Obligations (Details) (Pension Plans, Defined Benefit [Member])	Dec. 31, 2013	Dec. 31, 2012
Pension Plans, Defined Benefit [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Discount Rate	4.90%	4.05%
Rate of Increase in Future Compensation Levels	3.05%	3.08%

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Quarterly Financial Information (Tables)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Data [Abstract]

Schedule of Quarterly Financial Information

	Three Months Ended (Unaudited)												Year Ended
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	Mar 31, 2013			Jun 30, 2013			Sep 30, 2013			Dec 31, 2013			Dec 31, 2013
Revenues:
Earned Premiums	$	509.9		$	512.8		$	507.5		$	495.6		$	2,025.8
Net Investment Income	80.8			74.6			82.4			76.9			314.7
Other Income	0.2			0.2			0.1			0.3			0.8
Net Realized Gains on Sales of Investments	26.9			2.3			49.1			20.8			99.1
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(2.4		)	(2.3		)	(3.5		)	(7.6		)	(15.8		)
Portion of Losses Recognized in Other Comprehensive Income	0.5			1.3			0.1			—			1.9
Net Impairment Losses Recognized in Earnings	(1.9		)	(1.0		)	(3.4		)	(7.6		)	(13.9		)
Total Revenues	615.9			588.9			635.7			586.0			2,426.5
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	349.2			354.2			338.3			315.5			1,357.2
Insurance Expenses	158.3			163.1			170.1			162.9			654.4
Interest and Other Expenses	23.8			25.2			25.3			26.2			100.5
Total Expenses	531.3			542.5			533.7			504.6			2,112.1
Income from Continuing Operations before Income Taxes	84.6			46.4			102.0			81.4			314.4
Income Tax Expense	(26.0		)	(13.9		)	(33.4		)	(26.6		)	(99.9		)
Income from Continuing Operations	58.6			32.5			68.6			54.8			214.5
Income (Loss) from Discontinued Operations	(0.2		)	1.5			1.5			0.4			3.2
Net Income	$	58.4		$	34.0		$	70.1		$	55.2		$	217.7
Income from Continuing Operations Per Unrestricted Share:
Basic	$	1.00		$	0.56		$	1.21		$	0.98		$	3.75
Diluted	$	1.00		$	0.56		$	1.21		$	0.98		$	3.74
Net Income Per Unrestricted Share:
Basic	$	1.00		$	0.59		$	1.24		$	0.99		$	3.81
Diluted	$	1.00		$	0.59		$	1.23		$	0.99		$	3.80
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.96

The sum of quarterly per share amounts does not equal per share amounts for the year due to differences in weighted-average shares and/or equivalent shares outstanding for each of the periods presented.

NOTE 25. QUARTERLY FINANCIAL INFORMATION (Unaudited) (Continued)

	Three Months Ended (Unaudited)												Year Ended
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	Mar 31, 2012			Jun 30, 2012			Sep 30, 2012			Dec 31, 2012			Dec 31, 2012
Revenues:
Earned Premiums	$	529.2		$	529.8		$	527.3		$	520.8		$	2,107.1
Net Investment Income	77.4			75.2			70.4			72.9			295.9
Other Income	0.2			0.2			0.2			0.2			0.8
Net Realized Gains on Sales of Investments	4.9			4.1			50.9			5.5			65.4
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(0.5		)	(0.4		)	(3.2		)	(3.1		)	(7.2		)
Portion of Losses Recognized in Other Comprehensive Income	—			—			—			0.3			0.3
Net Impairment Losses Recognized in Earnings	(0.5		)	(0.4		)	(3.2		)	(2.8		)	(6.9		)
Total Revenues	611.2			608.9			645.6			596.6			2,462.3
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	376.6			423.8			368.7			413.0			1,582.1
Insurance Expenses	162.4			167.7			172.7			169.5			672.3
Interest and Other Expenses	21.8			20.9			22.7			20.1			85.5
Total Expenses	560.8			612.4			564.1			602.6			2,339.9
Income (Loss) from Continuing Operations before Income Taxes	50.4			(3.5		)	81.5			(6.0		)	122.4
Income Tax Benefit (Expense)	(14.1		)	5.1			(25.9		)	4.3			(30.6		)
Income (Loss) from Continuing Operations	36.3			1.6			55.6			(1.7		)	91.8
Income from Discontinued Operations	7.3			0.7			—			3.6			11.6
Net Income	$	43.6		$	2.3		$	55.6		$	1.9		$	103.4
Income (Loss) from Continuing Operations Per Unrestricted Share:
Basic	$	0.61		$	0.03		$	0.95		$	(0.03	)	$	1.55
Diluted	$	0.60		$	0.03		$	0.95		$	(0.03	)	$	1.54
Net Income Per Unrestricted Share:
Basic	$	0.73		$	0.04		$	0.95		$	0.03		$	1.75
Diluted	$	0.72		$	0.04		$	0.95		$	0.03		$	1.74
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.96

The sum of quarterly per share amounts does not equal per share amounts for the year due to differences in weighted-average shares and/or equivalent shares outstanding for each of the periods presented.

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Restructuring Expenses (Tables)

12 Months Ended

Dec. 31, 2013

Restructuring Expenses [Abstract]

Schedule of Restructuring and Related Costs

Activity related to restructuring costs from continuing operations for the years ended December 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS	2013		2012		2011
Liability at the Beginning of Year:
Employee Termination Costs	$	2.6	$	0.7	$	0.6
Early Lease Termination Costs	2.3		1.0		0.1
Other Associated Costs	—		—		—
Liability at the Beginning of Year	4.9		1.7		0.7
Expenses Incurred:
Employee Termination Costs	1.8		5.1		2.1
Early Lease Termination Costs	—		2.0		1.4
Other Associated Costs	—		0.1		0.1
Total Expenses Incurred	1.8		7.2		3.6
Payments of:
Employee Termination Costs	2.8		3.2		2.0
Early Lease Termination Costs	1.4		0.7		0.5
Other Associated Costs	—		0.1		0.1
Total Payments	4.2		4.0		2.6
Liability at End of Year:
Employee Termination Costs	1.6		2.6		0.7
Early Lease Termination Costs	0.9		2.3		1.0
Other Associated Costs	—		—		—
Liability at End of Year	$	2.5	$	4.9	$	1.7

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Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Contingencies

NOTE 23. CONTINGENCIES

In the ordinary course of its businesses, the Company is involved in legal proceedings, including lawsuits, regulatory examinations and inquiries. Except with regard to the matters discussed below, based on currently available information, the Company does not believe that it is reasonably possible that any of its pending legal proceedings will have a material effect on the Company’s consolidated financial statements.

Over the last several years, certain state insurance regulators, legislators, treasurers/controllers, and their respective agents have been involved in an array of initiatives that seek, in various ways, to impose new duties on life insurance companies to proactively search for deaths of their insureds and contact the insureds’ beneficiaries even though such beneficiaries may not have submitted claims, including due proof of death, as required under the terms of state-approved life insurance policy forms.

Legislation has been enacted in Kentucky, Maryland, Montana, Nevada, New York, North Dakota and Vermont, with varying effective dates (the “DMF Statutes”), that requires life insurance companies to compare on a regular basis their records for all in-force policies (including those policies issued prior to the effective dates of the legislation) against the database of reported deaths maintained by the Social Security Administration or a comparable database (a “Death Master File”). In contrast, New Mexico has enacted legislation that also requires such comparisons, but exempts life insurance companies, like Kemper’s life insurance subsidiaries (the “Life Companies”), that have not previously utilized a Death Master File, and instead only requires that such companies conduct Death Master File comparisons for life insurance policies issued and delivered in New Mexico after the legislation’s effective date. Likewise, Alabama has enacted a statute that requires such comparisons, but only with respect to policies issued on or after January 1, 2016.

In November 2012, certain of the Life Companies filed a declaratory judgment action in state court in Kentucky asking the court to construe the Kentucky DMF Statute to apply only prospectively - i.e., only with respect to those life insurance policies issued in Kentucky on or after the effective date of the Kentucky DMF Statute - consistent with what the Life Companies believe are the requirements of applicable Kentucky statutory law and Kentucky and federal constitutional provisions. On April 1, 2013, the trial court denied the subject Life Companies’ motion for summary judgment and held that the requirements of the Kentucky DMF Statute apply to life insurance policies issued before the statute’s January 1, 2013 effective date. The subject Life Companies believe that the court did not correctly apply governing law and have appealed the trial court’s decision to the Kentucky Court of Appeals, which issued a stay of enforcement of the Kentucky DMF Statute against the subject Life Companies pending the appeal. A decision by the Court of Appeals is unlikely before the second half of 2014.

In July 2013, certain of the Life Companies filed a declaratory judgment action in state court in Maryland, asking the court to construe the Maryland DMF Statute to apply only to policies issued in Maryland after the effective date of the statute for essentially the same reasons asserted in the Kentucky proceeding. The State of Maryland defendants filed a motion to dismiss the action, contending that the subject Life Companies did not exhaust their administrative remedies before filing their action in the trial court. A hearing on the state’s motion to dismiss is scheduled in March 2014.

The Life Companies are the subject of an unclaimed property compliance audit (the “Treasurers’ Audit”) being conducted by a private audit firm retained by the treasurers/controllers of thirty-eight states (the “Audit Firm”). In July 2013, the California State Controller (the “CA Controller”) filed a complaint for injunctive relief against the Life Companies in state court in California, seeking an order requiring the Life Companies to produce all of their in-force policy records to the Audit Firm to enable the firm to perform a comparison of such records against a Death Master File and to ascertain whether any of the insureds under such policies may be deceased. As described below, the Life Companies have filed a counterclaim in this case against the CA Controller.

The Life Companies are the subject of a multi-state market conduct examination by six state insurance regulators that is focused on the Life Companies’ claim settlement and policy administration practices, and specifically their compliance with state unclaimed property statutes (the “Multi-State Exam”). The Multi-State Exam was originated in June 2012 as a single-state examination by the Illinois Insurance Director. Insurance regulators from five additional states - California, Florida, Pennsylvania, New Hampshire and

NOTE 23. CONTINGENCIES (Continued)

North Dakota - joined the examination in May 2013. In July 2013, the Life Companies received requests from the Illinois Department of Insurance, as the managing lead state for the Multi-State Exam, for a significant volume of additional information, including their records of in-force policies and other information of the type previously requested by the Audit Firm as part of the Treasurers’ Audit and which is the subject of the CA Controller’s complaint.

In September 2013, certain of the Life Companies filed declaratory judgment actions against the insurance regulators in the states of California, Florida, Illinois and Pennsylvania, asking the courts in those states to declare that applicable law does not require life insurers to search a Death Master File to ascertain whether insureds are deceased. The subject Life Companies are also asking the courts to declare that regulators in those states do not have the legal authority to (i) obtain life insurers’ policy records for the purpose of comparing those records against a Death Master File, and (ii) impose payment obligations on life insurers before a claim and due proof of death have been submitted. The declaratory judgment action in California was filed as a counterclaim to the CA Controller’s complaint, joining the California Insurance Commissioner and the Audit Firm as parties to the counterclaim. These cases are in various stages procedurally and a decision in any of them is unlikely before the second quarter of 2014.

The results of the Treasurers’ Audit, Multi-State Exam and the various litigation described above cannot currently be predicted. The Life Companies continue to maintain that states lack the legal authority to establish new requirements that have the effect of changing the terms of existing life insurance contracts with regard to basic claims handling obligations and processes. If these state officials are able to apply such new requirements retroactively to the Life Companies’ existing life insurance policies, it will fundamentally alter the nature and timing of their responsibilities under such policies by effectively eliminating contractual terms that condition claim settlement and payment on the receipt of a claim, including “due proof of death” of an insured. The outcome of the various state initiatives and related litigation could have a significant effect on, including acceleration of, the Life Companies’ payment and/or escheatment of policy benefits, and significantly increase their claims handling costs. Kemper cannot reasonably estimate the amount of loss that it would recognize if the Life Companies were subjected to such requirements on a retroactive basis.

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Related Parties

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

Related Parties

NOTE 24. RELATED PARTIES

Mr. Fayez Sarofim, who served as a director of Kemper until May 1, 2013, is the Chairman of the Board, Chief Executive Officer and the majority shareholder of FS&C, a registered investment advisory firm. Mr. Christopher B. Sarofim, who currently is a director of Kemper and was elected as a director of Kemper on May 1, 2013, is Vice Chairman of FS&C. Kemper’s subsidiary, Trinity, is party to an agreement with FS&C whereby FS&C provides investment management services with respect to certain assets of Trinity for a fee based on the fair market value of the assets under management. Such agreement is terminable by either party at any time upon 30 days advance written notice. Trinity had $154.7 million, $125.2 million and $115.2 million in assets managed by FS&C at December 31, 2013, 2012 and 2011, respectively. Investment Expenses incurred in connection with such agreement were $0.4 million, $0.3 million and $0.3 million for the years ended December 31, 2013, 2012 and 2011, respectively.

FS&C also provides investment management services with respect to certain funds of the Company’s Pension Plan. The Company’s Pension Plan had $148.6 million, $120.7 million and $107.1 million in assets managed by FS&C at December 31, 2013, 2012 and 2011, respectively. The Company’s Pension Plan incurred, in the aggregate, expenses of $0.3 million, $0.3 million and $0.3 million to FS&C for the years ended December 31, 2013, 2012 and 2011, respectively.

With respect to the Company’s defined contribution plans, one of the alternative investment choices afforded to participating employees is the Dreyfus Appreciation Fund, an open-end, diversified managed investment fund. FS&C provides investment management services to the Dreyfus Appreciation Fund as a sub-investment advisor. According to published reports filed by FS&C with the SEC, the Dreyfus Appreciation Fund pays monthly fees to FS&C according to a graduated schedule computed at an annual rate based on the value of the Dreyfus Appreciation Fund’s average daily net assets. The Company does not compensate FS&C for services provided to the Dreyfus Appreciation Fund. Participants in the Company’s defined contribution plans had allocated $22.8 million, $20.4 million and $19.3 million for investment in the Dreyfus Appreciation Fund at December 31, 2013, 2012 and 2011, respectively, representing 6%, 7% and 7% of the total amount invested in the Company’s defined contribution plans at such dates.

The Company believes that the transactions described above have been provided on terms no less favorable to the Company than could have been negotiated with non-affiliated third parties.

As described in Note 21, “Other Reinsurance,” to the Consolidated Financial Statements, the Company also has certain relationships with Capitol, a mutual insurance company which is owned by its policyholders, and its subsidiary, ORCC.

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Basis of Presentation And Significant Estimates

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Significant Estimates

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ESTIMATES

The Consolidated Financial Statements included herein have been prepared on the basis of accounting principles generally accepted in the United States (“GAAP”) and include the accounts of Kemper Corporation (“Kemper”) and its subsidiaries (individually and collectively referred to herein as the “Company”). All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates and assumptions.

The fair values of the Company’s Investments in Fixed Maturities, Investments in Equity Securities, Short-term Investments, Trading Securities and Notes Payable are estimated using a hierarchal framework which prioritizes and ranks market price observability. The carrying amounts reported in the Consolidated Balance Sheets approximate fair value for Cash, Short-term Investments and certain other assets and other liabilities because of their short-term nature. The actual value at which financial instruments could actually be sold or settled with a willing buyer or seller may differ from estimated fair values depending on a number of factors, including, but not limited to, current and future economic conditions, the quantity sold or settled, the presence of an active market and the availability of a willing buyer or seller.

The process of estimating and establishing reserves for losses and LAE for property and casualty insurance is inherently uncertain and the actual ultimate net cost of known and unknown claims may vary materially from the estimated amounts reserved. The reserving process is particularly imprecise for claims involving long-tailed exposures, which may not be discovered or reported until years after the insurance policy period has ended. Management considers a variety of factors, including, but not limited to, past claims experience, current claim trends and relevant legal, economic and social conditions, in estimating reserves. A change in any one or more factors is likely to result in the ultimate net claim costs to differ from the estimated reserve. Changes in such estimates may be material and would be recognized in the Consolidated Financial Statements when such estimates change.

The process of determining whether an asset is impaired or recoverable relies on projections of future cash flows, operating results and market conditions. Projections are inherently uncertain and, accordingly, actual future cash flows may differ materially from projected cash flows. As a result, the Company’s assessment of the impairment of long-lived assets is susceptible to the risk inherent in making such projections.

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Quarterly Financial Information

12 Months Ended

Dec. 31, 2013

Quarterly Financial Data [Abstract]

Quarterly Financial Information

NOTE 25. QUARTERLY FINANCIAL INFORMATION (Unaudited)

	Three Months Ended (Unaudited)												Year Ended
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	Mar 31, 2013			Jun 30, 2013			Sep 30, 2013			Dec 31, 2013			Dec 31, 2013
Revenues:
Earned Premiums	$	509.9		$	512.8		$	507.5		$	495.6		$	2,025.8
Net Investment Income	80.8			74.6			82.4			76.9			314.7
Other Income	0.2			0.2			0.1			0.3			0.8
Net Realized Gains on Sales of Investments	26.9			2.3			49.1			20.8			99.1
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(2.4		)	(2.3		)	(3.5		)	(7.6		)	(15.8		)
Portion of Losses Recognized in Other Comprehensive Income	0.5			1.3			0.1			—			1.9
Net Impairment Losses Recognized in Earnings	(1.9		)	(1.0		)	(3.4		)	(7.6		)	(13.9		)
Total Revenues	615.9			588.9			635.7			586.0			2,426.5
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	349.2			354.2			338.3			315.5			1,357.2
Insurance Expenses	158.3			163.1			170.1			162.9			654.4
Interest and Other Expenses	23.8			25.2			25.3			26.2			100.5
Total Expenses	531.3			542.5			533.7			504.6			2,112.1
Income from Continuing Operations before Income Taxes	84.6			46.4			102.0			81.4			314.4
Income Tax Expense	(26.0		)	(13.9		)	(33.4		)	(26.6		)	(99.9		)
Income from Continuing Operations	58.6			32.5			68.6			54.8			214.5
Income (Loss) from Discontinued Operations	(0.2		)	1.5			1.5			0.4			3.2
Net Income	$	58.4		$	34.0		$	70.1		$	55.2		$	217.7
Income from Continuing Operations Per Unrestricted Share:
Basic	$	1.00		$	0.56		$	1.21		$	0.98		$	3.75
Diluted	$	1.00		$	0.56		$	1.21		$	0.98		$	3.74
Net Income Per Unrestricted Share:
Basic	$	1.00		$	0.59		$	1.24		$	0.99		$	3.81
Diluted	$	1.00		$	0.59		$	1.23		$	0.99		$	3.80
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.96

The sum of quarterly per share amounts does not equal per share amounts for the year due to differences in weighted-average shares and/or equivalent shares outstanding for each of the periods presented.

NOTE 25. QUARTERLY FINANCIAL INFORMATION (Unaudited) (Continued)

	Three Months Ended (Unaudited)												Year Ended
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	Mar 31, 2012			Jun 30, 2012			Sep 30, 2012			Dec 31, 2012			Dec 31, 2012
Revenues:
Earned Premiums	$	529.2		$	529.8		$	527.3		$	520.8		$	2,107.1
Net Investment Income	77.4			75.2			70.4			72.9			295.9
Other Income	0.2			0.2			0.2			0.2			0.8
Net Realized Gains on Sales of Investments	4.9			4.1			50.9			5.5			65.4
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(0.5		)	(0.4		)	(3.2		)	(3.1		)	(7.2		)
Portion of Losses Recognized in Other Comprehensive Income	—			—			—			0.3			0.3
Net Impairment Losses Recognized in Earnings	(0.5		)	(0.4		)	(3.2		)	(2.8		)	(6.9		)
Total Revenues	611.2			608.9			645.6			596.6			2,462.3
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	376.6			423.8			368.7			413.0			1,582.1
Insurance Expenses	162.4			167.7			172.7			169.5			672.3
Interest and Other Expenses	21.8			20.9			22.7			20.1			85.5
Total Expenses	560.8			612.4			564.1			602.6			2,339.9
Income (Loss) from Continuing Operations before Income Taxes	50.4			(3.5		)	81.5			(6.0		)	122.4
Income Tax Benefit (Expense)	(14.1		)	5.1			(25.9		)	4.3			(30.6		)
Income (Loss) from Continuing Operations	36.3			1.6			55.6			(1.7		)	91.8
Income from Discontinued Operations	7.3			0.7			—			3.6			11.6
Net Income	$	43.6		$	2.3		$	55.6		$	1.9		$	103.4
Income (Loss) from Continuing Operations Per Unrestricted Share:
Basic	$	0.61		$	0.03		$	0.95		$	(0.03	)	$	1.55
Diluted	$	0.60		$	0.03		$	0.95		$	(0.03	)	$	1.54
Net Income Per Unrestricted Share:
Basic	$	0.73		$	0.04		$	0.95		$	0.03		$	1.75
Diluted	$	0.72		$	0.04		$	0.95		$	0.03		$	1.74
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.96

The sum of quarterly per share amounts does not equal per share amounts for the year due to differences in weighted-average shares and/or equivalent shares outstanding for each of the periods presented.

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- Accumulated Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Unrealized Gains on Investments, Net of Income Taxes:
Available for Sale Fixed Maturities with Portion of OTTI Recognized in Earnings	$ 0.3	$ 1.4
Other Net Unrealized Gains on Investments	175.5	408.1
Foreign Currency Translation Adjustments, Net of Income Taxes	0.8	0.7
Net Unrecognized Postretirement Benefit Costs, Net of Income Taxes	(41.3)	(97.5)
Accumulated Other Comprehensive Income	$ 135.3	$ 312.7

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Business Segments - Segment Assets (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Assets	$ 7,656.4	$ 8,009.1
Kemper Preferred [Member]
Segment Reporting Information [Line Items]
Assets	1,600.9	1,562.0
Kemper Specialty [Member]
Segment Reporting Information [Line Items]
Assets	655.4	684.6
Kemper Direct [Member]
Segment Reporting Information [Line Items]
Assets	392.3	453.3
Life and Health Insurance [Member]
Segment Reporting Information [Line Items]
Assets	4,545.6	4,781.8
Corporate and Other, Net [Member]
Segment Reporting Information [Line Items]
Assets	$ 462.2	$ 527.4

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Property and Casualty Insurance Reserves (Tables)

12 Months Ended

Dec. 31, 2013

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Liability for Unpaid Claims Adjustment Expense by Expense Type

Property and Casualty Insurance Reserve activity for the years endedDecember 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Beginning Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year	$	970.6		$	1,029.1		$	1,118.7
Less Reinsurance Recoverables and Indemnification at Beginning of Year	66.2			74.5			78.1
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at Beginning of Year	904.4			954.6			1,040.6
Incurred Losses and LAE related to:
Current Year:
Continuing Operations	1,056.5			1,253.1			1,338.5
Prior Years:
Continuing Operations	(59.8		)	(25.2		)	(35.0		)
Discontinued Operations	(4.8		)	(6.3		)	1.9
Total Incurred Losses and LAE related to Prior Years	(64.6		)	(31.5		)	(33.1		)
Total Incurred Losses and LAE	991.9			1,221.6			1,305.4
Paid Losses and LAE related to:
Current Year:
Continuing Operations	682.2			801.4			887.7
Prior Years:
Continuing Operations	421.7			451.2			472.9
Discontinued Operations	12.3			19.2			30.8
Total Paid Losses and LAE related to Prior Years	434.0			470.4			503.7
Total Paid Losses and LAE	1,116.2			1,271.8			1,391.4
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at End of Year	780.1			904.4			954.6
Plus Reinsurance and Indemnification Recoverables at End of Year	63.4			66.2			74.5
Property and Casualty Insurance Reserves, Gross of Reinsurance at End of Year	$	843.5		$	970.6		$	1,029.1

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

Summary financial information included in Income from Discontinued Operations for the years endedDecember 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	2013			2012			2011
Interest, Loan Fees and Earned Discounts	$	—		$	—		$	31.8
Other Automobile Finance Revenues	—			—			1.4
Gain on Sale of Loan Portfolios	—			12.9			4.5
Total Automobile Finance Revenues	—			12.9			37.7
Net Investment Income	—			—			0.5
Net Realized Gains on Sales of Investments	—			—			0.4
Total Revenues Included in Discontinued Operations	$	—		$	12.9		$	38.6
Income (Loss) from Discontinued Operations before Income Taxes:
Results of Operations	$	—		$	(0.2	)	$	18.7
Gain on Sale of Loan Portfolios	—			12.9			4.5
Change in Estimate of Retained Liabilities Arising from Discontinued Operations	4.9			6.2			(3.7		)
Income from Discontinued Operations before Income Taxes	4.9			18.9			19.5
Income Tax Expense	(1.7		)	(7.3		)	(6.7		)
Income from Discontinued Operations	$	3.2		$	11.6		$	12.8
Income from Discontinued Operations Per Unrestricted Share:
Basic	$	0.06		$	0.20		$	0.21
Diluted	$	0.06		$	0.20		$	0.21

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Leases (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Leases, Rent Expense, Net [Abstract]
Minimum Rental Expense	$ 28.3	$ 33.2	$ 31.5
Less: Sublease Rental Income	(1.8)	(2.5)	(2.1)
Net Rental Exense	26.5	30.7	29.4
Future Minimum Lease Payments, Capital and Operating Leases
Capital Leases, Future Minimum Payments Due, 2013	4.7
Capital Leases, Future Minimum Payments Due, 2014	2.2
Capital Leases, Future Minimum Payments Due, 2015	2.1
Capital Leases, Future Minimum Payments Due, 2016	1.5
Capital Leases, Future Minimum Payments Due, 2017	0.1
Capital Leases, Future Minimum Payments Due, 2018 and Thereafter	0
Capital Leases, Total Future Payments	10.6
Less: Imputed Interest	(1.1)
Present Value of Minimum Capital Lease Payments	9.5
Operating Leases, Future Minimum Payments Due, 2013	25.1
Operating Leases, Future Minimum Payments Due, 2014	18.7
Operating Leases, Future Minimum Payments Due, 2015	16.7
Operating Leases, Future Minimum Payments Due, 2016	15.1
Operating Leases, Future Minimum Payments Due, 2017	8.9
Operating Leases, Future Minimum Payments Due, 2018 and Thereafter	15.3
Operating Leases, Total Future Payments	99.8
Capital Leases, Future Minimum Sublease Rentals	$ 5.5
Office Space [Member] | Minimum [Member]
Operating Leased Assets [Line Items]
Operating Lease, Term	1 year
Office Space [Member] | Maximum [Member]
Operating Leased Assets [Line Items]
Operating Lease, Term	12 years
Equipment [Member] | Minimum [Member]
Operating Leased Assets [Line Items]
Operating Lease, Term	1 year
Equipment [Member] | Maximum [Member]
Operating Leased Assets [Line Items]
Operating Lease, Term	5 years

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Assets:
Fixed Maturities at Fair Value (Amortized Cost: 2013 - $4,370.5; 2012 - $4,283.8)	$ 4,575.0	$ 4,860.2
Equity Securities at Fair Value (Cost: 2013 - $530.0; 2012 - $462.7)	598.5	521.9
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	245.1	253.0
Short-term Investments at Cost which Approximates Fair Value	284.7	327.5
Other Investments	448.0	497.5
Total Investments	6,151.3	6,460.1
Cash	66.5	96.3
Receivables from Policyholders	331.6	369.3
Other Receivables	193.1	206.1
Deferred Policy Acquisition Costs	302.9	303.4
Goodwill	311.8	311.8
Current and Deferred Income Tax Assets	31.8	5.4
Other Assets	267.4	256.7
Total Assets	7,656.4	8,009.1
Liabilities and Shareholders’ Equity:
Life and Health Insurance Reserves	3,217.5	3,161.6
Property and Casualty Insurance Reserves	843.5	970.6
Total Insurance Reserves	4,061.0	4,132.2
Unearned Premiums	598.9	650.9
Liabilities for Income Taxes	8.3	21.5
Notes Payable at Amortized Cost (Fair Value: 2013 - $667.1; 2012 - $675.5)	606.9	611.4
Accrued Expenses and Other Liabilities	329.8	431.4
Total Liabilities	5,604.9	5,847.4
Shareholders’ Equity:
Common Stock, $0.10 Par Value Per Share, 100 Million Shares Authorized; 55,653,437 Shares Issued and Outstanding at December 31, 2013 and 58,454,390 Shares Issued and Outstanding at December 31, 2012	5.6	5.8
Paid-in Capital	694.8	725.0
Retained Earnings	1,215.8	1,118.2
Accumulated Other Comprehensive Income	135.3	312.7
Total Shareholders’ Equity	2,051.5	2,161.7
Total Liabilities and Shareholders’ Equity	$ 7,656.4	$ 8,009.1

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Income From Continuing Operations Per Unrestricted Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

A reconciliation of the numerator and denominator used in the calculation of Basic Income from Continuing Operations Per Unrestricted Share and Diluted Income from Continuing Operations Per Unrestricted Share for the years endedDecember 31, 2013, 2012 and 2011 is as follows:

	2013		2012		2011
DOLLARS IN MILLIONS
Income from Continuing Operations	$	214.5	$	91.8	$	61.7
Less Income from Continuing Operations Attributed to Restricted Shares	1.1		0.5		0.3
Income from Continuing Operations Attributed to Unrestricted Shares	213.4		91.3		61.4
Dilutive Effect on Income of Kemper Equity-based Compensation Equivalent Shares	—		—		—
Diluted Income from Continuing Operations Attributed to Unrestricted Shares	$	213.4	$	91.3	$	61.4
SHARES IN THOUSANDS
Weighted-average Unrestricted Shares Outstanding	56,856.9		58,857.3		60,262.6
Kemper Equity-based Compensation Equivalent Shares	126.7		141.7		103.9
Weighted-Average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution	56,983.6		58,999.0		60,366.5
PER UNRESTRICTED SHARE IN WHOLE DOLLARS
Basic Income from Continuing Operations Per Unrestricted Share	$	3.75	$	1.55	$	1.02
Diluted Income from Continuing Operations Per Unrestricted Share	$	3.74	$	1.54	$	1.02

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Income Taxes - Statutory Federal Income Tax Expense, Effective Income Tax Expense, Rates (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Abstract]
Statutory Federal Income Tax Expense									$ (110.0)	$ (42.8)	$ (23.9)
Statutory Federal Income Tax Expense, Rate									35.00%	35.00%	35.00%
Tax-exempt Income and Dividends Received Deduction									10.6	13.9	17.7
Tax-exempt Income and Dividends Received Deduction, Rate									(3.40%)	(11.40%)	(26.00%)
State Income Taxes									(0.2)	(0.8)	(1.0)
State Income Taxes, Rate									0.10%	0.70%	1.50%
Other, Net									(0.3)	(0.9)	0.6
Other, Net, Rate									0.10%	0.70%	(1.00%)
Income Tax Expense	$ (26.6)	$ (33.4)	$ (13.9)	$ (26.0)	$ 4.3	$ (25.9)	$ 5.1	$ (14.1)	$ (99.9)	$ (30.6)	$ (6.6)
Effective Income Tax Expense, Rate									31.80%	25.00%	9.50%

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Schedule 2 - Parent Company Financial Statements - Statements of Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
Net Investment Income	$ 76.9	$ 82.4	$ 74.6	$ 80.8	$ 72.9	$ 70.4	$ 75.2	$ 77.4	$ 314.7	$ 295.9	$ 298.0
Net Realized Gains (Losses) on Sales of Investments	20.8	49.1	2.3	26.9	5.5	50.9	4.1	4.9	99.1	65.4	33.7
Total Revenues	586.0	635.7	588.9	615.9	596.6	645.6	608.9	611.2	2,426.5	2,462.3	2,495.0
Total Expenses	504.6	533.7	542.5	531.3	602.6	564.1	612.4	560.8	2,112.1	2,339.9	2,426.7
Loss before Income Taxes and Equity in Net Income of Subsidiaries					(6.0)	81.5	(3.5)	50.4		122.4
Income Tax Benefit	(26.6)	(33.4)	(13.9)	(26.0)	4.3	(25.9)	5.1	(14.1)	(99.9)	(30.6)	(6.6)
Net Income	55.2	70.1	34.0	58.4	1.9	55.6	2.3	43.6	217.7	103.4	74.5
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Net Investment Income									0.2	0.2	0.4
Net Realized Gains (Losses) on Sales of Investments									0.6	0.3	(0.2)
Total Revenues									0.8	0.5	0.2
Interest Expense									39.0	39.5	39.4
Other Operating Expenses									21.6	13.6	10.3
Total Expenses									60.6	53.1	49.7
Loss before Income Taxes and Equity in Net Income of Subsidiaries									(59.8)	(52.6)	(49.5)
Income Tax Benefit									20.8	18.2	18.6
Loss before Equity in Net Income of Subsidiaries									(39.0)	(34.4)	(30.9)
Equity in Net Income of Subsidiaries									256.7	137.8	105.4
Net Income									$ 217.7	$ 103.4	$ 74.5

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Business Segments (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 segments	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting [Abstract]
Number of Operating Segments	4
Allocated Interest and Other Expenses	$ 39.7	$ 31.7	$ 33.0

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Activities:
Net Income	$ 217.7	$ 103.4	$ 74.5
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities:
Decrease (Increase) in Deferred Policy Acquisition Costs	0.5	(9.4)	(7.8)
Amortization of Life VIF and P&C Customer Relationships	8.3	8.0	11.4
Impairment of P&C Customer Relationships	0	0	13.5
Equity in Earnings of Equity Method Limited Liability Investments	(26.4)	(9.3)	(9.6)
Distribution of Accumulated Earnings of Equity Method Limited Liability Investments	15.4	15.4	0
Amortization of Investment Securities and Depreciation of Investment Real Estate	16.2	15.2	16.0
Net Realized Gains on Sales of Investments	(99.1)	(65.4)	(34.1)
Net Impairment Losses Recognized in Earnings	13.9	6.9	11.3
Gain on Sale of Portfolio of Automobile Loan Receivables	0	(12.9)	(4.5)
Benefit for Loan Losses	0	(2.0)	(42.0)
Depreciation of Property and Equipment	17.4	15.3	10.9
Decrease (Increase) in Other Receivables	43.5	13.9	(0.2)
Decrease in Insurance Reserves	(72.5)	(1.1)	(52.1)
Decrease in Unearned Premiums	(52.0)	(15.2)	(12.4)
Change in Income Taxes	57.9	(14.9)	17.2
Decrease in Accrued Expenses and Other Liabilities	(54.8)	(15.6)	(47.5)
Other, Net	36.1	33.4	30.4
Net Cash Provided (Used) by Operating Activities	122.1	65.7	(25.0)
Investing Activities:
Sales, Paydowns and Maturities of Fixed Maturities	664.4	914.4	650.3
Purchases of Fixed Maturities	(744.5)	(872.6)	(663.4)
Sales of Equity Securities	182.1	70.8	248.3
Purchases of Equity Securities	(213.4)	(137.7)	(199.2)
Acquisition and Improvements of Investment Real Estate	(5.4)	(5.5)	(6.4)
Sales of Investment Real Estate	102.7	6.0	0.3
Sales of and Return of Investment of Equity Method Limited Liability Investments	31.3	56.0	57.0
Acquisitions of Equity Method Limited Liability Investments	(20.5)	(31.0)	(25.7)
Decrease (Increase) in Short-term Investments	41.8	(80.0)	155.5
Receipts from Automobile Loan Receivables	0	2.0	166.5
Net Proceeds from Sale of Portfolio of Automobile Loan Receivables	0	16.7	220.7
Proceeds from Divestiture of Businesses, Net of Cash Divested	3.8	0	0
Increase in Other Investments	(9.1)	(12.4)	(15.6)
Acquisition of Software	(15.2)	(26.5)	(23.2)
Other, Net	(13.2)	(6.4)	(0.5)
Net Cash Provided (Used) by Investing Activities	4.8	(106.2)	564.6
Financing Activities:
Repayments of Certificates of Deposits	0	0	(321.8)
Proceeds from Issuance of Notes Payable	0	0	95.0
Repayments of Notes Payable	(5.5)	0	(95.0)
Common Stock Repurchases	(100.4)	(60.7)	(27.4)
Cash Dividends Paid to Shareholders	(54.9)	(56.9)	(58.2)
Cash Exercise of Stock Options	1.7	1.3	0.2
Excess Tax Benefits from Share-based Awards	1.3	0.5	0.2
Other, Net	1.1	1.4	1.4
Net Cash Used by Financing Activities	(156.7)	(114.4)	(405.6)
Increase (Decrease) in Cash	(29.8)	(154.9)	134.0
Cash, Beginning of Year	96.3	251.2	117.2
Cash, End of Year	$ 66.5	$ 96.3	$ 251.2

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Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at Beginning of Year	$ 6.4	$ 6.2	$ 7.8
Reductions for Tax Positions of Current Period	0.1	0	(1.8)
Additions for Tax Positions of Prior Years	0.3	0.2	0.2
Balance at End of Year	6.8	6.4	6.2
Unrecognized Tax Benefit that Would Not Impact Effective Tax Rate, Tax Position with Uncertain Timing of Deductibility	3.4	3.5	3.7
Unrecognized Tax Benefits, Interest on Income Taxes Accrued	3.4	2.9	2.5
Unrecognized Tax Benefits, Interest on Income Taxes Expense	$ 0.4	$ (0.4)	$ (0.4)

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Schedule 3 - Supplementary Insurance Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Supplementary Insurance Information, by Segment [Line Items]
Premiums	$ 2,025.8		$ 2,107.1		$ 2,173.6
Other Income	0.8		0.8		1.0
Net Investment Income	314.7		295.9		298.0
Insurance Claims and Policyholders' Benefits	1,357.2		1,582.0		1,645.7
Amortization of Deferred Policy Acquisition Costs	253.9		257.0		260.7
Other Insurance Expenses	400.5		415.3		422.9
Deferred Policy Acquisition Costs	302.9		303.4
Insurance Reserves	4,061.0		4,132.2
Unearned Premiums	598.9		650.9
Kemper Preferred [Member]
Supplementary Insurance Information, by Segment [Line Items]
Premiums	876.7		879.4		859.8
Premiums Written	847.8		891.7		868.8
Other Income	0.2		0.4		0.3
Net Investment Income	55.7		45.0		48.8
Insurance Claims and Policyholders' Benefits	592.4		709.0		709.6
Amortization of Deferred Policy Acquisition Costs	148.3		147.8		144.4
Other Insurance Expenses	104.2		96.0		95.4
Deferred Policy Acquisition Costs	68.0		72.7
Insurance Reserves	412.8		452.3
Unearned Premiums	418.6		447.6
Kemper Specialty [Member]
Supplementary Insurance Information, by Segment [Line Items]
Premiums	392.8		419.8		445.2
Premiums Written	383.1		415.1		438.2
Other Income	0.3		0.3		0.5
Net Investment Income	21.8		19.0		22.8
Insurance Claims and Policyholders' Benefits	314.4		350.4		352.8
Amortization of Deferred Policy Acquisition Costs	54.3		58.7		62.6
Other Insurance Expenses	33.9		32.8		28.9
Deferred Policy Acquisition Costs	16.5		17.9
Insurance Reserves	196.4		215.9
Unearned Premiums	119.6		129.4
Kemper Direct [Member]
Supplementary Insurance Information, by Segment [Line Items]
Premiums	123.4		168.0		222.7
Premiums Written	111.3		147.3		209.0
Other Income	0		0		0.1
Net Investment Income	13.4		13.9		17.4
Insurance Claims and Policyholders' Benefits	62.5		129.5		197.6
Amortization of Deferred Policy Acquisition Costs	4.6		6.1		8.8
Other Insurance Expenses	30.1		51.1		67.5
Deferred Policy Acquisition Costs	1.2		1.5
Insurance Reserves	133.4		177.8
Unearned Premiums	32.1		44.3
Life and Health Insurance [Member]
Supplementary Insurance Information, by Segment [Line Items]
Premiums	632.9	[1]	639.9	[1]	645.9	[1]
Other Income	0.2	[1]	0.1	[1]	0.1	[1]
Net Investment Income	209.9	[1]	204.3	[1]	200.5	[1]
Insurance Claims and Policyholders' Benefits	387.9	[1]	393.1	[1]	385.7	[1]
Amortization of Deferred Policy Acquisition Costs	46.7	[1]	44.4	[1]	44.9	[1]
Other Insurance Expenses	271.5	[1]	266.4	[1]	263.7	[1]
Deferred Policy Acquisition Costs	217.2	[1]	211.3	[1]
Insurance Reserves	3,222.8	[1]	3,168.6	[1]
Unearned Premiums	28.6	[1]	29.6	[1]
Other Segments [Member]
Supplementary Insurance Information, by Segment [Line Items]
Premiums	0		0		0
Other Income	0.1		0		0
Net Investment Income	13.9		13.7		8.5
Insurance Claims and Policyholders' Benefits	0		0		0
Amortization of Deferred Policy Acquisition Costs	0		0		0
Other Insurance Expenses	(39.2)		(31.0)		(32.6)
Deferred Policy Acquisition Costs	0		0
Insurance Reserves	95.6		117.6
Unearned Premiums	$ 0		$ 0

[1] The Company’s Life and Health Insurance employee-agents also market certain property and casualty insurance products under common management. Accordingly, the Company includes the results of these property and casualty insurance products in its Life and Health Insurance segment.

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Investments - Schedule of Contractual Maturity (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Due in One Year or Less, Amortized Cost	$ 81.3
Due in One Year or Less, Fair Value	82.9
Due after One Year to Five Years, Amortized Cost	724.8
Due after One Year to Five Years, Fair Value	766.0
Due after Five Years to Ten Years, Amortized Cost	1,304.4
Due after Five Years to Ten Years, Fair Value	1,324.4
Due after Ten Years, Amortized Cost	2,051.1
Due after Ten Years, Fair Value	2,183.4
Asset-backed Securities Not Due at a Single Maturity Date, Amortized Cost	208.9
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	218.3
Investments in Fixed Maturities, Amortized Cost	4,370.5	4,283.8
Investments in Fixed Maturities, Fair Value	4,575.0	4,860.2
Other Non-Governmental Issuers [Member]
Schedule of Available-for-sale Securities [Line Items]
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	50.7
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Schedule of Available-for-sale Securities [Line Items]
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	155.9
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Schedule of Available-for-sale Securities [Line Items]
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	11.3
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Schedule of Available-for-sale Securities [Line Items]
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	$ 0.4

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Pension Benefits - Changes in Fair Value of Plan Assets and Changes in Accumulated Benefit Obligations (Details) (Pension Plans, Defined Benefit [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair Value of Plan Assets at Beginning of Year	$ 457.6	$ 441.3
Actual Return on Plan Assets	34.5	38.0
Employer Contributions	55.0	0
Benefits Paid	(22.6)	(21.5)
Settlement Benefits	0	(0.2)
Fair Value of Plan Assets at End of Year	524.5	457.6
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Benefit Obligations at Beginning of Year	553.9	499.2
Service Cost	10.8	10.8
Interest Cost	22.4	22.4
Benefits Paid	(22.6)	(21.5)
Settlement Benefits	0	(0.2)
Actuarial Losses	49.0	(43.2)
Benefit Obligations at End Of Year	515.5	553.9
Funded Status - Benefit Obligation In Excess of Plan Assets	9.0	(96.3)
Amount Recognized in Accumulated Other Comprehensive Income:
Accumulated Actuarial Loss	(86.3)	(166.4)
Prior Service Cost	0	0.1
Amount Recognized in Accumulated Other Comprehensive Income	(86.3)	(166.3)
Accumulated Benefit Obligation	$ 496.2	$ 531.3

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Schedule 3 - Supplementary Insurance Information

12 Months Ended

Dec. 31, 2013

Supplementary Insurance Information [Abstract]

Supplementary Insurance Information

KEMPER CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION

(Dollars in Millions)

	Year Ended December 31,															December 31,
	Premiums		Premiums Written		Other Income		Net Investment Income		Insurance Claims and Policy- holders’ Benefits		Amortization Of Deferred Policy Acquisition Costs		Other Insurance Expenses			Deferred Policy Acquisition Costs		Insurance Reserves		Unearned Premiums
2013
Kemper Preferred	$	876.7	$	847.8	$	0.2	$	55.7	$	592.4	$	148.3	$	104.2		$	68.0	$	412.8	$	418.6
Kemper Specialty	392.8		383.1		0.3		21.8		314.4		54.3		33.9			16.5		196.4		119.6
Kemper Direct	123.4		111.3		—		13.4		62.5		4.6		30.1			1.2		133.4		32.1
Life and Health (1)	632.9		N/A		0.2		209.9		387.9		46.7		271.5			217.2		3,222.8		28.6
Other	—		N/A		0.1		13.9		—		—		(39.2		)	—		95.6		—
Total	$	2,025.8	N/A		$	0.8	$	314.7	$	1,357.2	$	253.9	$	400.5		$	302.9	$	4,061.0	$	598.9
2012
Kemper Preferred	$	879.4	$	891.7	$	0.4	$	45.0	$	709.0	$	147.8	$	96.0		$	72.7	$	452.3	$	447.6
Kemper Specialty	419.8		415.1		0.3		19.0		350.4		58.7		32.8			17.9		215.9		129.4
Kemper Direct	168.0		147.3		—		13.9		129.5		6.1		51.1			1.5		177.8		44.3
Life and Health (1)	639.9		N/A		0.1		204.3		393.1		44.4		266.4			211.3		3,168.6		29.6
Other	—		N/A		—		13.7		—		—		(31.0		)	—		117.6		—
Total	$	2,107.1	N/A		$	0.8	$	295.9	$	1,582.0	$	257.0	$	415.3		$	303.4	$	4,132.2	$	650.9
2011
Kemper Preferred	$	859.8	$	868.8	$	0.3	$	48.8	$	709.6	$	144.4	$	95.4
Kemper Specialty	445.2		438.2		0.5		22.8		352.8		62.6		28.9
Kemper Direct	222.7		209.0		0.1		17.4		197.6		8.8		67.5
Life and Health (1)	645.9		N/A		0.1		200.5		385.7		44.9		263.7
Other	—		N/A		—		8.5		—		—		(32.6		)
Total	$	2,173.6	N/A		$	1.0	$	298.0	$	1,645.7	$	260.7	$	422.9

(1) The Company’s Life and Health Insurance employee-agents also market certain property and casualty insurance products under common management. Accordingly, the Company includes the results of these property and casualty insurance products in its Life and Health Insurance segment.

See Accompanying Report of Independent Registered Public Accounting Firm.

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Quarterly Financial Information (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenues [Abstract]
Earned Premiums	$ 495.6	$ 507.5	$ 512.8	$ 509.9	$ 520.8	$ 527.3	$ 529.8	$ 529.2	$ 2,025.8	$ 2,107.1	$ 2,173.6
Net Investment Income	76.9	82.4	74.6	80.8	72.9	70.4	75.2	77.4	314.7	295.9	298.0
Other Income	0.3	0.1	0.2	0.2	0.2	0.2	0.2	0.2	0.8	0.8	1.0
Net Realized Gains on Sales of Investments	20.8	49.1	2.3	26.9	5.5	50.9	4.1	4.9	99.1	65.4	33.7
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(7.6)	(3.5)	(2.3)	(2.4)	(3.1)	(3.2)	(0.4)	(0.5)	(15.8)	(7.2)	(11.4)
Portion of Losses Recognized in Other Comprehensive Income	0	0.1	1.3	0.5	0.3	0	0	0	1.9	0.3	0.1
Net Impairment Losses Recognized in Earnings	(7.6)	(3.4)	(1.0)	(1.9)	(2.8)	(3.2)	(0.4)	(0.5)	(13.9)	(6.9)	(11.3)
Total Revenues	586.0	635.7	588.9	615.9	596.6	645.6	608.9	611.2	2,426.5	2,462.3	2,495.0
Expenses [Abstract]
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	315.5	338.3	354.2	349.2	413.0	368.7	423.8	376.6	1,357.2	1,582.1	1,645.7
Insurance Expenses	162.9	170.1	163.1	158.3	169.5	172.7	167.7	162.4	654.4	672.3	683.6
Interest and Other Expenses	26.2	25.3	25.2	23.8	20.1	22.7	20.9	21.8	100.5	85.5	83.9
Total Expenses	504.6	533.7	542.5	531.3	602.6	564.1	612.4	560.8	2,112.1	2,339.9	2,426.7
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest					(6.0)	81.5	(3.5)	50.4		122.4
Income Tax Expense	(26.6)	(33.4)	(13.9)	(26.0)	4.3	(25.9)	5.1	(14.1)	(99.9)	(30.6)	(6.6)
Income from Continuing Operations	54.8	68.6	32.5	58.6	(1.7)	55.6	1.6	36.3	214.5	91.8	61.7
Income from Discontinued Operations	0.4	1.5	1.5	(0.2)	3.6	0	0.7	7.3	3.2	11.6	12.8
Net Income	55.2	70.1	34.0	58.4	1.9	55.6	2.3	43.6	217.7	103.4	74.5
Income (Loss) from Continuing Operations Per Unrestricted Share [Abstract]
Income from Continuing Operations Per Unrestricted Share - Basic	$ 0.98	$ 1.21	$ 0.56	$ 1.00	$ (0.03)	$ 0.95	$ 0.03	$ 0.61	$ 3.75	$ 1.55	$ 1.02
Income from Continuing Operations Per Unrestricted Share - Diluted	$ 0.98	$ 1.21	$ 0.56	$ 1.00	$ (0.03)	$ 0.95	$ 0.03	$ 0.60	$ 3.74	$ 1.54	$ 1.02
Net Income (Loss) Per Unrestricted Share [Abstract]
Net Income Per Unrestricted Share - Basic	$ 0.99	$ 1.24	$ 0.59	$ 1.00	$ 0.03	$ 0.95	$ 0.04	$ 0.73	$ 3.81	$ 1.75	$ 1.23
Net Income Per Unrestricted Share - Diluted	$ 0.99	$ 1.23	$ 0.59	$ 1.00	$ 0.03	$ 0.95	$ 0.04	$ 0.72	$ 3.80	$ 1.74	$ 1.23
Dividends Paid to Shareholders Per Share	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.96	$ 0.96	$ 0.96
Income from Continuing Operations before Income Taxes	$ 81.4	$ 102.0	$ 46.4	$ 84.6					$ 314.4	$ 122.4	$ 68.3

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Investments - Estimated Fair Value of Investments in Fixed Maturities (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	$ 284,200,000	$ 584,500,000
Available-for-sale Debt Securities, Gross Unrealized Loss Accumulated in Investments	79,700,000	8,100,000
Other Receivables	193,100,000	206,100,000
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	218,300,000
Investments in Fixed Maturities, Fair Value	4,575,000,000	4,860,200,000
Accrued Expenses and Other Liabilities	329,800,000	431,400,000
US Government and Government Agencies and Authorities [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	22,800,000	45,100,000
Available-for-sale Debt Securities, Gross Unrealized Loss Accumulated in Investments	11,700,000	200,000
Investments in Fixed Maturities, Fair Value	362,200,000	428,900,000
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Schedule of Available-for-sale Securities [Line Items]
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	155,900,000
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Schedule of Available-for-sale Securities [Line Items]
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	11,300,000
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Schedule of Available-for-sale Securities [Line Items]
Asset-backed Securities Not Due at a Single Maturity Date, Fair Value	400,000
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	53,800,000	150,500,000
Available-for-sale Debt Securities, Gross Unrealized Loss Accumulated in Investments	20,200,000	100,000
Investments in Fixed Maturities, Fair Value	1,361,000,000	1,401,400,000
Corporate Bonds and Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	205,000,000	385,400,000
Available-for-sale Debt Securities, Gross Unrealized Loss Accumulated in Investments	47,700,000	7,500,000
Investments in Fixed Maturities, Fair Value	2,793,700,000	2,993,400,000
Redeemable Preferred Stocks [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	800,000	2,500,000
Available-for-sale Debt Securities, Gross Unrealized Loss Accumulated in Investments	0	0
Investments in Fixed Maturities, Fair Value	7,400,000	32,600,000
Mortgage and Asset Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	1,800,000	1,000,000
Available-for-sale Debt Securities, Gross Unrealized Loss Accumulated in Investments	100,000	300,000
Investments in Fixed Maturities, Fair Value	50,700,000	3,900,000
Investments in Fixed Maturities [Member]
Schedule of Available-for-sale Securities [Line Items]
Other Receivables	2,500,000	0
Accrued Expenses and Other Liabilities	$ 0	$ 1,500,000

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 15. INCOME TAXES

Current and Deferred Income Tax Assets at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Current Income Tax Assets	$	—	$	5.4
Deferred Income Tax Assets	31.8		6.6
Valuation Allowance for State Income Taxes	—		(6.6		)
Current and Deferred Income Tax Assets	$	31.8	$	5.4

The components of Liabilities for Income Taxes at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Current Income Tax Liabilities	$	1.5	$	—
Deferred Income Tax Liabilities	—		15.1
Unrecognized Tax Benefits	6.8		6.4
Liabilities for Income Taxes	$	8.3	$	21.5

The tax effects of temporary differences that give rise to significant portions of the Company’s Net Deferred Income Tax Assets and Deferred Income Tax Liabilities at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Deferred Income Tax Assets:
Insurance Reserves	$	76.4	$	79.3
Unearned Premium Reserves	40.2		44.1
Tax Capitalization of Policy Acquisition Costs	73.3		73.6
Payroll and Employee Benefit Accruals	38.8		79.9
Net Operating Loss Carryforwards	53.3		100.7
Other	12.6		10.7
Total Deferred Income Tax Assets	294.6		388.3
Deferred Income Tax Liabilities:
Investments	80.0		208.4
Deferred Policy Acquisition Costs	106.0		104.1
Life VIF and P&C Customer Relationships	20.2		25.2
Goodwill and Licenses	26.8		23.5
Depreciable Assets	26.0		29.3
Other	3.8		6.3
Total Deferred Income Tax Liabilities	262.8		396.8
Valuation Allowance for State Income Taxes	—		6.6
Net Deferred Income Tax Assets (Liabilities)	$	31.8	$	(15.1	)

NOTE 15. INCOME TAXES (Continued)

Deferred Income Tax Assets include net operating loss (“NOL”) carryforwards of $53.3 million and $100.7 million at December 31, 2013 and 2012, respectively, which include federal NOL carryforwards of $53.3 million and $94.4 million, respectively, and a state NOL carryforwards of $6.3 million at December 31, 2012. The state NOL carryforwards relate to FAF, the majority of which are scheduled to expire in 2029. Deferred tax asset valuation allowances of $6.6 million were required at December 31, 2012 related to these state NOL carryforwards and other deferred state income tax assets. In 2013, the Company wrote off $6.6 million of deferred state income tax assets that had been previously reserved for in the valuation allowance.

The expiration of the federal net operating loss carryforwards and the related deferred income tax assets is presented below by year of expiration.

DOLLARS IN MILLIONS	NOL Carryforwards		Deferred Tax Asset
Expiring in:
2020	$	19.0	$	6.7
2021 through 2025	32.9		11.5
2026 through 2030	30.0		10.5
2031 through 2032	70.4		24.6
Total All Years	$	152.3	$	53.3

Except for the federal NOL carryforwards scheduled to expire in 2031 through 2032, all of the federal NOL carryforwards were acquired in connection with business acquisitions made in prior years and are subject to annual usage limitations under the Internal Revenue Code. The Company expects to fully utilize these federal NOL carryforwards.

The Company has not provided Federal income taxes on $14.7 million of Mutual Savings Life’s income earned prior to 1984 which is not subject to income taxes under certain circumstances. Federal income taxes of $5.1 million would be paid on such income if it is distributed to shareholders in the future or if it does not continue to meet certain limitations.

A reconciliation of the beginning and ending amount of Unrecognized Tax Benefits for the years ended December 31, 2013, 2012 and 2011 is as follows:

DOLLARS IN MILLIONS	2013		2012		2011
Balance at Beginning of Year	$	6.4	$	6.2	$	7.8
Additions (Reductions) for Tax Positions of Current Period	0.1		—		(1.8		)
Additions for Tax Positions of Prior Years	0.3		0.2		0.2
Balance at End of Year	$	6.8	$	6.4	$	6.2

The statute of limitations related to Kemper and its eligible subsidiaries’ consolidated Federal income tax returns is closed for all tax years up to and including 2006. The expiration of the statute of limitations related to the various state income tax returns that Kemper and its subsidiaries file varies by state.

During the first quarter of 2012, the Internal Revenue Service (“IRS”) began an audit of the Company’s 2009 and 2010 federal income tax returns. The Company reported a capital loss and a net operating loss in its 2009 federal income tax return and a net operating loss in its 2010 federal income tax return. The Company has carried these losses back to earlier tax years. Even though the Company has already received the refunds from carrying these losses back to such earlier tax years, approval by the Joint Committee on Taxation (“JCT”) is still required by law. The JCT has requested that the IRS perform an audit of these years before approving the refunds. During the second quarter of 2013, the Company extended the federal statute of limitations related to its 2007 through 2010 tax years to December 31, 2014. The extension was requested by the IRS to provide additional time for the IRS to finish processing its audit of the Company’s 2009 and 2010 federal income tax returns and related refund claims and for the IRS to prepare the necessary documentation for the JCT’s review required by statute. The Company does not anticipate a material modification to the filed returns or the related refunds that have been received.

NOTE 15. INCOME TAXES (Continued)

During 2012, the Illinois Department of Revenue began an audit of the 2009 and 2010 tax years. The Company does not anticipate a material modification to the filed returns.

Unrecognized Tax Benefits at December 31, 2013, 2012 and 2011 include $3.4 million, $3.5 million and $3.7 million, respectively, for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred income tax accounting, other than for interest and penalties, the disallowance of the shorter deductibility period would not affect the effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The liability for Unrecognized Tax Benefits included accrued interest of $3.4 million, $2.9 million and $2.5 million at December 31, 2013, 2012 and 2011, respectively. Tax expense includes interest expense of $0.4 million related to unrecognized tax benefits for each of the years ended December 31, 2013, 2012 and 2011.

The components of Income Tax Expense from Continuing Operations for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Current Income Tax Expense	$	(49.4	)	$	(43.3	)	$	(43.4	)
Deferred Income Tax Benefit (Expense)	(50.1		)	12.9			35.2
Decrease (Increase) Unrecognized Tax Benefits	(0.4		)	(0.2		)	1.6
Income Tax Expense	$	(99.9	)	$	(30.6	)	$	(6.6	)

Net income taxes paid were $42.4 million and $52.2 million in 2013 and 2012, respectively. Income taxes refunded, net of income tax paid of $57.1 million, were $4.1 million in 2011.

A reconciliation of the Statutory Federal Income Tax Expense and Rate to the Company’s Effective Income Tax Expense and Rate from Continuing Operations for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013					2012					2011
	Amount			Rate		Amount			Rate		Amount			Rate
Statutory Federal Income Tax Expense	$	(110.0	)	35.0	%	$	(42.8	)	35.0	%	$	(23.9	)	35.0	%
Tax-exempt Income and Dividends Received Deduction	10.6			(3.4	)	13.9			(11.4	)	17.7			(26.0	)
State Income Taxes	(0.2		)	0.1		(0.8		)	0.7		(1.0		)	1.5
Other, Net	(0.3		)	0.1		(0.9		)	0.7		0.6			(1.0	)
Effective Income Tax Expense from Continuing Operations	$	(99.9	)	31.8	%	$	(30.6	)	25.0	%	$	(6.6	)	9.5	%

Comprehensive Income Tax Expense included in the Consolidated Financial Statements for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Income Tax Expense:
Continuing Operations	$	(99.9	)	$	(30.6	)	$	(6.6	)
Discontinued Operations	(1.7		)	(7.3		)	(6.7		)
Unrealized Depreciation (Appreciation) on Securities	129.1			(34.4		)	(71.6		)
Foreign Currency Translation Adjustments on Investments	(0.1		)	(0.6		)	(0.1		)
Tax Effects from Postretirement Benefit Plans	(30.4		)	4.6			15.9
Tax Effects from Long-Term Equity-based Compensation included in Paid-in Capital	0.2			(0.1		)	(1.0		)
Comprehensive Income Tax Expense	$	(2.8	)	$	(68.4	)	$	(70.1	)

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Schedule 4 - Reinsurance Schedule

12 Months Ended

Dec. 31, 2013

Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract]

Reinsurance Schedule

SCHEDULE IV

KEMPER CORPORATION

REINSURANCE SCHEDULE

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

(Dollars in Millions)

	Gross Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount		Percentage of Amount Assumed to Net
Year Ended December 31, 2013
Life Insurance in Force	$	21,006.0	$	576.4	$	229.5	$	20,659.1	1.1	%
Premiums:
Life Insurance	$	392.4	$	1.5	$	1.8	$	392.7	0.5	%
Accident and Health Insurance	161.9		0.6		0.1		161.4		0.1	%
Property and Liability Insurance	1,452.7		31.8		50.8		1,471.7		3.5	%
Total Premiums	$	2,007.0	$	33.9	$	52.7	$	2,025.8	2.6	%
Year Ended December 31, 2012
Life Insurance in Force	$	21,340.4	$	610.4	$	242.9	$	20,972.9	1.2	%
Premiums:
Life Insurance	$	392.8	$	1.4	$	2.0	$	393.4	0.5	%
Accident and Health Insurance	165.5		0.4		0.1		165.2		0.1	%
Property and Liability Insurance	1,547.3		40.7		41.9		1,548.5		2.7	%
Total Premiums	$	2,105.6	$	42.5	$	44.0	$	2,107.1	2.1	%
Year Ended December 31, 2011
Life Insurance in Force	$	21,627.8	$	662.0	$	256.9	$	21,222.7	1.2	%
Premiums:
Life Insurance	$	394.3	$	1.5	$	2.3	$	395.1	0.6	%
Accident and Health Insurance	166.5		0.3		0.1		166.3		0.1	%
Property and Liability Insurance	1,609.8		38.9		41.3		1,612.2		2.6	%
Total Premiums	$	2,170.6	$	40.7	$	43.7	$	2,173.6	2.0	%

See Accompanying Report of Independent Registered Public Accounting Firm.

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Pension Benefits (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended								0 Months Ended	12 Months Ended			0 Months Ended				12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Pension Plans, Defined Benefit [Member]	Dec. 31, 2012 Pension Plans, Defined Benefit [Member]	Dec. 31, 2013 Supplemental Employee Retirement Plan, Defined Benefit [Member]	Dec. 31, 2012 Supplemental Employee Retirement Plan, Defined Benefit [Member]	Dec. 31, 2011 Supplemental Employee Retirement Plan, Defined Benefit [Member]	Sep. 14, 2011 Pension Plans, Defined Benefit [Member]	Dec. 31, 2013 Pension Plans, Defined Benefit [Member]	Dec. 31, 2012 Pension Plans, Defined Benefit [Member]	Dec. 31, 2011 Pension Plans, Defined Benefit [Member]	Sep. 04, 2013 Cash Contribution [Member] Pension Plans, Defined Benefit [Member]	Sep. 14, 2011 Cash Contribution [Member] Pension Plans, Defined Benefit [Member]	Sep. 14, 2011 Common Stock Intermec [Member] Pension Plans, Defined Benefit [Member]	Sep. 14, 2011 Stock Contribution [Member] Pension Plans, Defined Benefit [Member]	Dec. 31, 2012 Segment, Discontinued Operations [Member] Pension Plans, Defined Benefit [Member]	Dec. 31, 2011 Segment, Discontinued Operations [Member] Pension Plans, Defined Benefit [Member]	Dec. 31, 2013 Dreyfus Appreciation Fund [Member]	Dec. 31, 2013 Kemper's ESOP Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Funded Status of Plan				$ 9.0	$ (96.3)	$ 23.3	$ 24.0
Defined Benefit Pension Plan, Number of Participants and Beneficiaries				9,000
Defined Benefit Pension Plans Active Employees				2,400
Percentage of Compensation, Defined Benefit Plan Employee Contribution				3.00%
Defined Benefit Plan, Contributions by Employer				55.0	0				83.7				55.0	32.2		51.5
Defined Benefit Plan, Number of Shares of Equity Securities Contributed by Employer Included in Plan Assets															7,309,764
Pension Expense Recognized						1.8	1.8	3.3		29.7	22.5	18.1					0.5	0.6
Actuarial Gain Recognized in Other Comprehensive Income, Before Tax	61.6	(29.4)	(53.9)			1.5	1.3	2.9		53.8	(34.8)	(52.4)
Defined Contribution Plan, Cost Recognized	7.3	7.8	7.3
Defined Contribution Plan, Fair Value of Plan Assets																			$ 22.5	$ 19.3
Defined Contribution Plan, Percentage of Plan Assets Invested																			6.50%	5.60%

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Catatrophe Reinsurance - Catatrophe Reinsurance Premiums (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Liability for Catastrophe Claims [Line Items]
Ceded Catastrphoe Reinsurance Premiums	$ 33.9	$ 42.5	$ 40.7
Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Ceded Catastrphoe Reinsurance Premiums	23.6	27.1	23.2
Kemper Preferred [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Ceded Catastrphoe Reinsurance Premiums	23.2	24.6	20.0
Kemper Specialty [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Ceded Catastrphoe Reinsurance Premiums	0.1	0.1	0.1
Kemper Direct [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Ceded Catastrphoe Reinsurance Premiums	0.3	0.4	0.8
Life and Health Insurance [Member] | Catastrophe [Member]
Liability for Catastrophe Claims [Line Items]
Ceded Catastrphoe Reinsurance Premiums	$ 0	$ 2.0	$ 2.3

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Postretirement Benefits Other Than Pensions (Other Postretirement Benefit Plan, Defined Benefit [Member])

12 Months Ended

Dec. 31, 2013

Other Postretirement Benefit Plan, Defined Benefit [Member]

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Postemployment Benefits Other Than Pensions

NOTE 17. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company sponsors an other than pension postretirement employee benefit plan (“OPEB”) that provides medical, dental and/or life insurance benefits to approximately 600 retired and 300 active employees (the “OPEB Plan”). The Company generally is self-insured for the benefits under the OPEB Plan. The medical plan generally provides for a limited number of years of medical insurance benefits at retirement based on the participant’s attained age at retirement and number of years of service until specified dates and generally requires participant contributions, with most contributions adjusted annually.

Changes in Fair Value of Plan Assets and Changes in Accumulated Postretirement Benefit Obligation for the years ended December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS
	2013			2012
Fair Value of Plan Assets at Beginning of Year	$	—		$	—
Employer Contributions	2.9			3.0
Plan Participants’ Contributions	1.2			1.0
Benefits Paid	(4.1		)	(4.0		)
Fair Value of Plan Assets at End of Year	—			—
Accumulated Postretirement Benefit Obligation at Beginning of Year	42.8			44.7
Service Cost	0.2			0.2
Interest Cost	1.2			1.6
Plan Participants’ Contributions	1.2			1.0
Benefits Paid	(4.1		)	(4.0		)
Medicare Part D Subsidy Received	—			1.0
Actuarial Gains	(6.2		)	(5.5		)
Obligations Transferred Into Plan	—			3.8
Accumulated Postretirement Benefit Obligation at End of Year	35.1			42.8
Funded Status—Accumulated Postretirement Benefit Obligation in Excess of Plan Assets	$	(35.1	)	$	(42.8	)
Actuarial Gain Recognized in Accumulated Other Comprehensive Income	$	18.4		$	13.4

The measurement dates of the assets and liabilities at end of year in the preceding table under the headings “2013” and “2012” were December 31, 2013 and December 31, 2012, respectively.

The weighted-average discount rate and rate of increase in future compensation levels used to develop the components of the Accumulated Postretirement Benefit Obligation at December 31, 2013 and 2012 were:

	2013		2012
Discount Rate	4.00	%	3.15	%
Rate of Increase in Future Compensation Levels	2.10		2.10

The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at December 31, 2013 was 8.5% for 2014, gradually declining to 5.0% in the year 2021 and remaining at that level thereafter for medical benefits and 8.0% for 2014, gradually declining to 5.0% in the year 2022 and remaining at that level thereafter for prescription drug benefits. The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at December 31, 2012 was 7.0% for 2013, gradually declining to 5.0% in the year 2017 and remaining at that level thereafter for medical benefits and 8.5% for 2013, gradually declining to 5.0% in the year 2020 and remaining at that level thereafter for prescription drug benefits.

A one-percentage point increase in the assumed health care cost trend rate for each year would increase the Accumulated Postretirement Benefit Obligation at December 31, 2013 by $2.1 million and 2013 OPEB expense by $0.1 million. A one-percentage point increase in the assumed health care cost trend rate for each year would increase the Accumulated Postretirement Benefit Obligation at December 31, 2012 by $2.8 million and 2012 OPEB expense by $0.1 million.

NOTE 17. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)

The components of Comprehensive OPEB (Income) Expense for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Service Cost Earned During the Year	$	0.2		$	0.2		$	0.1
Interest Cost on Accumulated Postretirement Benefit Obligation	1.2			1.6			1.9
Amortization of Actuarial Gain	(1.2		)	(1.2		)	(0.6		)
OPEB Expense Recognized in Consolidated Statements of Income	0.2			0.6			1.4
Unrecognized OPEB (Gain) Loss Arising During the Year	(6.2		)	(5.5		)	4.4
Amortization of Accumulated Unrecognized OPEB Gain	1.2			1.2			0.6
Comprehensive OPEB (Income) Expense	$	(4.8	)	$	(3.7	)	$	6.4

The Company estimates that OPEB Expense for the year ended December 31, 2014 will include income of $1.5 million resulting from the amortization of the related accumulated actuarial gain included in Accumulated Other Comprehensive Income at December 31, 2013.

The weighted-average discount rate and rate of increase in future compensation levels used to develop OPEB Expense for the years ended December 31, 2013, 2012 and 2011 were:

	2013		2012		2011
Discount Rate	3.15	%	4.25	%	4.40	%
Rate of Increase in Future Compensation Levels	2.10		2.10		1.50

The Company expects to contribute $3.7 million, net of the expected Medicare Part D subsidy, to its OPEB Plan to fund benefit payments in 2014.

The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are expected to be paid:

DOLLARS IN MILLIONS	Years Ending December 31,
	2014			2015			2016			2017			2018			2019-2023
Benefit Payments:
Excluding Medicare Part D Subsidy	$	4.1		$	4.2		$	4.2		$	4.1		$	3.9		$	16.4
Expected Medicare Part D Subsidy	(0.4		)	(0.4		)	(0.4		)	(0.4		)	(0.4		)	(2.0		)
Net Benefit Payments	$	3.7		$	3.8		$	3.8		$	3.7		$	3.5		$	14.4

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Notes Payable - Debt Outstanding (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Notes Payable under Revolving Credit Agreement Former Credit Agreement [Member]	Mar. 07, 2012 Notes Payable under Revolving Credit Agreement Former Credit Agreement [Member]	Dec. 31, 2011 Notes Payable under Revolving Credit Agreement Former Credit Agreement [Member]	Dec. 31, 2013 Senior Notes [Member] Senior Notes, 6% Due May 15, 2017 [Member]	Dec. 31, 2012 Senior Notes [Member] Senior Notes, 6% Due May 15, 2017 [Member]	Dec. 31, 2013 Senior Notes [Member] Senior Notes, 6% Due November 30, 2015 [Member]	Dec. 31, 2012 Senior Notes [Member] Senior Notes, 6% Due November 30, 2015 [Member]	Dec. 31, 2013 Mortgage Note Payable [Member]	Dec. 31, 2012 Mortgage Note Payable [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 245,000,000.0
Notes Payable	606,900,000	611,400,000				357,900,000	357,300,000	249,000,000	248,600,000	0	5,500,000
Line of Credit Facility, Amount Outstanding				$ 0	$ 0

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Postretirement Benefits Other Than Pensions - Changes in Fair Value of Plan Assets and Changes in Accumulated Benefit Obligations (Details) (Other Postretirement Benefit Plan, Defined Benefit [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Other Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair Value of Plan Assets at Beginning of Year	$ 0	$ 0
Employer Contributions	2.9	3.0
Plan Participants' Contributions	1.2	1.0
Benefits Paid	(4.1)	(4.0)
Fair Value of Plan Assets at End of Year	0	0	0
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Benefit Obligations at Beginning of Year	42.8	44.7
Service Cost	0.2	0.2	0.1
Interest Cost	1.2	1.6	1.9
Plan Participants' Contributions	1.2	1.0
Benefits Paid	(4.1)	(4.0)
Modernization Act Subsidy Received	0	1.0
Actuarial Losses	(6.2)	(5.5)
Obligations Transferred Into Plan	0	3.8
Benefit Obligations at End Of Year	35.1	42.8	44.7
Funded Status - Benefit Obligation In Excess of Plan Assets	(35.1)	(42.8)
Actuarial Gain Recognized in Accumulated Other Comprehensive Income	$ (18.4)	$ (13.4)

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Consolidated Statements of Shareholders’ Equity (USD $) In Millions, unless otherwise specified	Total	Common Stock [Member]	Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Balance at Dec. 31, 2010	$ 2,023.1	$ 6.1	$ 751.1	$ 1,108.5	$ 157.4
Balance, shares at Dec. 31, 2010		61.1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	74.5			74.5
Other Comprehensive Income (Loss), Net of Tax	100.6				100.6
Cash Dividends to Shareholders	(58.2)			(58.2)
Repurchases of Common Stock	(27.4)	(0.1)	(11.6)	(15.7)
Repurchases of Common Stock, shares	(0.9)	(0.9)
Equity-based Compensation Cost (note 9)	5.3		5.3
Equity-based Awards, Net of Shares Exchanged (note 9)	(1.3)		(0.9)	(0.4)
Equity-based Awards, Net of Shares Exchanged, shares (note 9)		0.1
Balance at Dec. 31, 2011	2,116.6	6.0	743.9	1,108.7	258.0
Balance, shares at Dec. 31, 2011		60.3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	103.4			103.4
Other Comprehensive Income (Loss), Net of Tax	54.7				54.7
Cash Dividends to Shareholders	(56.9)			(56.9)
Repurchases of Common Stock	(60.7)	(0.2)	(24.9)	(35.6)
Repurchases of Common Stock, shares	(2.0)	(2.0)
Equity-based Compensation Cost (note 9)	5.8		5.8
Equity-based Awards, Net of Shares Exchanged (note 9)	(1.2)		0.2	(1.4)
Equity-based Awards, Net of Shares Exchanged, shares (note 9)		0.2
Balance at Dec. 31, 2012	2,161.7	5.8	725.0	1,118.2	312.7
Balance, shares at Dec. 31, 2012		58.5
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	217.7			217.7
Other Comprehensive Income (Loss), Net of Tax	(177.4)				(177.4)
Cash Dividends to Shareholders	(54.9)			(54.9)
Repurchases of Common Stock	(100.4)	(0.2)	(36.8)	(63.4)
Repurchases of Common Stock, shares	(3.0)	(3.0)
Equity-based Compensation Cost (note 9)	5.5		5.5
Equity-based Awards, Net of Shares Exchanged (note 9)	(0.7)		1.1	(1.8)
Equity-based Awards, Net of Shares Exchanged, shares (note 9)		0.2
Balance at Dec. 31, 2013	$ 2,051.5	$ 5.6	$ 694.8	$ 1,215.8	$ 135.3
Balance, shares at Dec. 31, 2013		55.7

XML

Consolidated Balance Sheets Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Amortized Cost of Fixed Maturity Securities	$ 4,370.5	$ 4,283.8
Equity Securities at Cost	530.0	462.7
Fair Value of Notes Payable	$ 667.1	$ 675.5
Common Stock, Par Value	$ 0.1	$ 0.1
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Issued	55,653,437	58,454,390
Common Stock, Shares Outstanding	55,653,437	58,454,390

XML

Restructuring Expenses

12 Months Ended

Dec. 31, 2013

Restructuring Expenses [Abstract]

Restructuring Expenses

NOTE 10. RESTRUCTURING EXPENSES

Activity related to restructuring costs from continuing operations for the years ended December 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS	2013		2012		2011
Liability at the Beginning of Year:
Employee Termination Costs	$	2.6	$	0.7	$	0.6
Early Lease Termination Costs	2.3		1.0		0.1
Other Associated Costs	—		—		—
Liability at the Beginning of Year	4.9		1.7		0.7
Expenses Incurred:
Employee Termination Costs	1.8		5.1		2.1
Early Lease Termination Costs	—		2.0		1.4
Other Associated Costs	—		0.1		0.1
Total Expenses Incurred	1.8		7.2		3.6
Payments of:
Employee Termination Costs	2.8		3.2		2.0
Early Lease Termination Costs	1.4		0.7		0.5
Other Associated Costs	—		0.1		0.1
Total Payments	4.2		4.0		2.6
Liability at End of Year:
Employee Termination Costs	1.6		2.6		0.7
Early Lease Termination Costs	0.9		2.3		1.0
Other Associated Costs	—		—		—
Liability at End of Year	$	2.5	$	4.9	$	1.7

XML

Pension Benefits - Changes in Fair Value of Pension Plans Level 3 (Details) (Pension Plans, Defined Benefit [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Transfers out of Level 3		$ (1.0)
Fair Value of Plan Assets at End of Year	524.5	457.6
Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair Value of Plan Assets at Beginning of Year	27.5	41.4
Return on Plan Assets Still Held	3.5	1.8
Purchases, Sales and Settlements, Net	16.4	(14.7)
Fair Value of Plan Assets at End of Year	47.4	27.5
Corporate Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair Value of Plan Assets at Beginning of Year		1.0
Return on Plan Assets Still Held		0
Purchases, Sales and Settlements, Net		0
Transfers out of Level 3		(1.0)
Fair Value of Plan Assets at End of Year		0
Other Equity Interests [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair Value of Plan Assets at Beginning of Year	26.9	37.2
Return on Plan Assets Still Held	3.5	1.7
Purchases, Sales and Settlements, Net	16.5	(12.0)
Transfers out of Level 3		0
Fair Value of Plan Assets at End of Year	46.9	26.9
Receivables and Other [Member]
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair Value of Plan Assets at End of Year	2.8	3.1
Receivables and Other [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair Value of Plan Assets at Beginning of Year	0.6	3.2
Return on Plan Assets Still Held	0	0.1
Purchases, Sales and Settlements, Net	(0.1)	(2.7)
Transfers out of Level 3		0
Fair Value of Plan Assets at End of Year	$ 0.5	$ 0.6

XML

Income Taxes - Summary of Federal Net Operating Loss Carryforwards and Related Deferred Income Tax Aseets (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Income Tax Contingency [Line Items]
Deferred Tax Assets, Net Operating Loss Carryforwards	$ 53.3	$ 100.7
Federal [Member]
Income Tax Contingency [Line Items]
Net Operating Loss Carryforwards	152.3
Deferred Tax Assets, Net Operating Loss Carryforwards	53.3	94.4
State and Local Jurisdiction [Member]
Income Tax Contingency [Line Items]
Deferred Tax Assets, Net Operating Loss Carryforwards		6.3
2017 through 2020 [Member] | Federal [Member]
Income Tax Contingency [Line Items]
Net Operating Loss Carryforwards	19.0
Deferred Tax Assets, Net Operating Loss Carryforwards	6.7
2021 through 2025 [Member] | Federal [Member]
Income Tax Contingency [Line Items]
Net Operating Loss Carryforwards	32.9
Deferred Tax Assets, Net Operating Loss Carryforwards	11.5
2026 through 2030 [Member] | Federal [Member]
Income Tax Contingency [Line Items]
Net Operating Loss Carryforwards	30.0
Deferred Tax Assets, Net Operating Loss Carryforwards	10.5
2031 through 2032 [Member] | Federal [Member]
Income Tax Contingency [Line Items]
Net Operating Loss Carryforwards	70.4
Deferred Tax Assets, Net Operating Loss Carryforwards	$ 24.6

XML

Income Taxes - Schedule of Liabilities for Income Tax (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Accrued Income Taxes, Current	$ 1.5	$ 0
Deferred Income Tax Liabilities	0	15.1
Unrecognized Tax Benefits	6.8	6.4	6.2	7.8
Liabilities for Income Taxes	$ 8.3	$ 21.5

XML

Catatrophe Reinsurance - Coverage for Catastrophe Reinsurance (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Retained [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Retained [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] First Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] First Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Second Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Second Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Third Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Third Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Fourth Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Fourth Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] First Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] First Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] Second Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] Second Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] Third Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] Third Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] Fourth Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Minimum [Member] Fourth Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] First Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] First Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] Second Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] Second Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] Third Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] Third Layer of Coverage [Member]	Dec. 31, 2013 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] Fourth Layer of Coverage [Member]	Dec. 31, 2012 Kemper Preferred, Kemper Specialty and Kemper Direct Segments [Member] Maximum [Member] Fourth Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Retained [Member]	Dec. 31, 2011 Kemper Preferred [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Second Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Third Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Minimum [Member]	Dec. 31, 2011 Kemper Preferred [Member] Minimum [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Minimum [Member] Second Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Minimum [Member] Third Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Maximum [Member]	Dec. 31, 2011 Kemper Preferred [Member] Maximum [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Maximum [Member] Second Layer of Coverage [Member]	Dec. 31, 2011 Kemper Preferred [Member] Maximum [Member] Third Layer of Coverage [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Retained [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Retained [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] First Layer of Coverage [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Second Layer of Coverage [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Second Layer of Coverage [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Minimum [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Minimum [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Minimum [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Minimum [Member] First Layer of Coverage [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Minimum [Member] Second Layer of Coverage [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Minimum [Member] Second Layer of Coverage [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Maximum [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Maximum [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Maximum [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Maximum [Member] First Layer of Coverage [Member]	Dec. 31, 2012 Life and Health Segment - Property Insurance Operations [Member] Maximum [Member] Second Layer of Coverage [Member]	Dec. 31, 2011 Life and Health Segment - Property Insurance Operations [Member] Maximum [Member] Second Layer of Coverage [Member]	Dec. 31, 2011 Kemper Direct and Kemper Specialty Segments [Member] Retained [Member]	Dec. 31, 2011 Kemper Direct and Kemper Specialty Segments [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Kemper Direct and Kemper Specialty Segments [Member] Minimum [Member]	Dec. 31, 2011 Kemper Direct and Kemper Specialty Segments [Member] Minimum [Member] First Layer of Coverage [Member]	Dec. 31, 2011 Kemper Direct and Kemper Specialty Segments [Member] Maximum [Member]	Dec. 31, 2011 Kemper Direct and Kemper Specialty Segments [Member] Maximum [Member] First Layer of Coverage [Member]
Liability for Catastrophe Claims [Line Items]
Reinsurance Retention Policy, Amount Retained											$ 0	$ 0									$ 50.0	$ 50.0													$ 0				$ 50.0										$ 0	$ 0					$ 8.0	$ 8.0							$ 0		$ 3.0
Reinsurance Retention Policy, Reinsured Risk, Percentage	0.00%	0.00%																													0.00%												0.00%	0.00%																	0.00%
Reinsurance Retention Policy, Excess Retention, Percentage			65.00%	65.00%	95.00%	95.00%	90.00%	90.00%	50.00%	50.00%																						65.00%	95.00%	90.00%											70.00%	70.00%	70.00%	100.00%														100.00%
Reinsurance Retention Policy, Excess Retention, Amount Reinsured													$ 50.0	$ 50.0	$ 100.0	$ 100.0	$ 200.0	$ 200.0	$ 350.0	$ 350.0			$ 100.0	$ 100.0	$ 200.0	$ 200.0	$ 350.0	$ 350.0	$ 450.0	$ 450.0						$ 50.0	$ 100.0	$ 200.0		$ 100.0	$ 200.0	$ 350.0									$ 8.0	$ 8.0	$ 15.0	$ 15.0			$ 15.0	$ 15.0	$ 40.0	$ 40.0				$ 3.0		$ 16.0

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Schedule 1 - Investments Other Than Investments in Related Parties (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	$ 5,878.3
Amount Carried in Balance Sheet	6,151.3
Fixed Maturities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	4,370.5
Fair Value	4,575.0
Amount Carried in Balance Sheet	4,575.0
US Government and Government Agencies and Authorities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	351.1
Fair Value	362.2
Amount Carried in Balance Sheet	362.2
States and Political Subdivisions [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	1,327.4
Fair Value	1,361.0
Amount Carried in Balance Sheet	1,361.0
Other Corporate Bonds and Notes [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	2,685.4
Fair Value	2,844.4
Amount Carried in Balance Sheet	2,844.4
Redeemable Preferred Stocks [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	6.6
Fair Value	7.4
Amount Carried in Balance Sheet	7.4
Equity Securities, Investment Summary [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	530.0
Fair Value	598.5
Amount Carried in Balance Sheet	598.5
Preferred Stock [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	105.5
Fair Value	110.2
Amount Carried in Balance Sheet	110.2
Common Stock [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	152.2
Fair Value	189.5
Amount Carried in Balance Sheet	189.5
Other Equity Interests [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	272.3
Fair Value	298.8
Amount Carried in Balance Sheet	298.8
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	245.1
Amount Carried in Balance Sheet	245.1
Loans, Real Estate and Other Investments [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	448.0
Amount Carried in Balance Sheet	448.0
Short-term Investments [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized Cost	284.7
Amount Carried in Balance Sheet	$ 284.7

XML

Business Segments - Earned Premiums by Product Line (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Entity-Wide Information, Revenue from External Customer [Line Items]
Premiums Earned, Net, Life									$ 392.7	$ 393.4	$ 395.1
Premiums Earned, Net, Accident and Health									161.4	165.2	166.3
Earned Premiums	495.6	507.5	512.8	509.9	520.8	527.3	529.8	529.2	2,025.8	2,107.1	2,173.6
Personal Lines [Member]
Entity-Wide Information, Revenue from External Customer [Line Items]
Premiums Earned, Net, Property and Casualty									1,419.4	1,505.0	1,572.2
Automobile [Member]
Entity-Wide Information, Revenue from External Customer [Line Items]
Premiums Earned, Net, Property and Casualty									959.1	1,050.1	1,129.4
Homeowners [Member]
Entity-Wide Information, Revenue from External Customer [Line Items]
Premiums Earned, Net, Property and Casualty									326.2	318.0	304.1
Other Personal Lines [Member]
Entity-Wide Information, Revenue from External Customer [Line Items]
Premiums Earned, Net, Property and Casualty									134.1	136.9	138.7
Commercial Automobile [Member]
Entity-Wide Information, Revenue from External Customer [Line Items]
Premiums Earned, Net, Property and Casualty									$ 52.3	$ 43.5	$ 40.0

XML

Document and Entity Information Document and Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Feb. 13, 2014	Jun. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	KEMPER Corporation
Trading Symbol	KMPR
Entity Central Index Key	0000860748
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		55,510,825
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 1.9
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013

XML

Other Reinsurance Ceded Insurance (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Effects of Reinsurance [Line Items]
Ceded to Other Companies	$ 33.9	$ 42.5	$ 40.7
Assumed Premiums Earned	52.7	44.0	43.7
Non-Catastrophe Reinsurance [Member]
Effects of Reinsurance [Line Items]
Ceded to Other Companies	33.9	42.5	40.7
Assumed Premiums Earned	$ 52.7	$ 44.0	$ 43.7

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Income From Continuing Operations Per Unrestricted Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Income from Continuing Operations Per Unrestricted Share

NOTE 11. INCOME FROM CONTINUING OPERATIONS PER UNRESTRICTED SHARE

The Company’s awards of restricted common stock contain a right to receive non-forfeitable dividends and participate in the undistributed earnings with common shareholders. Accordingly, the Company is required to apply the two-class method of computing basic and diluted earnings per share.

A reconciliation of the numerator and denominator used in the calculation of Basic Income from Continuing Operations Per Unrestricted Share and Diluted Income from Continuing Operations Per Unrestricted Share for the years endedDecember 31, 2013, 2012 and 2011 is as follows:

	2013		2012		2011
DOLLARS IN MILLIONS
Income from Continuing Operations	$	214.5	$	91.8	$	61.7
Less Income from Continuing Operations Attributed to Restricted Shares	1.1		0.5		0.3
Income from Continuing Operations Attributed to Unrestricted Shares	213.4		91.3		61.4
Dilutive Effect on Income of Kemper Equity-based Compensation Equivalent Shares	—		—		—
Diluted Income from Continuing Operations Attributed to Unrestricted Shares	$	213.4	$	91.3	$	61.4
SHARES IN THOUSANDS
Weighted-average Unrestricted Shares Outstanding	56,856.9		58,857.3		60,262.6
Kemper Equity-based Compensation Equivalent Shares	126.7		141.7		103.9
Weighted-Average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution	56,983.6		58,999.0		60,366.5
PER UNRESTRICTED SHARE IN WHOLE DOLLARS
Basic Income from Continuing Operations Per Unrestricted Share	$	3.75	$	1.55	$	1.02
Diluted Income from Continuing Operations Per Unrestricted Share	$	3.74	$	1.54	$	1.02

Options outstanding to purchase 2.1 million, 2.8 million and 3.3 million shares of Kemper common stock were excluded from the computation of Kemper Equity-based Compensation Equivalent Shares and Weighted-average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution for the years endedDecember 31, 2013, 2012 and 2011, respectively, because the exercise price exceeded the average market price.

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Income From Continuing Operations Per Unrestricted Share (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Schedule of Basic and Diluted Earnings Per Share [Line Items]
Income from Continuing Operations	$ 54.8	$ 68.6	$ 32.5	$ 58.6	$ (1.7)	$ 55.6	$ 1.6	$ 36.3	$ 214.5	$ 91.8	$ 61.7
Dilutive Effect on Income of Kemper Equity-based Compensation Equivalent Shares									0	0	0
Diluted Income from Continuing Operations Attributed to Unrestricted Shares									213.4	91.3	61.4
Weighted-Average Unrestricted Shares Outstanding									56,856,900	58,857,300	60,262,600
Kemper Equity-based Compensation Equivalent Shares									126,700	141,700	103,900
Weighted-Average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution									56,983,600	58,999,000	60,366,500
Basic Income from Continuing Operations Per Unrestricted Share	$ 0.98	$ 1.21	$ 0.56	$ 1.00	$ (0.03)	$ 0.95	$ 0.03	$ 0.61	$ 3.75	$ 1.55	$ 1.02
Diluted Income from Continuing Operations Per Unrestricted Share	$ 0.98	$ 1.21	$ 0.56	$ 1.00	$ (0.03)	$ 0.95	$ 0.03	$ 0.60	$ 3.74	$ 1.54	$ 1.02
Restricted Stock [Member]
Schedule of Basic and Diluted Earnings Per Share [Line Items]
Income from Continuing Operations									1.1	0.5	0.3
Common Stock [Member]
Schedule of Basic and Diluted Earnings Per Share [Line Items]
Income from Continuing Operations									$ 213.4	$ 91.3	$ 61.4

XML

Income Taxes - Schedule of Current and Deferred Income Tax Assets (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Current Income Tax Assets	$ 0	$ 5.4
Deferred Income Tax Assets	31.8	6.6
Valuation Allowance for State Income Taxes	0	(6.6)
Current and Deferred Income Tax Assets	$ 31.8	$ 5.4

XML

Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenues:
Earned Premiums	$ 2,025.8	$ 2,107.1	$ 2,173.6
Net Investment Income	314.7	295.9	298.0
Other Income	0.8	0.8	1.0
Net Realized Gains on Sales of Investments	99.1	65.4	33.7
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(15.8)	(7.2)	(11.4)
Portion of Losses Recognized in Other Comprehensive Income	1.9	0.3	0.1
Net Impairment Losses Recognized in Earnings	(13.9)	(6.9)	(11.3)
Total Revenues	2,426.5	2,462.3	2,495.0
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	1,357.2	1,582.1	1,645.7
Insurance Expenses	654.4	672.3	683.6
Impairment of Intangible Assets (Excluding Goodwill)	0	0	13.5
Interest and Other Expenses	100.5	85.5	83.9
Total Expenses	2,112.1	2,339.9	2,426.7
Income from Continuing Operations before Income Taxes	314.4	122.4	68.3
Income Tax Expense	(99.9)	(30.6)	(6.6)
Income from Continuing Operations	214.5	91.8	61.7
Discontinued Operations:
Income from Discontinued Operations	3.2	11.6	12.8
Net Income	$ 217.7	$ 103.4	$ 74.5
Income from Continuing Operations Per Unrestricted Share:
Income from Continuing Operations Per Unrestricted Share - Basic	$ 3.75	$ 1.55	$ 1.02
Income from Continuing Operations Per Unrestricted Share - Diluted	$ 3.74	$ 1.54	$ 1.02
Net Income Per Unrestricted Share:
Net Income Per Unrestricted Share - Basic	$ 3.81	$ 1.75	$ 1.23
Net Income Per Unrestricted Share - Diluted	$ 3.80	$ 1.74	$ 1.23
Dividends Paid to Shareholders Per Share	$ 0.96	$ 0.96	$ 0.96

XML

Property and Casualty Insurance Reserves

12 Months Ended

Dec. 31, 2013

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Property and Casualty Insurance Reserves

NOTE 5. PROPERTY AND CASUALTY INSURANCE RESERVES

Property and Casualty Insurance Reserve activity for the years endedDecember 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Beginning Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year	$	970.6		$	1,029.1		$	1,118.7
Less Reinsurance Recoverables and Indemnification at Beginning of Year	66.2			74.5			78.1
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at Beginning of Year	904.4			954.6			1,040.6
Incurred Losses and LAE related to:
Current Year:
Continuing Operations	1,056.5			1,253.1			1,338.5
Prior Years:
Continuing Operations	(59.8		)	(25.2		)	(35.0		)
Discontinued Operations	(4.8		)	(6.3		)	1.9
Total Incurred Losses and LAE related to Prior Years	(64.6		)	(31.5		)	(33.1		)
Total Incurred Losses and LAE	991.9			1,221.6			1,305.4
Paid Losses and LAE related to:
Current Year:
Continuing Operations	682.2			801.4			887.7
Prior Years:
Continuing Operations	421.7			451.2			472.9
Discontinued Operations	12.3			19.2			30.8
Total Paid Losses and LAE related to Prior Years	434.0			470.4			503.7
Total Paid Losses and LAE	1,116.2			1,271.8			1,391.4
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at End of Year	780.1			904.4			954.6
Plus Reinsurance and Indemnification Recoverables at End of Year	63.4			66.2			74.5
Property and Casualty Insurance Reserves, Gross of Reinsurance at End of Year	$	843.5		$	970.6		$	1,029.1

Property and Casualty Insurance Reserves are estimated based on historical experience patterns and current economic trends. Actual loss experience and loss trends are likely to differ from these historical experience patterns and economic conditions. Loss experience and loss trends emerge over several years from the dates of loss inception. The Company monitors such emerging loss trends on a quarterly basis. Changes in such estimates are included in the Consolidated Statements of Income in the period of change.

In 2013, the Company reduced its property and casualty insurance reserves by $64.6 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance loss and LAE reserves developed favorably by $56.8 million and commercial lines insurance loss and LAE reserves developed favorably by $7.8 million. Personal automobile insurance loss and LAE reserves developed favorably by $30.1 million, homeowners insurance loss and LAE reserves developed favorably by $20.1 million and other personal lines loss and LAE reserves developed favorably by $6.6 million. The personal lines insurance losses and LAE reserves developed favorably due primarily to the emergence of more favorable loss patterns than expected for the four most recent accident years. Commercial lines insurance loss and LAE reserves included favorable development of $3.0 million from continuing operations and $4.8 million from discontinued operations. Commercial lines insurance losses and LAE reserves developed favorably from continuing operations due primarily to the emergence of more favorable loss patterns than expected for the 2011, 2010 and 2009 accident years, partially offset by less favorable loss patterns than expected for the 2012 accident year.

NOTE 5. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

In 2012, the Company reduced its property and casualty insurance reserves by $31.5 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance loss and LAE reserves developed favorably by $12.6 million and commercial lines insurance loss and LAE reserves developed favorably by $18.9 million. Personal automobile insurance loss and LAE reserves developed adversely by $2.2 million, homeowners insurance loss and LAE reserves developed favorably by $11.7 million and other personal lines loss and LAE reserves developed favorably by $3.1 million. Personal automobile loss and LAE reserves developed adversely for the 2011 accident year and developed favorably for the 2010, 2009 and 2008 accident years. Homeowners insurance loss and LAE reserves developed favorably due primarily to the emergence of more favorable loss patterns than expected for the 2011, 2010 and 2009 accident years and favorable development on certain catastrophes. Commercial lines insurance loss and LAE reserves included favorable development of $12.6 million from continuing operations and $6.3 million from discontinued operations. Commercial lines insurance losses and LAE reserves developed favorably from continuing operations due primarily to the emergence of more favorable loss patterns than expected for the four most recent accident years. Commercial lines insurance loss and LAE reserves developed favorably from discontinued operations due primarily to the commutation of certain insurance liabilities that had been previously assumed.

In 2011, the Company reduced its property and casualty insurance reserves by $33.1 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance loss and LAE reserves developed favorably by $29.3 million and commercial lines insurance loss and LAE reserves developed favorably by $3.8 million. Personal lines insurance loss and LAE reserves developed favorably due primarily to the emergence of more favorable loss patterns than expected for the 2010, 2009 and 2008 accident years and favorable development on certain catastrophes.

The Company cannot predict whether loss and LAE reserves will develop favorably or unfavorably from the amounts reported in the Company’s consolidated financial statements. The Company believes that any such development will not have a material effect on the Company’s consolidated financial position, but could have a material effect on the Company’s consolidated financial results for a given period.

Reinsurance and indemnification recoverables on property and casualty insurance reserves were $63.4 million and $66.2 million at December 31, 2013 and 2012, respectively. These recoverables are concentrated with several reinsurers, the vast majority of which are highly rated by one or more of the principal investor and/or insurance company rating agencies. While most of these recoverables were unsecured at December 31, 2013 and 2012, the agreements with the reinsurers generally provide for some form of collateralization upon the occurrence of certain events.

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Goodwill

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

NOTE 4. GOODWILL

Goodwill balances by business segment at December 31, 2013 and December 31, 2012 were:

DOLLARS IN MILLIONS	2013		2012
Kemper Preferred	$	49.6	$	49.6
Kemper Specialty	42.8		42.8
Life and Health Insurance	219.4		219.4
Total	$	311.8	$	311.8

The Company tests goodwill for recoverability on an annual basis at the beginning of the first quarter and, if circumstances or events indicate that the fair value of a reporting unit may have declined below its carrying value, such tests are performed at intervening interim periods. The Company principally used projections of discounted future cash flows to estimate the fair values of the reporting units tested. For each reporting unit tested, the estimated fair value exceeded the carrying value of the reporting unit, and the Company concluded that the associated goodwill was recoverable at the aforementioned dates tested.

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Pension Benefits

12 Months Ended

Dec. 31, 2013

Pension Benefits [Abstract]

Pension Benefits

NOTE 16. PENSION BENEFITS

The Company sponsors a qualified defined benefit pension plan (the “Pension Plan”). The Pension Plan covers approximately 9,000 participants and beneficiaries, of which 2,400 are active employees. The Pension Plan is generally non-contributory, but participation requires or required some employees to contribute 3% of pay, as defined, per year. Benefits for participants who are or were required to contribute to the Pension Plan are based on compensation during plan participation and the number of years of participation. Benefits for the vast majority of participants who are not required to contribute to the Pension Plan are based on years of service and final average pay, as defined. The Company funds the Pension Plan in accordance with the requirements of ERISA.

Changes in Fair Value of Plan Assets and Changes in Projected Benefit Obligation for the years ended December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS
	2013			2012
Fair Value of Plan Assets at Beginning of Year	$	457.6		$	441.3
Actual Return on Plan Assets	34.5			38.0
Employer Contributions	55.0			—
Benefits Paid	(22.6		)	(21.5		)
Settlement Benefits	—			(0.2		)
Fair Value of Plan Assets at End of Year	524.5			457.6
Projected Benefit Obligation at Beginning of Year	553.9			499.2
Service Cost	10.8			10.8
Interest Cost	22.4			22.4
Benefits Paid	(22.6		)	(21.5		)
Settlement Benefits	—			(0.2		)
Actuarial Losses (Gains)	(49.0		)	43.2
Projected Benefit Obligation at End of Year	515.5			553.9
Funded Status—Plan Assets in Excess (Deficit) of Projected Benefit Obligation	$	9.0		$	(96.3	)
Amount Recognized in Accumulated Other Comprehensive Income:
Accumulated Actuarial Loss	$	(86.3	)	$	(166.4	)
Prior Service Cost	—			0.1
Amount Recognized in Accumulated Other Comprehensive Income	$	(86.3	)	$	(166.3	)
Accumulated Benefit Obligation	$	496.2		$	531.3

The measurement dates of the assets and liabilities at end of year presented in the preceding table under the headings, “2013” and “2012” were December 31, 2013 and December 31, 2012, respectively.

NOTE 16. PENSION BENEFITS (Continued)

The weighted-average discount rate and rate of increase in future compensation levels used to estimate the components of the Projected Benefit Obligation at December 31, 2013 and 2012 were:

	2013		2012
Discount Rate	4.90	%	4.05	%
Rate of Increase in Future Compensation Levels	3.05		3.08

Weighted-average asset allocations at December 31, 2013 and 2012 by asset category were:

ASSET CATEGORY	2013		2012
Cash and Short-term Investments	8	%	12	%
Corporate Bonds and Notes	27		33
Common and Preferred Stocks	34		31
Exchange Traded Funds	22		17
Other Assets	9		7
Total	100	%	100	%

The investment objective of the Pension Plan is to produce current income and long-term capital growth through a combination of equity and fixed income investments which, together with appropriate employer contributions and any required employee contributions, is adequate to provide for the payment of the benefit obligations of the Pension Plan. The assets of the Pension Plan may be invested in fixed income and equity investments or any other investment vehicle or financial instrument deemed appropriate. Fixed income investments may include cash and short-term instruments, U.S. Government securities, corporate bonds, mortgages and other fixed income investments. Equity investments may include various types of stock, such as large-cap, mid-cap and small-cap stocks, and may also include investments in investment companies and Kemper common stock (subject to Section 407 and other requirements of ERISA). The Pension Plan has not invested in Kemper common stock.

The trust investment committee for the Pension Plan, along with its third party fiduciary advisor, periodically reviews the performance of the Pension Plan’s investments and asset allocation. Several external investment managers, one of which is Fayez Sarofim & Co. (“FS&C”) (see Note 24, “Related Parties,” to the Consolidated Financial Statements), manage the equity investments of the trust for the Pension Plan. Each manager is allowed to exercise investment discretion, subject to limitations, if any, established by the trust investment committee for the Pension Plan. An independent fiduciary had sole investment discretion with respect to shares of Intermec common stock contributed by the Company to the Pension Plan in 2011 until such shares were fully disposed of in 2012. All other investment decisions are made by the Company, subject to general guidelines as set by the trust investment committee for the Pension Plan.

The Company determines its Expected Long Term Rate of Return on Plan Assets based primarily on the Company’s expectations of future returns, with consideration to historical returns, for the Pension Plan’s investments, based on target allocations of the Pension Plan’s investments.

NOTE 16. PENSION BENEFITS (Continued)

Fair value measurements for the Pension Plan’s assets at December 31, 2013 are summarized below:

DOLLARS IN MILLIONS	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	12.1	$	—	$	—	$	12.1
States and Political Subdivisions	—		3.1		—		3.1
Corporate Bonds and Notes	—		127.0		—		127.0
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		4.0		—		4.0
Common Stocks:
Manufacturing	97.5		7.8		—		105.3
Other Industries	67.2		1.8		—		69.0
Other Equity Interests:
Exchange Traded Funds	111.7		—		—		111.7
Limited Liability Companies and Limited Partnerships	—		—		46.9		46.9
Short-term Investments	42.6		—		—		42.6
Receivables and Other	2.3		—		0.5		2.8
Total	$	333.4	$	143.7	$	47.4	$	524.5

Additional information pertaining to the changes in the fair value of the Pension Plan’s assets classified as Level 3 for the year ended December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Other Equity Interests		Receivables and Other			Total
Balance at Beginning of Year	$	26.9	$	0.6		$	27.5
Return on Plan Assets Held	3.5		—			3.5
Purchases, Sales and Settlements, Net	16.5		(0.1		)	16.4
Balance at December 31, 2013	$	46.9	$	0.5		$	47.4

NOTE 16. PENSION BENEFITS (Continued)

Fair value measurements for the Pension Plan’s assets at December 31, 2012 are summarized below:

DOLLARS IN MILLIONS	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	6.1	$	—	$	—	$	6.1
States and Political Subdivisions	—		3.3		—		3.3
Corporate Bonds and Notes	—		142.7		—		142.7
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		3.4		—		3.4
Common Stocks:
Manufacturing	82.2		5.6		—		87.8
Other Industries	48.2		0.7		—		48.9
Other Equity Interests:
Exchange Traded Funds	79.6		—		—		79.6
Limited Liability Companies and Limited Partnerships	—		—		26.9		26.9
Short-term Investments	55.8		—		—		55.8
Receivables and Other	2.5		—		0.6		3.1
Total	$	274.4	$	155.7	$	27.5	$	457.6

Additional information pertaining to the changes in the fair value of the Pension Plan’s assets classified as Level 3 for the year ended December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Corporate Bonds			Other Equity Interests			Receivables and Other			Total
Balance at Beginning of Year	$	1.0		$	37.2		$	3.2		$	41.4
Return on Plan Assets Held	—			1.7			0.1			1.8
Purchases, Sales and Settlements, Net	—			(12.0		)	(2.7		)	(14.7		)
Transfers out of Level 3	(1.0		)	—			—			(1.0		)
Balance at December 31, 2012	$	—		$	26.9		$	0.6		$	27.5

The components of Comprehensive Pension (Income) Expense for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Service Cost Earned During the Year	$	10.8		$	10.8		$	10.2
Interest Cost on Projected Benefit Obligation	22.4			22.4			22.9
Expected Return on Plan Assets	(29.7		)	(29.8		)	(24.4		)
Amortization of Actuarial Loss	26.2			18.8			9.4
Settlements	—			0.3			—
Pension Expense Recognized in Consolidated Statements of Income	29.7			22.5			18.1
Unrecognized Pension (Gain) Loss Arising During the Year	(53.8		)	34.8			52.4
Amortization of Accumulated Unrecognized Pension Loss	(26.2		)	(18.8		)	(9.4		)
Comprehensive Pension (Income) Expense	$	(50.3	)	$	38.5		$	61.1

NOTE 16. PENSION BENEFITS (Continued)

The Company estimates that Pension Expense for the year ended December 31, 2014 will include expense of $9.2 million resulting from the amortization of the related accumulated actuarial loss included in Accumulated Other Comprehensive Income at December 31, 2013.

Total Pension Expense Recognized in the Consolidated Statements of Income as presented in the preceding table includes service cost benefits earned and reported in discontinued operations of $0.5 million and $0.6 million for the years ended December 31, 2012 and 2011, respectively.

The weighted-average discount rate, rate of increase in future compensation levels and expected long-term rate of return on plan assets used to develop the components of the Pension Expense for the years ended December 31, 2013, 2012 and 2011 were:

	2013		2012		2011
Discount Rate	4.05	%	4.60	%	5.35	%
Rate of Increase in Future Compensation Levels	3.08		3.27		2.47
Expected Long Term Rate of Return on Plan Assets	7.00		7.00		7.00

On September 3, 2013, the Company made a voluntary cash contribution of $55.0 million to its defined benefit pension plan.

The Company does not expect that it will be required to contribute to its Pension Plan in 2014, but could make a voluntary contribution pursuant to the maximum funding limits under ERISA.

On September 14, 2011, the Company made a voluntary contribution of $83.7 million to its defined benefit pension plan. The contribution consisted of $32.2 million in cash and 7,309,764 shares of Intermec common stock with a fair value of $51.5 million on the date of contribution. On May 23, 2011, the Company requested a waiver from the U.S. Department of Labor (“DOL”) related to the prohibited transaction rules under ERISA and the Internal Revenue Code for the one-time in-kind contribution of the shares of Intermec common stock. On January 19, 2012, the DOL granted relief, from the prohibited transaction rules retroactive to September 1, 2011.

The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are expected to be paid:

DOLLARS IN MILLIONS	Years Ending December 31,
	2014		2015		2016		2017		2018		2019-2023
Pension Benefits	$	24.4	$	25.4	$	26.7	$	27.9	$	29.1	$	163.4

The Company also sponsors a non-qualified supplemental defined benefit pension plan (the “Supplemental Plan”). The unfunded liability related to the Supplemental Plan was $23.3 million and $24.0 million at December 31, 2013 and 2012, respectively. Pension expense for the Supplemental Plan was $1.8 million, $1.8 million and $3.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. An actuarial gain of $1.5 million before tax, an actuarial loss of $1.3 million before tax and an actuarial gain of $2.9 million before tax is included Other Comprehensive Income for the years ended December 31, 2013, 2012 and 2011, respectively.

The Company also sponsors several defined contribution benefit plans covering most of its employees. The Company made contributions to those plans of $7.3 million, $7.8 million and $7.3 million in 2013, 2012 and 2011, respectively. Under these plans, the participants have several investment alternatives, including Kemper’s common stock held through the Kemper Employee Stock Ownership Plan (“ESOP”) Fund and the Dreyfus Appreciation Fund. FS&C (see Note 24, “Related Parties,” to the Consolidated Financial Statements) is a sub-investment advisor of the Dreyfus Appreciation Fund. The fair value of participants’ investments in Kemper’s ESOP Fund was $19.3 million, or 5.6% of the total investments in the defined contribution benefit plans at December 31, 2013. The fair value of participants’ investments in the Dreyfus Appreciation Fund was $22.5 million, or 6.5% of the total investments in the defined contribution benefit plans at December 31, 2013.

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Other Comprehensive Income And Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2013

Statement of Comprehensive Income [Abstract]

Other Comprehensive Income and Accumulated Other Comprehensive Income

NOTE 12. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of Other Comprehensive Income (Loss) Before Income Taxes for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Other Comprehensive Income (Loss) Before Income Taxes:
Unrealized Holding Gains (Losses) Arising During the Period Year Reclassification Adjustment	$	(324.9	)	$	157.9		$	232.1
Reclassification Adjustment for Amounts Included in Net Income	(37.9		)	(61.2		)	(30.9		)
Unrealized Holding Gains (Losses)	(362.8		)	96.7			201.2
Foreign Currency Translation Adjustments Arising During the Year Before Reclassification Adjustment	0.2			1.6			0.4
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Unrecognized Postretirement Benefit Costs Arising During the Year	61.6			(29.4		)	(53.9		)
Amortization of Unrecognized Postretirement Benefit Costs	25.0			16.2			8.7
Net Unrecognized Postretirement Benefit Costs	86.6			(13.2		)	(45.2		)
Other Comprehensive Income (Loss) Before Income Taxes	$	(276.0	)	$	85.1		$	156.4

The components of Other Comprehensive Income Tax Benefit (Expense) for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year Before Reclassification Adjustment	$	115.9		$	(55.9	)	$	(82.5	)
Reclassification Adjustment for Amounts Included in Net Income	13.2			21.5			10.9
Unrealized Holding Gains and Losses	129.1			(34.4		)	(71.6		)
Foreign Currency Translation Adjustments Arising During the Year Before Reclassification Adjustment	(0.1		)	(0.6		)	(0.1		)
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustment	(0.1		)	(0.6		)	(0.1		)
Unrecognized Postretirement Benefit Costs Arising During the Year	(21.6		)	10.3			19.0
Amortization of Unrecognized Postretirement Benefit Costs	(8.8		)	(5.7		)	(3.1		)
Net Unrecognized Postretirement Benefit Costs	(30.4		)	4.6			15.9
Other Comprehensive Income Tax Benefit (Expense)	$	98.6		$	(30.4	)	$	(55.8	)

The components of AOCI at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013			2012
Unrealized Gains on Investments, Net of Income Taxes:
Available for Sale Fixed Maturities with Portion of OTTI Recognized in Earnings	$	0.3		$	1.4
Other Net Unrealized Gains on Investments	175.5			408.1
Foreign Currency Translation Adjustments, Net of Income Taxes	0.8			0.7
Net Unrecognized Postretirement Benefit Costs, Net of Income Taxes	(41.3		)	(97.5		)
Accumulated Other Comprehensive Income	$	135.3		$	312.7

NOTE 12. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

Components of AOCI were reclassified to the following lines of the Consolidated Statements of Income for the years endedDecember 31, 2013, 2012 and 2011:

DOLLARS IN MILLIONS	2013			2012			2011
Reclassification of AOCI from Unrealized Gains and Losses on Available For Sale Securities to:
Net Realized Gains on Sales of Investments	$	51.8		$	65.0		$	35.0
Net Impairment Losses Recognized in Earnings	(13.9		)	(3.8		)	(4.1		)
Total Before Income Taxes	37.9			61.2			30.9
Income Tax Expense	(13.2		)	(21.5		)	(10.9		)
Reclassification from AOCI, Net of Income Taxes	24.7			39.7			20.0
Reclassification of AOCI from Amortization of Unrecognized Postretirement Benefit Costs to:
Interest and Other Expenses	(25.0		)	(16.2		)	(8.7		)
Income Tax Benefit	8.8			5.7			3.1
Reclassification from AOCI, Net of Income Taxes	(16.2		)	(10.5		)	(5.6		)
Total Reclassification from AOCI to Net Income	$	8.5		$	29.2		$	14.4

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Other Comprehensive Income And Accumulated Other Comprehensive Income Reclassification from AOCI to Consolidated Statements of Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net Realized Gains (Losses) on Sales of Investments	$ 20.8	$ 49.1	$ 2.3	$ 26.9	$ 5.5	$ 50.9	$ 4.1	$ 4.9	$ 99.1	$ 65.4	$ 33.7
Net Impairment Losses Recognized in Earnings	(7.6)	(3.4)	(1.0)	(1.9)	(2.8)	(3.2)	(0.4)	(0.5)	(13.9)	(6.9)	(11.3)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest					(6.0)	81.5	(3.5)	50.4		122.4
Income Tax Expense	(26.6)	(33.4)	(13.9)	(26.0)	4.3	(25.9)	5.1	(14.1)	(99.9)	(30.6)	(6.6)
Net Income	55.2	70.1	34.0	58.4	1.9	55.6	2.3	43.6	217.7	103.4	74.5
Interest and Other Expenses	(26.2)	(25.3)	(25.2)	(23.8)	(20.1)	(22.7)	(20.9)	(21.8)	(100.5)	(85.5)	(83.9)
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net Income									8.5	29.2	14.4
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net Realized Gains (Losses) on Sales of Investments									51.8	65.0	35.0
Net Impairment Losses Recognized in Earnings									(13.9)	(3.8)	(4.1)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest									37.9	61.2	30.9
Income Tax Expense									(13.2)	(21.5)	(10.9)
Net Income									24.7	39.7	20.0
Accumulated Defined Benefit Plans Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income Tax Expense									8.8	5.7	3.1
Net Income									(16.2)	(10.5)	(5.6)
Interest and Other Expenses									$ (25.0)	$ (16.2)	$ (8.7)

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Shareholders' Equity

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Stockholders' Equity

NOTE 8. SHAREHOLDERS’ EQUITY

Kemper is authorized to issue 20 million shares of $0.10 par value preferred stock and 100 million shares of $0.10 par value common stock. No preferred shares were issued or outstanding at December 31, 2013 and 2012. There were 55,653,437 shares and 58,454,390 shares of common stock outstanding at December 31, 2013 and 2012, respectively. Common stock outstanding included 278,427 shares and 313,424 shares at December 31, 2013 and 2012, respectively, that have been issued, subject to certain vesting and other requirements, in connection with the Company’s long-term equity compensation plans. See Note 9, “Long-Term Equity-based Compensation,” to the Consolidated Financial Statements for a discussion of the restrictions and vesting provisions.

On August 4, 2004, the Board of Directors declared a dividend distribution of one preferred share purchase right for each outstanding share of common stock of Kemper, pursuant to a shareholder rights plan. The rights have a term of 10 years. The description and terms of the rights are set forth in a rights agreement between Kemper and Computershare Trust Company, N.A., as rights agent.

Kemper repurchased and retired 3.0 million shares of its common stock in open market transactions at an aggregate cost of $100.4 million in 2013. Kemper repurchased and retired 2.0 million shares of its common stock in open market transactions at an aggregate cost of $60.7 million in 2012. Kemper repurchased and retired 0.9 million shares of its common stock in open market transactions at an aggregate cost of $27.4 million in 2011.

Various state insurance laws restrict the amount that an insurance subsidiary may pay in the form of dividends, loans or advances without the prior approval of regulatory authorities. Also, that portion of an insurance subsidiary’s net equity which results from differences between statutory insurance accounting practices and GAAP would not be available for cash dividends, loans or advances. Kemper’s insurance subsidiaries paid dividends of $95.0 million in cash to Kemper in 2013. In 2014, Kemper’s insurance subsidiaries would be able to pay $217 million in dividends to Kemper without prior regulatory approval. Kemper’s insurance subsidiaries had net assets of $2.4 billion, determined in accordance with GAAP, that were restricted from payment to Kemper without prior regulatory approval at December 31, 2013.

Kemper’s insurance subsidiaries are required to file financial statements prepared on the basis of statutory insurance accounting practices, a comprehensive basis of accounting other than GAAP. Statutory capital and surplus for the Company’s life and health insurance subsidiaries was $430.2 million and $457.8 million at December 31, 2013 and 2012, respectively. Statutory net income for the Company’s life and health insurance subsidiaries was $81.5 million, $102.0 million and $116.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. Statutory capital and surplus for the Company’s property and casualty insurance subsidiaries was $989.7 million and $844.8 million at December 31, 2013 and 2012, respectively. Statutory net income for the Company’s property and casualty insurance subsidiaries was $138.8 million, $40.6 million and $30.6 million for the years ended December 31, 2013, 2012 and 2011, respectively. Statutory capital and surplus and statutory net income exclude parent company operations.

Kemper’s insurance subsidiaries are also required to hold minimum levels of statutory capital and surplus to satisfy regulatory requirements. The minimum statutory capital and surplus, or company action level RBC, necessary to satisfy regulatory requirements for the Company’s life and health insurance subsidiaries collectively was $123.7 million at December 31, 2013. The minimum statutory capital and surplus necessary to satisfy regulatory requirements for the Company’s property and casualty insurance subsidiaries collectively was $286.4 million at December 31, 2013. Company action level RBC is the level at which a company is required to file a corrective action plan with its regulators and is equal to 200% of the authorized control level RBC.

In 2013, Kemper paid dividends of $54.9 million to its shareholders. Except for certain financial covenants under the 2016 Credit Agreement, there are no restrictions on Kemper’s ability to pay dividends to its shareholders. Certain financial covenants, namely minimum net worth and a maximum debt to total capitalization ratio, under the 2016 Credit Agreement could limit the amount of dividends that Kemper may pay to shareholders at December 31, 2013. Kemper had the ability to pay without restrictions $407 million in dividends to its shareholders and still be in compliance with all financial covenants under the 2016 Credit Agreement at December 31, 2013.

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Investments - Unrealized Gains and Gross Unrealized Losses in Investment in Equity Securities (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Equity Securities at Cost	$ 530.0	$ 462.7
Gross Unrealized Gains	74.7	62.5
Gross Unrealized Losses	(6.2)	(3.3)
Equity Securities at Fair Value	598.5	521.9
Preferred Stocks Finance, Insurance and Real Estate [Member]
Schedule of Available-for-sale Securities [Line Items]
Equity Securities at Cost	85.4	75.4
Gross Unrealized Gains	2.9	3.9
Gross Unrealized Losses	(2.5)	(0.1)
Equity Securities at Fair Value	85.8	79.2
Preferred Stocks Other Industries [Member]
Schedule of Available-for-sale Securities [Line Items]
Equity Securities at Cost	20.1	18.4
Gross Unrealized Gains	4.4	3.8
Gross Unrealized Losses	(0.1)	(0.9)
Equity Securities at Fair Value	24.4	21.3
Common Stocks Manufacturing [Member]
Schedule of Available-for-sale Securities [Line Items]
Equity Securities at Cost	83.4	67.0
Gross Unrealized Gains	21.3	20.9
Gross Unrealized Losses	(0.1)	(0.4)
Equity Securities at Fair Value	104.6	87.5
Common Stock Other Industries [Member]
Schedule of Available-for-sale Securities [Line Items]
Equity Securities at Cost	68.8	59.1
Gross Unrealized Gains	17.0	8.1
Gross Unrealized Losses	(0.9)	(0.5)
Equity Securities at Fair Value	84.9	66.7
Exchange Traded Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Equity Securities at Cost	122.0	119.6
Gross Unrealized Gains	3.9	6.3
Gross Unrealized Losses	(1.0)	0
Equity Securities at Fair Value	124.9	125.9
Limited Liability Companies and Limited Partnerships [Member]
Schedule of Available-for-sale Securities [Line Items]
Equity Securities at Cost	150.3	123.2
Gross Unrealized Gains	25.2	19.5
Gross Unrealized Losses	(1.6)	(1.4)
Equity Securities at Fair Value	$ 173.9	$ 141.3

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Postretirement Benefits Other Than Pensions - Components Of Comprehensive OPEB (Income) Expense (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Unrecognized Postretirement Benefit Costs Arising During the Year	$ 61.6	$ (29.4)	$ (53.9)
Amortization of Unrecognized Postretirement Benefit Costs	(25.0)	(16.2)	(8.7)
Other Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost Earned During the Year	0.2	0.2	0.1
Interest Cost on Accumulated Benefit Obligation	1.2	1.6	1.9
Net Amortization and Deferral	(1.2)	(1.2)	(0.6)
Pension Expense Recognized	0.2	0.6	1.4
Unrecognized Postretirement Benefit Costs Arising During the Year	6.2	5.5	(4.4)
Amortization of Unrecognized Postretirement Benefit Costs	1.2	1.2	0.6
Comprehensive OPEB Expense	$ (4.8)	$ (3.7)	$ 6.4

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Notes Payable

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Notes Payable

NOTE 6. NOTES PAYABLE

Total amortized cost of debt outstanding at December 31, 2013 and 2012 was:

DOLLARS IN MILLIONS	2013		2012
Senior Notes:
6.00% Senior Notes due May 15, 2017	$	357.9	$	357.3
6.00% Senior Notes due November 30, 2015	249.0		248.6
Mortgage Note Payable due September 1, 2013	—		5.5
Total Notes Payable	$	606.9	$	611.4

NOTE 6. NOTES PAYABLE (Continued)

Interest Expense, including facility fees, accretion of discount and write-off of unamortized credit agreement issuance costs for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Notes Payable under Revolving Credit Agreement	$	1.4		$	1.9		$	2.0
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	22.2			22.1			22.0
6.00% Senior Notes due November 30, 2015	15.4			15.4			15.4
Mortgage Note Payable	0.2			0.4			0.4
Interest Expense before Capitalization of Interest	39.2			39.8			39.8
Capitalization of Interest	(0.9		)	(1.8		)	(2.5		)
Total Interest Expense	$	38.3		$	38.0		$	37.3

Interest Paid on Notes Payable, including facility fees, for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Notes Payable under Revolving Credit Agreement	$	0.8	$	2.3	$	1.2
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	21.6		21.6		21.6
6.00% Senior Notes due November 30, 2015	15.0		15.0		15.2
Mortgage Note Payable	0.3		0.4		0.4
Total Interest Paid	$	37.7	$	39.3	$	38.4

On March 7, 2012, Kemper entered into the 2016 Credit Agreement, a four-year, $325.0 million, unsecured, revolving credit agreement, expiring March 7, 2016, with a group of financial institutions. Effective December 31, 2013, Kemper amended the 2016 Credit Agreement to, among other things, reduce the amount of the aggregate commitments under the 2016 Credit Agreement by $100.0 million, bringing the amount of aggregate commitments to $225.0 million, and to increase the amount of indebtedness that may be incurred and outstanding in the aggregate at any time in connection with borrowings from the FHLB or issuances of surplus notes by $150.0 million, to $250.0 million, provided that the aggregate indebtedness incurred and outstanding in connection with issuances of surplus notes may not exceed $100.0 million at any one time. The action resulted from the completion in December 2013 of a process initiated by Kemper’s subsidiaries, United Insurance and Trinity, to become members of the FHLBs of Chicago and Dallas, respectively. The FHLB memberships provide United Insurance and Trinity with access to additional sources of liquidity and consequently reduce the need for such liquidity at the parent company level.

The 2016 Credit Agreement replaced Kemper’s Former Credit Agreement, a $245.0 million, unsecured, revolving credit agreement which was scheduled to expire on October 30, 2012 and was terminated on March 7, 2012. There were no borrowings under the Former Credit Agreement at either December 31, 2011 or at its termination. The 2016 Credit Agreement provides for fixed and floating rate advances for periods up to six months at various interest rates. The 2016 Credit Agreement contains various financial covenants, including limits on total debt to total capitalization, consolidated net worth and minimum risk-based capital ratios for Kemper’s largest insurance subsidiaries, United Insurance and Trinity. Proceeds from advances under the 2016 Credit Agreement may be used for general corporate purposes, including repayment of existing indebtedness. There were no outstanding borrowings under the 2016 Credit Agreement at December 31, 2013, and accordingly, $225.0 million was available for future borrowings.

In connection with the finalization of their FHLB memberships, United Insurance and Trinity purchased capital stock in the FHLBs of Chicago and Dallas, respectively. In addition, to complete Trinity’s membership in the FHLB of Dallas, which became effective as of December 31, 2013, Trinity and the FHLB of Dallas entered into agreements pursuant to which Trinity may obtain advances from the FHLB of Dallas. The specific terms of each advance, including the amount and rate of interest, will be specified in a written or electronic confirmation of advance. The amount of advances that may be obtained by Trinity will be determined as of any particular date based on a multiple of the amount of capital stock in the FHLB of Dallas that has been purchased by Trinity as of such date, as determined in accordance with the policies and procedures for members of the

NOTE 6. NOTES PAYABLE (Continued)

FHLB of Dallas, subject to any applicable limitations under the 2016 Credit Agreement. Advances are subject to collateral requirements as specified in the agreements. There were no advances from the FHLB of Dallas outstanding at December 31, 2013.

In 2011, Kemper borrowed and repaid $95.0 million under the Former Credit Agreement. Kemper had no outstanding advances under the Former Credit Agreement at December 31, 2011.

In 2010, Kemper issued $250 million of its 6.00% senior notes due November 30, 2015. The 2015 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Kemper issued the 2015 Senior Notes for proceeds of $247.8 million, net of transaction costs, for an effective yield of 6.21%.

In 2007, Kemper issued $360 million of its 6.00% senior notes due May 15, 2017. The 2017 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Kemper issued the 2017 Senior Notes for proceeds of $354.8 million, net of transaction costs, for an effective yield of 6.19%.

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Leases

12 Months Ended

Dec. 31, 2013

Leases [Abstract]

Leases

NOTE 7. LEASES

The Company leases certain office space under non-cancelable operating leases, with initial terms typically ranging from one to twelve years, along with options that permit renewals for additional periods. The Company also leases certain equipment under non-cancelable operating leases, with initial terms typically ranging from one to five years. Minimum rent is expensed on a straight-line basis over the term of the lease.

Net rental expense for operating leases for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Minimum Rental Expense	$	28.3		$	33.2		$	31.5
Less Sublease Rental Income	(1.8		)	(2.5		)	(2.1		)
Net Rental Expense	$	26.5		$	30.7		$	29.4

Future minimum lease payments under capital and operating leases at December 31, 2013 were:

DOLLARS IN MILLIONS	Capital Leases			Operating Leases
2014	$	4.7		$	25.1
2015	2.2			18.7
2016	2.1			16.7
2017	1.5			15.1
2018	0.1			8.9
2019 and Thereafter	—			15.3
Total Future Payments	$	10.6		$	99.8
Less Imputed Interest	(1.1		)
Present Value of Minimum Capital Lease Payments	$	9.5

The total of minimum rentals to be received in the future under non-cancelable subleases was $5.5 million at December 31, 2013.

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Schedule 2 - Parent Company Financial Statements - Statements of Cash Flows (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Activities:
Net Income	$ 217.7	$ 103.4	$ 74.5
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
Net Realized (Gains) Losses on Sales of Investments	(99.1)	(65.4)	(33.7)
Other, Net	36.1	33.4	30.4
Net Cash Provided by Operating Activities	122.1	65.7	(25.0)
Investing Activities:
Sales, Paydowns and Maturities of Fixed Maturities	664.4	914.4	650.3
Purchases of Fixed Maturities	(744.5)	(872.6)	(663.4)
Change in Short-term Investments	41.8	(80.0)	155.5
Net Cash Provided (Used) by Investing Activities	4.8	(106.2)	564.6
Notes Payable Payments:
Cash Dividends Paid	(54.9)	(56.9)	(58.2)
Common Stock Repurchases	(100.4)	(60.7)	(27.4)
Cash Exercise of Stock Options	1.7	1.3	0.2
Excess Tax Benefits on Share Based Awards	1.3	0.5	0.2
Net Cash Used by Financing Activities	(156.7)	(114.4)	(405.6)
Increase (Decrease) in Cash	(29.8)	(154.9)	134.0
Cash, Beginning of Year	96.3	251.2	117.2
Cash, End of Year	66.5	96.3	251.2
Parent Company [Member]
Operating Activities:
Net Income	217.7	103.4	74.5
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
Equity in Net Income of Subsidiaries	(256.7)	(137.8)	(105.4)
Cash Dividends from Subsidiaries	95.0	95.0	70.8
Cash Contribution to Defined Benefit Plan	(55.0)	0	(32.2)
Net Realized (Gains) Losses on Sales of Investments	(0.6)	(0.3)	0.2
Other, Net	67.3	8.5	35.5
Net Cash Provided by Operating Activities	67.7	68.8	43.4
Investing Activities:
Capital Distribution from Subsidiary	50.5	20.0	250.0
Sales, Paydowns and Maturities of Fixed Maturities	0	13.1	0
Purchases of Common Stocks from Subsidiary	0	0	(50.8)
Change in Short-term Investments	52.7	(106.3)	(35.4)
Net Cash Provided (Used) by Investing Activities	103.2	(73.2)	163.8
Notes Payable Proceeds:
Revolving Credit Agreement	0	0	95.0
Notes Payable Payments:
Revolving Credit Agreement	0	0	(95.0)
Cash Dividends Paid	(54.9)	(56.9)	(58.2)
Common Stock Repurchases	(100.4)	(60.7)	(27.4)
Cash Exercise of Stock Options	1.7	1.3	0.2
Excess Tax Benefits on Share Based Awards	1.3	0.5	0.2
Net Cash Used by Financing Activities	(152.3)	(115.8)	(85.2)
Increase (Decrease) in Cash	18.6	(120.2)	122.0
Cash, Beginning of Year	2.2	122.4	0.4
Cash, End of Year	$ 20.8	$ 2.2	$ 122.4

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Long-term Equity-based Compensation

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Long-Term Equity-Based Compensation

NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION

On May 4, 2011, Kemper’s shareholders approved the 2011 Omnibus Equity Plan (“Omnibus Plan”). The Omnibus Plan replaced the Company’s previous employee stock option plans, director stock option plan and restricted stock plan (collectively, the “Prior Plans”). Awards previously granted under the Prior Plans remain outstanding in accordance with their original terms. Beginning May 4, 2011, equity-based compensation awards may only be granted under the Omnibus Plan. A maximum number of 10,000,000 shares of Kemper common stock may be issued under the Omnibus Plan (the “Share Authorization”). As of December 31, 2013, there were 8,750,768 common shares available for future grants under the Omnibus Plan, of which 390,486 shares were reserved for future grants based on the achievement of performance goals under the terms of outstanding performance-based restricted stock awards.

The design of the Omnibus Plan provides for fungible use of shares to determine the number of shares available for future grants, with a fungible conversion factor of three to one, such that the Share Authorization will be reduced at two different rates, depending on the type of award granted. Each share of Kemper common stock issuable upon the exercise of stock options or stock appreciation rights will reduce the number of shares available for future grant under the Share Authorization by one share, while each share of Kemper common stock issued pursuant to “full value awards” will reduce the number of shares available for future grant under the Share Authorization by three shares. “Full value awards” are awards, other than stock options or stock appreciation rights, that are settled by the issuance of shares of Kemper common stock and include restricted stock, restricted stock units, performance shares, performance units, if settled with stock, and other stock-based awards.

Outstanding awards under the Omnibus Plan and Prior Plans at December 31, 2013 consisted of tandem stock option and stock appreciation rights (“Tandem Awards”), time-vested restricted stock, performance-based restricted stock and deferred stock units (“DSUs”). Recipients of restricted stock receive full dividend and voting rights on the same basis as all other outstanding shares of Kemper common stock, and all awards are subject to forfeiture until certain restrictions have lapsed.

For equity-based compensation awards with a graded vesting schedule, the Company recognizes compensation expense on a straight-line basis over the requisite service period for each separately-vesting portion of the awards as if each award were, in substance, multiple awards. Compensation expense is recognized only for those awards expected to vest, with forfeitures estimated at the date of grant based on the Company’s historical experience and future expectations. Equity-based compensation expense was $5.5 million, $5.8 million and $5.3 million for the years endedDecember 31, 2013, 2012 and 2011, respectively. Total unamortized compensation expense related to nonvested awards at December 31, 2013 was $5.4 million, which is expected to be recognized over a weighted-average period of 1.4 years.

The Compensation Committee of the Board of Directors, or the Board’s authorized designee, has sole discretion to determine the persons to whom awards under the Omnibus Plan are granted, and the material terms of the awards. For Tandem Awards, material terms include the number of shares covered by such awards and the exercise price, vesting and expiration dates of such awards. Tandem Awards are non-transferable. The exercise price is the fair value of Kemper’s common stock on the date of grant. Employee Tandem Awards generally vest, beginning six months after date of grant, in four equal annual installments over a period of three and one-half years and expire ten years from the date of grant.

Each new member of the Board of Directors who is not employed by the Company (“Non-Employee Director”) receives an initial option to purchase 4,000 shares of Kemper common stock immediately upon becoming a director. Thereafter, on the date of each annual meeting of Kemper’s shareholders, eligible Non-Employee Directors automatically receive annual grants of options to purchase 4,000 shares of common stock. Prior to May 1, 2013, such options granted to Non-Employee Directors were exercisable one year from the date of grant at an exercise price equal to the fair market value of Kemper’s common stock on the date of grant and expire ten years from the date of grant. Effective May 1, 2013, new grants of such options are fully vested and exercisable on the date of grant at an exercise price equal to the fair market value of Kemper’s common stock on the date of grant. In addition to the option awards, effective May 1, 2013, annual awards to each Non-employee Director include 500 DSUs. DSUs give the recipient the right to receive one share of Kemper common stock for each DSU issued. The DSUs granted to Non-Employee Directors are fully vested on the date of grant. Holders of DSUs are entitled to receive dividend equivalents in cash in the amount and at the time that dividends would have been payable if the DSUs were shares of Kemper common stock. Conversion of the DSUs into shares of Kemper’s common stock is deferred until the date a director’s board service terminates. On May 1, 2013, the Company issued 4,000 DSUs at a fair value of $31.50 per DSU.

All of the Company’s prior stock option plans included provisions, subject to certain limitations, to automatically grant restorative, or reload stock options (“Restorative Options”), to replace shares of previously owned Kemper common stock that an exercising option holder surrenders, either actually or constructively, to satisfy the exercise price and/or tax withholding obligations relating to the exercise. The restorative feature was eliminated prospectively for original option awards granted on or after February 3, 2009. Restorative Options may still be granted, subject to certain limitations, in connection with the

NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

exercise of original options granted before February 3, 2009. Restorative Options are subject to the same terms and conditions as the original options, including the expiration date, except that the exercise price is equal to the fair value of Kemper common stock on the date of grant of a Restorative Option and cannot be exercised until six months after the date of grant. The grant of a Restorative Option does not result in an increase in the total number of shares and options held by an employee, but changes the mix of the two.

The Company uses the Black-Scholes option pricing model to estimate the fair value of each option on the date of grant. The expected terms of options are developed by considering the Company’s historical share option exercise experience, demographic profiles, historical share retention practices of employees and assumptions about their propensity for early exercise in the future. Further, the Company aggregates individual awards into relatively homogenous groups that exhibit similar exercise behavior to obtain a more refined estimate of the expected term of options. Expected volatility is estimated using weekly historical volatility. The Company believes that historical volatility is currently the best estimate of expected volatility. The dividend yield in 2013, 2012 and 2011 was calculated by taking the natural logarithm of the annualized yield divided by the Kemper common stock price on the date of grant. The risk free interest rate was the yield on the grant date of U.S. Treasury zero coupon issues with a maturity comparable to the expected term of the option.

The assumptions used in the Black-Scholes pricing model for options granted during the years endedDecember 31, 2013, 2012 and 2011, were as follows:

	2013					2012					2011
RANGE OF VALUATION ASSUMPTIONS
Expected Volatility	39.10	%	-	48.23	%	29.36	%	-	53.84	%	41.26	%	-	55.16	%
Risk Free Interest Rate	0.62		-	1.38		0.16		-	1.26		1.30		-	2.87
Expected Dividend Yield	2.83		-	3.00		2.92		-	3.26		3.15		-	3.38
WEIGHTED-AVERAGE EXPECTED LIFE IN YEARS
Employee Grants	4		-	7		1		-	7		3.5		-	7
Director Grants	6					6					6

Option and SAR activity for the year endedDecember 31, 2013 is presented below:

	Shares Subject to Options		Weighted- average Exercise Price Per Share ($)		Weighted- average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value ($ In Millions)
Outstanding at Beginning of the Year	3,192,054		$	40.53
Granted	283,750		33.20
Exercised	(364,750	)	25.32
Forfeited or Expired	(567,381	)	42.83
Outstanding at December 31, 2013	2,543,673		41.38		3.57	$	9.3
Vested and Expected to Vest at December 31, 2013	2,512,512		$	41.51	3.51	$	9.0
Exercisable at December 31, 2013	2,226,795		$	42.81	2.87	$	6.3

NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

The weighted-average grant-date fair values of options granted during 2013, 2012 and 2011 were $10.20, $9.40 and $9.11, respectively. Total intrinsic value of stock options exercised was $4.1 million, $3.0 million and $0.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. Cash received from option exercises was $1.7 million, $1.3 million and $0.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. Total tax benefits realized for tax deductions from option exercises were $1.4 million, $1.0 million and $0.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Information pertaining to options outstanding at December 31, 2013 is presented below:

					Outstanding				Exercisable
Range of Exercise Prices ($)					Shares Subject to Options	Weighted- average Exercise Price Per Share ($)		Weighted- average Remaining Contractual Life (in Years)	Shares Subject to Options	Weighted- average Exercise Price Per Share ($)
$	10.00	-	$	15.00	16,750	$	13.55	5.10	16,750	$	13.55
15.01		-	20.00		8,000	16.48		5.35	8,000	16.48
20.01		-	25.00		38,250	23.43		6.07	38,250	23.43
25.01		-	30.00		404,000	28.87		7.58	250,812	28.77
30.01		-	35.00		255,375	33.19		9.08	91,685	32.72
35.01		-	40.00		314,500	37.22		3.97	314,500	37.22
40.01		-	45.00		311,868	43.57		0.71	311,868	43.57
45.01		-	50.00		958,222	48.64		1.85	958,222	48.64
50.01		-	55.00		236,708	50.51		0.36	236,708	50.51
10.00		-	55.00		2,543,673	41.38		3.57	2,226,795	42.81

The grant-date fair values of time-based restricted stock awards are determined using the closing price of Kemper common stock on the date of grant. Activity related to nonvested time-based restricted stock for the year endedDecember 31, 2013 was as follows:

	Time-based Restricted Shares		Weighted- average Grant-date Fair Value Per Share
Nonvested Balance at Beginning of the Year	126,349		$	26.19
Granted	75,625		33.33
Vested	(59,065	)	24.99
Forfeited	(41,282	)	27.98
Nonvested Balance at End of Period	101,627		$	31.48

Prior to February 3, 2009, only awards of time-vested restricted stock had been granted. Beginning on February 3, 2009, in addition to time-vested restricted stock granted to certain employees and officers, the Company began awarding performance-based restricted stock to certain officers and employees. The initial number of shares awarded to each participant of a performance-based restricted stock award represents the shares that would vest if the performance goals were achieved at the “target” performance level. The final payout of these awards will be determined based on Kemper’s total shareholder return over a three-year performance period relative to a peer group comprised of all the companies in the S&P Supercomposite Insurance Index.

NOTE 9. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

Performance-based restricted stock awards are earned over a three-year performance period. If, at the end of the performance period, the Company’s relative performance:

• exceeds the “target” performance level, additional shares of stock will be issued to the award recipient;

• is below the “target” performance level, but at or above a “minimum” performance level, only a portion of the shares of performance-based restricted stock originally issued to the award recipient will vest; or

• is below a “minimum” performance level, none of the shares of performance-based restricted stock originally issued to the award recipient will vest.

The grant date fair values of the performance-based restricted stock awards are determined using the Monte Carlo simulation method. The Monte Carlo simulation model produces a risk-neutral simulation of the daily returns on the common stock of Kemper and each of the other companies included in the peer group. Returns generated by the simulation depend on the risk-free interest rate used and the volatilities of, and the correlation between, these stocks. The model simulates stock prices and dividend payouts to the end of the three-year performance period. Total shareholder returns are generated for each of these stocks based on the simulated prices and dividend payouts. The total shareholder returns are then ranked, and Kemper’s simulated ranking is converted to a payout percentage based on the terms of the performance-based restricted stock awards. The payout percentage is applied to the simulated stock price at the end of the performance period, reinvested dividends are added back, and the total is discounted to the valuation date at the risk-free rate. This process is repeated approximately ten thousand times, and the grant date fair value is equal to the average of the results from these trials.

Activity related to nonvested performance-based restricted stock for the year endedDecember 31, 2013 was as follows:

	Performance-based Restricted Shares		Weighted- average- Grant-date Fair Value Per Share
Nonvested Balance at Beginning of the Year	187,075		$	36.70
Granted	70,675		42.12
Vested	(53,118	)	33.14
Forfeited	(27,832	)	39.16
Nonvested Balance at End of Period	176,800		$	39.54

The number of additional shares that would be granted if the Company were to meet or exceed the maximum performance levels related to the outstanding performance-based shares for the 2013 and 2012 three-year performance periods was 60,150 common shares and 59,775 common shares, respectively, (as “full value awards,” the equivalent of 180,450 shares and 179,325 shares, respectively, under the Share Authorization) at December 31, 2013. For the 2011 three-year performance period, the Company exceeded target performance levels with a payout percentage of 118%. Accordingly, an additional 9,014 shares of stock were issued to award recipients on February 1, 2014. For the 2010 three-year performance period, the Company exceeded target performance levels with a payout percentage of 114%. Accordingly, an additional 6,996 shares of stock were issued to award recipients on February 2, 2013 (the “2010 Additional Shares”). For the 2009 three-year performance period, the Company exceeded target performance levels with a payout percentage of 183%. Accordingly, an additional 40,727 shares of stock were issued to award recipients on January 31, 2012 (the “2009 Additional Shares”).

The total fair value of restricted stock, including the 2010 Additional Shares, that vested during the year endedDecember 31, 2013 was $4.1 million and the tax benefits for tax deductions realized from the vesting on such restricted stock was $1.4 million. The total fair value of restricted stock, including the 2009 Additional Shares, that vested during the year endedDecember 31, 2012 was $4.0 million and the tax benefits for tax deductions realized from the vesting on such restricted stock was $1.4 million. The total fair value of restricted stock that vested during the year endedDecember 31, 2011 was $1.4 million and the tax benefits for tax deductions realized from the vesting on such restricted stock was $0.5 million.

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Investments - Other Investments Carrying Values (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2013 The Kemper Building [Member]
Investments Disclosures [Abstract]
Loans to Policyholders at Unpaid Principal	$ 275.4	$ 266.3
Real Estate at Depreciated Cost	167.1	226.2
Trading Securities, Fair Value Disclosure	5.0	4.5
Other	0.5	0.5
Total Investments	448.0	497.5
Investment Holdings [Line Items]
Gains (Losses) on Sales of Investment Real Estate				43.6
Sales of Investment Real Estate	$ 102.7	$ 6.0	$ 0.3	$ 101.5

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Discontinued Operations (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]
Interest, Loan Fees and Earned Discounts									$ 0	$ 0	$ 31.8
Other Automobile Finance Revenues									0	0	1.4
Gain on Sale of Loan Portfolios									0	12.9	4.5
Total Automobile Finance Revenues									0	12.9	37.7
Net Investment Income									0	0	0.5
Net Realized Gains on Sales of Investments									0	0	0.4
Total Revenues Included in Discontinued Operations									0	12.9	38.6
Income (Loss) from Discontinued Operations before Income Taxes:
Gain on Sale of Loan Portfolios									0	12.9	4.5
Income from Discontinued Operations before Income Taxes									4.9	18.9	19.5
Income Tax Expense									(1.7)	(7.3)	(6.7)
Income from Discontinued Operations	0.4	1.5	1.5	(0.2)	3.6	0	0.7	7.3	3.2	11.6	12.8
Income from Discontinued Operations Per Unrestricted Share:
Basic (in dollars per share)									$ 0.06	$ 0.20	$ 0.21
Diluted (in dollars per share)									$ 0.06	$ 0.20	$ 0.21
Property and Casualty Insurance Reserves	843.5				970.6				843.5	970.6	1,029.1	1,118.7
Fireside [Member]
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]
Gain on Sale of Loan Portfolios									0	12.9	4.5
Income (Loss) from Discontinued Operations before Income Taxes:
Results of Operations									0	(0.2)	18.7
Gain on Sale of Loan Portfolios									0	12.9	4.5
Unitrin Business Insurance [Member]
Income (Loss) from Discontinued Operations before Income Taxes:
Results of Operations									4.9	6.2	(3.7)
Income from Discontinued Operations Per Unrestricted Share:
Property and Casualty Insurance Reserves	82.0				99.2				82.0	99.2
Active Loan Portfolio [Member] | Fireside [Member]
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]
Gain on Sale of Loan Portfolios											4.5
Income (Loss) from Discontinued Operations before Income Taxes:
Gain on Sale of Loan Portfolios											4.5
Inactive Loan Portfolio [Member] | Fireside [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Notional Amount of Sales of Loans Held-for-sale										283
Disposal Group, Including Discontinued Operation, Transaction, Shutdown, and Other Costs										13.3
Disposal Group, Including Discontinued Operation, Accrued Transaction, Shutdown, and Other Costs	1.0								1.0
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]
Gain on Sale of Loan Portfolios										12.9
Income (Loss) from Discontinued Operations before Income Taxes:
Gain on Sale of Loan Portfolios										$ 12.9

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Income From Investments - Net Investment Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Investment Income:
Short-term Investments									$ 0.1	$ 0.2	$ 0.1
Loans to Policyholders									19.8	18.9	17.7
Real Estate									20.8	27.4	26.0
Equity Method Limited Liability Investments									26.4	9.3	9.6
Other									0	0.1	0.3
Total Investment Income									340.6	327.7	325.5
Investment Expenses:
Other Investment Expenses									25.9	31.8	27.5
Net Investment Income	76.9	82.4	74.6	80.8	72.9	70.4	75.2	77.4	314.7	295.9	298.0
Accrued Investment Income Receivable	66.7				72.4				66.7	72.4
Real Estate Investment [Member]
Investment Expenses:
Other Investment Expenses									18.3	26.1	25.9
Other Investment [Member]
Investment Expenses:
Other Investment Expenses									7.6	5.7	1.6
Fixed Maturities [Member]
Investment Income:
Interest and Dividends on Fixed Maturities									235.5	246.1	246.6
Equity Securities [Member]
Investment Income:
Dividends on Equity Securities									$ 38.0	$ 25.7	$ 25.2

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Goodwill (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Goodwill [Roll Forward]
Goodwill	$ 311.8	$ 311.8
Kemper Preferred [Member]
Goodwill [Roll Forward]
Goodwill	49.6	49.6
Kemper Specialty [Member]
Goodwill [Roll Forward]
Goodwill	42.8	42.8
Life and Health Insurance [Member]
Goodwill [Roll Forward]
Goodwill	$ 219.4	$ 219.4

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Pension Benefits - Fair Value Plan Assets Measurements (Details) (Pension Plans, Defined Benefit [Member], USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 524.5	$ 457.6
Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	333.4	274.4
Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	143.7	155.7
Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	47.4	27.5	41.4
US Government and Government Agencies and Authorities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	12.1	6.1
US Government and Government Agencies and Authorities [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	12.1	6.1
US Government and Government Agencies and Authorities [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
US Government and Government Agencies and Authorities [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
States and Political Subdivisions [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3.1	3.3
States and Political Subdivisions [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
States and Political Subdivisions [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3.1	3.3
States and Political Subdivisions [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Corporate Bonds and Notes [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	127.0	142.7
Corporate Bonds and Notes [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Corporate Bonds and Notes [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	127.0	142.7
Corporate Bonds and Notes [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Preferred Stocks Finance, Insurance and Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	4.0	3.4
Preferred Stocks Finance, Insurance and Real Estate [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Preferred Stocks Finance, Insurance and Real Estate [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	4.0	3.4
Preferred Stocks Finance, Insurance and Real Estate [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Common Stocks Manufacturing [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	105.3	87.8
Common Stocks Manufacturing [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	97.5	82.2
Common Stocks Manufacturing [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	7.8	5.6
Common Stocks Manufacturing [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Common Stock Other Industries [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	69.0	48.9
Common Stock Other Industries [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	67.2	48.2
Common Stock Other Industries [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	1.8	0.7
Common Stock Other Industries [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Exchange Traded Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	111.7	79.6
Exchange Traded Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	111.7	79.6
Exchange Traded Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Exchange Traded Funds [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Limited Liability Companies and Limited Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	46.9	26.9
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Limited Liability Companies and Limited Partnerships [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	46.9	26.9
Short-term Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	42.6	55.8
Short-term Investments [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	42.6	55.8
Short-term Investments [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Short-term Investments [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Receivables and Other [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	2.8	3.1
Receivables and Other [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	2.3	2.5
Receivables and Other [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Receivables and Other [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 0.5	$ 0.6	$ 3.2

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Investments - Equity Method LLCs (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Investments Disclosures [Abstract]
Available-for-sale-Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Securities that have had Recognized Credit Losses in Earnings, Aggregate Losses	$ 0	$ (300,000)
Equity Method Investment, Summarized Financial Information, Assets	3,392,100,000	3,643,600,000
Equity Method Investment, Summarized Financial Information, Liabilities	576,300,000	421,000,000
Equity Method Investment, Summarized Financial Information, Net Income (Loss)	181,100,000	134,600,000	(13,800,000)
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	245,100,000	253,000,000
Outstanding Commitments to Fund Equity Method Limited Liability Investments	$ 50,400,000

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Income Taxes - Schedule of Temporary Differences That Give Rise to Net Deferred Income Tax Assets (Liabilities) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Deferred Income Tax Assets:
Insurance Reserves	$ 76.4	$ 79.3
Unearned Premium Reserves	40.2	44.1
Tax Capitalization of Policy Acquisition Costs	73.3	73.6
Net Operating Loss Carryforward	53.3	100.7
Payroll and Employee Benefit Accruals	38.8	79.9
Other	12.6	10.7
Total Deferred Income Tax Assets	294.6	388.3
Deferred Income Tax Liabilities:
Deferred Policy Acquisition Costs	106.0	104.1
Value of Insurance in Force Acquired	20.2	25.2
Investments	80.0	208.4
Depreciable Assets	26.0	29.3
Goodwill and Licenses	26.8	23.5
Other	3.8	6.3
Total Deferred Income Tax Liabilities	262.8	396.8
Valuation Allowance for State Income Taxes	0	6.6
Net Deferred Income Tax Liabilities	31.8	(15.1)
Federal [Member]
Deferred Income Tax Assets:
Net Operating Loss Carryforward	53.3	94.4
State [Member]
Deferred Income Tax Assets:
Net Operating Loss Carryforward		6.3
Fireside [Member] | State [Member]
Deferred Income Tax Liabilities:
Valuation Allowance for State Income Taxes		6.6
Valuation Allowance, Deferred Tax Asset, Change in Amount	$ (6.6)

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Fair Value Measurements - Level 3 Inputs Reconciliation (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Level 1 to Level 2 Activity Transfers, Amount	$ 0	$ 0
Fair Value, Level 2 to Level 1 Activity Transfers, Amount	0	0
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Year	520.4	348.1
Included in Consolidated Statement of Income	(10.0)	6.8
Included in Other Comprehensive Income	1.0	8.9
Purchases	270.1	253.4
Settlements	(151.4)	(87.0)
Sales	(2.8)	(4.6)
Transfers Into Level 3	8.2	0.9
Transfers out of Level 3	(8.8)	(6.1)
Balance at December 31, 2012	626.7	520.4
Corporate Bonds and Notes [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Year	361.0	235.1
Included in Consolidated Statement of Income	(7.9)	4.0
Included in Other Comprehensive Income	(7.8)	1.4
Purchases	145.1	199.7
Settlements	(123.2)	(73.1)
Sales	(0.1)	(0.9)
Transfers Into Level 3	5.8	0.9
Transfers out of Level 3	(8.8)	(6.1)
Balance at December 31, 2012	364.1	361.0
Redeemable Preferred Stocks [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Year	4.7	6.1
Included in Consolidated Statement of Income	0.2	(0.4)
Included in Other Comprehensive Income	(1.3)	0.5
Purchases	5.1	0.1
Settlements	(1.3)	(1.6)
Sales	0	0
Transfers Into Level 3	0	0
Transfers out of Level 3	0	0
Balance at December 31, 2012	7.4	4.7
Mortgage and Asset Backed [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Year	0.1	0.3
Included in Consolidated Statement of Income	0.3	0
Included in Other Comprehensive Income	(0.1)	0
Purchases	48.6	0
Settlements	(0.1)	(0.2)
Sales	(2.0)	0
Transfers Into Level 3	2.4	0
Transfers out of Level 3	0	0
Balance at December 31, 2012	49.2	0.1
Preferred and Common Stock [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Year	13.3	13.5
Included in Consolidated Statement of Income	(1.0)	3.2
Included in Other Comprehensive Income	4.6	(1.3)
Purchases	15.9	1.6
Settlements	0	0
Sales	(0.7)	(3.7)
Transfers Into Level 3	0	0
Transfers out of Level 3	0	0
Balance at December 31, 2012	32.1	13.3
Other Equity Interests [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Year	141.3	93.1
Included in Consolidated Statement of Income	(1.6)	0
Included in Other Comprehensive Income	5.6	8.3
Purchases	55.4	52.0
Settlements	(26.8)	(12.1)
Sales	0	0
Transfers Into Level 3	0	0
Transfers out of Level 3	0	0
Balance at December 31, 2012	$ 173.9	$ 141.3

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Schedule 2 - Parent Company Financial Statements

12 Months Ended

Dec. 31, 2013

Parent Company Financial Statements [Abstract]

Parent Company Financial Statements

SCHEDULE II

KEMPER CORPORATION

PARENT COMPANY BALANCE SHEETS

(Dollars in Millions)

	December 31,
	2013		2012
ASSETS
Investments in Subsidiaries	$	2,614.0	$	2,744.0
Equity Securities at Fair Value (Cost: 2013 – $4.7; 2012 – $4.9)	5.0		4.5
Short-term Investments	130.8		183.5
Cash	20.8		2.2
Other Receivables	4.9		7.2
Deferred Income Taxes	35.0		75.4
Other Assets	7.3		6.3
Total Assets	$	2,817.8	$	3,023.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Senior Notes Payable, 6.00% due 2017 (Fair Value: 2013 – $395.5; 2012 – $393.7)	$	357.9	$	357.3
Senior Notes Payable, 6.00% due 2015 (Fair Value: 2013 – $271.6; 2012 – $276.3)	249.0		248.6
Liabilities for Income Taxes	90.5		77.6
Liabilities for Benefit Plans	63.9		172.8
Accrued Expenses and Other Liabilities	5.0		5.1
Total Liabilities	766.3		861.4
Shareholders’ Equity:
Common Stock	5.6		5.8
Additional Paid-in Capital	694.8		725.0
Retained Earnings	1,215.8		1,118.2
Accumulated Other Comprehensive Income	135.3		312.7
Total Shareholders’ Equity	2,051.5		2,161.7
Total Liabilities and Shareholders’ Equity	$	2,817.8	$	3,023.1

See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF INCOME

(Dollars in Millions)

	For The Years Ended December 31,
	2013			2012			2011
Net Investment Income	$	0.2		$	0.2		$	0.4
Net Realized Gains (Losses) on Sales of Investments	0.6			0.3			(0.2		)
Total Revenues	0.8			0.5			0.2
Interest Expense	39.0			39.5			39.4
Other Operating Expenses	21.6			13.6			10.3
Total Operating Expenses	60.6			53.1			49.7
Loss before Income Taxes and Equity in Net Income of Subsidiaries	(59.8		)	(52.6		)	(49.5		)
Income Tax Benefit	20.8			18.2			18.6
Loss before Equity in Net Income of Subsidiaries	(39.0		)	(34.4		)	(30.9		)
Equity in Net Income of Subsidiaries	256.7			137.8			105.4
Net Income	$	217.7		$	103.4		$	74.5

See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Millions)

	For The Years Ended December 31,
	2013			2012			2011
Net Income	$	217.7		$	103.4		$	74.5
Other Comprehensive Income (Loss):
Unrealized Holding Gains (Losses) Arising During the Year:
Securities Held by Subsidiaries	(324.9		)	157.9			231.5
Securities Held by Parent	—			—			0.6
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	(37.9		)	(61.2		)	(30.2		)
Securities Held by Parent	—			—			(0.7		)
Unrealized Holding Gains (Losses)	(362.8		)	96.7			201.2
Unrecognized Postretirement Benefit Costs Arising During the Year	61.6			(29.4		)	(53.9		)
Amortization of Unrecognized Postretirement Benefit Costs	25.0			16.2			8.7
Net Unrecognized Postretirement Benefit Costs	86.6			(13.2		)	(45.2		)
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	0.2			1.6			0.4
Other Comprehensive Income (Loss) before Income Taxes	(276.0		)	85.1			156.4
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year:
Securities Held by Subsidiaries	115.9			(55.9		)	(82.3		)
Securities Held by Parent	—			—			(0.2		)
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	13.2			21.5			10.7
Securities Held by Parent	—			—			0.2
Unrealized Holding Gains and Losses	129.1			(34.4		)	(71.6		)
Unrecognized Postretirement Benefit Costs Arising During the Year	(21.6		)	10.3			19.0
Amortization of Unrecognized Postretirement Benefit Costs	(8.8		)	(5.7		)	(3.1		)
Net Unrecognized Postretirement Benefit Costs	(30.4		)	4.6			15.9
Foreign Currency Translation Adjustments	(0.1		)	(0.6		)	(0.1		)
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	(0.1		)	(0.6		)	(0.1		)
Income Tax Benefit (Expense)	98.6			(30.4		)	(55.8		)
Other Comprehensive Income (Loss)	(177.4		)	54.7			100.6
Total Comprehensive Income	$	40.3		$	158.1		$	175.1

See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF CASH FLOWS

(Dollars in Millions)

	For The Years Ended December 31,
	2013			2012			2011
Operating Activities:
Net Income	$	217.7		$	103.4		$	74.5
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
Equity in Net Income of Subsidiaries	(256.7		)	(137.8		)	(105.4		)
Cash Dividends from Subsidiaries	95.0			95.0			70.8
Cash Contribution to Defined Benefit Plan	(55.0		)	—			(32.2		)
Net Realized (Gains) Losses on Sales of Investments	(0.6		)	(0.3		)	0.2
Other, Net	67.3			8.5			35.5
Net Cash Provided by Operating Activities	67.7			68.8			43.4
Investing Activities:
Capital Distribution from Subsidiary	50.5			20.0			250.0
Sales, Paydowns and Maturities of Fixed Maturities	—			13.1			—
Purchases of Common Stocks from Subsidiary	—			—			(50.8		)
Change in Short-term Investments	52.7			(106.3		)	(35.4		)
Net Cash Provided (Used) by Investing Activities	103.2			(73.2		)	163.8
Financing Activities:
Notes Payable Proceeds:
Revolving Credit Agreement	—			—			95.0
Notes Payable Payments:
Revolving Credit Agreement	—			—			(95.0		)
Cash Dividends Paid	(54.9		)	(56.9		)	(58.2		)
Common Stock Repurchases	(100.4		)	(60.7		)	(27.4		)
Cash Exercise of Stock Options	1.7			1.3			0.2
Excess Tax Benefits on Share Based Awards	1.3			0.5			0.2
Net Cash Used by Financing Activities	(152.3		)	(115.8		)	(85.2		)
Increase (Decrease) in Cash	18.6			(120.2		)	122.0
Cash, Beginning of Year	2.2			122.4			0.4
Cash, End of Year	$	20.8		$	2.2		$	122.4

See Accompanying Report of Independent Registered Public Accounting Firm.

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Postretirement Benefits Other Than Pensions (Tables) (Other Postretirement Benefit Plan, Defined Benefit [Member])

12 Months Ended

Dec. 31, 2013

Other Postretirement Benefit Plan, Defined Benefit [Member]

Defined Benefit Plan Disclosure [Line Items]

Schedule of Changes in Fair Value of Plan Assets

Changes in Fair Value of Plan Assets and Changes in Accumulated Postretirement Benefit Obligation for the years ended December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS
	2013			2012
Fair Value of Plan Assets at Beginning of Year	$	—		$	—
Employer Contributions	2.9			3.0
Plan Participants’ Contributions	1.2			1.0
Benefits Paid	(4.1		)	(4.0		)
Fair Value of Plan Assets at End of Year	—			—
Accumulated Postretirement Benefit Obligation at Beginning of Year	42.8			44.7
Service Cost	0.2			0.2
Interest Cost	1.2			1.6
Plan Participants’ Contributions	1.2			1.0
Benefits Paid	(4.1		)	(4.0		)
Medicare Part D Subsidy Received	—			1.0
Actuarial Gains	(6.2		)	(5.5		)
Obligations Transferred Into Plan	—			3.8
Accumulated Postretirement Benefit Obligation at End of Year	35.1			42.8
Funded Status—Accumulated Postretirement Benefit Obligation in Excess of Plan Assets	$	(35.1	)	$	(42.8	)
Actuarial Gain Recognized in Accumulated Other Comprehensive Income	$	18.4		$	13.4

Schedule of Assumptions Used

The weighted-average discount rate and rate of increase in future compensation levels used to develop OPEB Expense for the years ended December 31, 2013, 2012 and 2011 were:

	2013		2012		2011
Discount Rate	3.15	%	4.25	%	4.40	%
Rate of Increase in Future Compensation Levels	2.10		2.10		1.50

The weighted-average discount rate and rate of increase in future compensation levels used to develop the components of the Accumulated Postretirement Benefit Obligation at December 31, 2013 and 2012 were:

	2013		2012
Discount Rate	4.00	%	3.15	%
Rate of Increase in Future Compensation Levels	2.10		2.10

Schedule of Comprehensive Other Postretirement Employee Benefit Expense

The components of Comprehensive OPEB (Income) Expense for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Service Cost Earned During the Year	$	0.2		$	0.2		$	0.1
Interest Cost on Accumulated Postretirement Benefit Obligation	1.2			1.6			1.9
Amortization of Actuarial Gain	(1.2		)	(1.2		)	(0.6		)
OPEB Expense Recognized in Consolidated Statements of Income	0.2			0.6			1.4
Unrecognized OPEB (Gain) Loss Arising During the Year	(6.2		)	(5.5		)	4.4
Amortization of Accumulated Unrecognized OPEB Gain	1.2			1.2			0.6
Comprehensive OPEB (Income) Expense	$	(4.8	)	$	(3.7	)	$	6.4

Schedule of Expected Benefit Payments

The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are expected to be paid:

DOLLARS IN MILLIONS	Years Ending December 31,
	2014			2015			2016			2017			2018			2019-2023
Benefit Payments:
Excluding Medicare Part D Subsidy	$	4.1		$	4.2		$	4.2		$	4.1		$	3.9		$	16.4
Expected Medicare Part D Subsidy	(0.4		)	(0.4		)	(0.4		)	(0.4		)	(0.4		)	(2.0		)
Net Benefit Payments	$	3.7		$	3.8		$	3.8		$	3.7		$	3.5		$	14.4

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Insurance Expenses

12 Months Ended

Dec. 31, 2013

Insurance Expenses [Abstract]

Insurance Expenses

NOTE 14. INSURANCE EXPENSES

Insurance Expenses for the years endedDecember 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Commissions	$	345.7		$	366.1		$	363.5
General Expenses	257.1			262.9			270.1
Taxes, Licenses and Fees	42.8			44.7			46.4
Total Costs Incurred	645.6			673.7			680.0
Policy Acquisition Costs:
Deferred	(253.4		)	(266.4		)	(268.5		)
Amortized	253.9			257.0			260.7
Net Policy Acquisition Costs Amortized (Deferred)	0.5			(9.4		)	(7.8		)
Life VIF and P&C Customer Relationships Amortized	8.3			8.0			11.4
Insurance Expenses	$	654.4		$	672.3		$	683.6

Commissions for servicing policies are expensed as incurred, rather than deferred and amortized.

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Business Segments - Segment Revenues (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Earned Premiums	$ 495.6	$ 507.5	$ 512.8	$ 509.9	$ 520.8	$ 527.3	$ 529.8	$ 529.2	$ 2,025.8	$ 2,107.1	$ 2,173.6
Net Investment Income	76.9	82.4	74.6	80.8	72.9	70.4	75.2	77.4	314.7	295.9	298.0
Other Income	0.3	0.1	0.2	0.2	0.2	0.2	0.2	0.2	0.8	0.8	1.0
Total Revenues	586.0	635.7	588.9	615.9	596.6	645.6	608.9	611.2	2,426.5	2,462.3	2,495.0
Net Realized Gains on Sales of Investments	20.8	49.1	2.3	26.9	5.5	50.9	4.1	4.9	99.1	65.4	33.7
Net Impairment Losses Recognized in Earnings	(7.6)	(3.4)	(1.0)	(1.9)	(2.8)	(3.2)	(0.4)	(0.5)	(13.9)	(6.9)	(11.3)
Operating Segments [Member]
Segment Reporting Information [Line Items]
Total Revenues									2,327.3	2,390.1	2,464.1
Kemper Preferred [Member]
Segment Reporting Information [Line Items]
Earned Premiums									876.7	879.4	859.8
Net Investment Income									55.7	45.0	48.8
Other Income									0.2	0.4	0.3
Total Revenues									932.6	924.8	908.9
Kemper Specialty [Member]
Segment Reporting Information [Line Items]
Earned Premiums									392.8	419.8	445.2
Net Investment Income									21.8	19.0	22.8
Other Income									0.3	0.3	0.5
Total Revenues									414.9	439.1	468.5
Kemper Direct [Member]
Segment Reporting Information [Line Items]
Earned Premiums									123.4	168.0	222.7
Net Investment Income									13.4	13.9	17.4
Other Income									0	0	0.1
Total Revenues									136.8	181.9	240.2
Life and Health Insurance [Member]
Segment Reporting Information [Line Items]
Earned Premiums									632.9	639.9	645.9
Net Investment Income									209.9	204.3	200.5
Other Income									0.2	0.1	0.1
Total Revenues									843.0	844.3	846.5
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Other Income									$ 14.0	$ 13.7	$ 8.5

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Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

NOTE 19. DISCONTINUED OPERATIONS

The Company accounts for Kemper’s subsidiary, FAF, and the Company’s former Unitrin Business Insurance operations as discontinued operations.

Summary financial information included in Income from Discontinued Operations for the years endedDecember 31, 2013, 2012 and 2011 is presented below:

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS	2013			2012			2011
Interest, Loan Fees and Earned Discounts	$	—		$	—		$	31.8
Other Automobile Finance Revenues	—			—			1.4
Gain on Sale of Loan Portfolios	—			12.9			4.5
Total Automobile Finance Revenues	—			12.9			37.7
Net Investment Income	—			—			0.5
Net Realized Gains on Sales of Investments	—			—			0.4
Total Revenues Included in Discontinued Operations	$	—		$	12.9		$	38.6
Income (Loss) from Discontinued Operations before Income Taxes:
Results of Operations	$	—		$	(0.2	)	$	18.7
Gain on Sale of Loan Portfolios	—			12.9			4.5
Change in Estimate of Retained Liabilities Arising from Discontinued Operations	4.9			6.2			(3.7		)
Income from Discontinued Operations before Income Taxes	4.9			18.9			19.5
Income Tax Expense	(1.7		)	(7.3		)	(6.7		)
Income from Discontinued Operations	$	3.2		$	11.6		$	12.8
Income from Discontinued Operations Per Unrestricted Share:
Basic	$	0.06		$	0.20		$	0.21
Diluted	$	0.06		$	0.20		$	0.21

NOTE 19. DISCONTINUED OPERATIONS (Continued)

During 2011, FAF sold its active portfolio of automobile loan receivables at a gain of $4.5 million, net of transaction and other costs, while retaining its inactive portfolio of loans that had been previously charged-off (the “Inactive Portfolio”). The Inactive Portfolio was not carried on the Company’s Consolidated Balance Sheet. During 2012, FAF sold $283 million of loans in the Inactive Portfolio at a gain of $12.9 million, net of transaction, shutdown and other costs of $13.3 million, of which $1.0 million was unpaid at December 31, 2013.

In 2008, the Company sold its Unitrin Business Insurance operations. The Company retained Property and Casualty Insurance Reserves for unpaid insured losses that occurred prior to the date of the sale. Property and Casualty Insurance Reserves reported in the Company’s Consolidated Balance Sheets include $82.0 million and $99.2 million at December 31, 2013 and 2012, respectively, for the retained liabilities. In accordance with GAAP, changes in the Company’s estimate of such retained liabilities after the sale are reported as a separate component of the results of discontinued operations. See Note 5, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements.

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Income Taxes - Income Tax Benefit (Expense) from Continuing Operations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Abstract]
Current Income Tax Expense									$ (49.4)	$ (43.3)	$ (43.4)
Deferred Income Tax Benefit (Expense)									(50.1)	12.9	35.2
Unrecognized Tax Benefit									(0.4)	(0.2)	1.6
Income Tax Expense	$ (26.6)	$ (33.4)	$ (13.9)	$ (26.0)	$ 4.3	$ (25.9)	$ 5.1	$ (14.1)	$ (99.9)	$ (30.6)	$ (6.6)

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Current and Deferred Income Tax Assets Table

Current and Deferred Income Tax Assets at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Current Income Tax Assets	$	—	$	5.4
Deferred Income Tax Assets	31.8		6.6
Valuation Allowance for State Income Taxes	—		(6.6		)
Current and Deferred Income Tax Assets	$	31.8	$	5.4

Schedule of Components of Income Tax Liabilities Table

The components of Liabilities for Income Taxes at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Current Income Tax Liabilities	$	1.5	$	—
Deferred Income Tax Liabilities	—		15.1
Unrecognized Tax Benefits	6.8		6.4
Liabilities for Income Taxes	$	8.3	$	21.5

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the Company’s Net Deferred Income Tax Assets and Deferred Income Tax Liabilities at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Deferred Income Tax Assets:
Insurance Reserves	$	76.4	$	79.3
Unearned Premium Reserves	40.2		44.1
Tax Capitalization of Policy Acquisition Costs	73.3		73.6
Payroll and Employee Benefit Accruals	38.8		79.9
Net Operating Loss Carryforwards	53.3		100.7
Other	12.6		10.7
Total Deferred Income Tax Assets	294.6		388.3
Deferred Income Tax Liabilities:
Investments	80.0		208.4
Deferred Policy Acquisition Costs	106.0		104.1
Life VIF and P&C Customer Relationships	20.2		25.2
Goodwill and Licenses	26.8		23.5
Depreciable Assets	26.0		29.3
Other	3.8		6.3
Total Deferred Income Tax Liabilities	262.8		396.8
Valuation Allowance for State Income Taxes	—		6.6
Net Deferred Income Tax Assets (Liabilities)	$	31.8	$	(15.1	)

Summary of Operating Loss Carryforwards

The expiration of the federal net operating loss carryforwards and the related deferred income tax assets is presented below by year of expiration.

DOLLARS IN MILLIONS	NOL Carryforwards		Deferred Tax Asset
Expiring in:
2020	$	19.0	$	6.7
2021 through 2025	32.9		11.5
2026 through 2030	30.0		10.5
2031 through 2032	70.4		24.6
Total All Years	$	152.3	$	53.3

Reconciliation Of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of Unrecognized Tax Benefits for the years ended December 31, 2013, 2012 and 2011 is as follows:

DOLLARS IN MILLIONS	2013		2012		2011
Balance at Beginning of Year	$	6.4	$	6.2	$	7.8
Additions (Reductions) for Tax Positions of Current Period	0.1		—		(1.8		)
Additions for Tax Positions of Prior Years	0.3		0.2		0.2
Balance at End of Year	$	6.8	$	6.4	$	6.2

Schedule of Components of Income Tax Expense (Benefit)

The components of Income Tax Expense from Continuing Operations for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Current Income Tax Expense	$	(49.4	)	$	(43.3	)	$	(43.4	)
Deferred Income Tax Benefit (Expense)	(50.1		)	12.9			35.2
Decrease (Increase) Unrecognized Tax Benefits	(0.4		)	(0.2		)	1.6
Income Tax Expense	$	(99.9	)	$	(30.6	)	$	(6.6	)

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the Statutory Federal Income Tax Expense and Rate to the Company’s Effective Income Tax Expense and Rate from Continuing Operations for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013					2012					2011
	Amount			Rate		Amount			Rate		Amount			Rate
Statutory Federal Income Tax Expense	$	(110.0	)	35.0	%	$	(42.8	)	35.0	%	$	(23.9	)	35.0	%
Tax-exempt Income and Dividends Received Deduction	10.6			(3.4	)	13.9			(11.4	)	17.7			(26.0	)
State Income Taxes	(0.2		)	0.1		(0.8		)	0.7		(1.0		)	1.5
Other, Net	(0.3		)	0.1		(0.9		)	0.7		0.6			(1.0	)
Effective Income Tax Expense from Continuing Operations	$	(99.9	)	31.8	%	$	(30.6	)	25.0	%	$	(6.6	)	9.5	%

Comprehensive Income Tax Benefit and Expenses

Comprehensive Income Tax Expense included in the Consolidated Financial Statements for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Income Tax Expense:
Continuing Operations	$	(99.9	)	$	(30.6	)	$	(6.6	)
Discontinued Operations	(1.7		)	(7.3		)	(6.7		)
Unrealized Depreciation (Appreciation) on Securities	129.1			(34.4		)	(71.6		)
Foreign Currency Translation Adjustments on Investments	(0.1		)	(0.6		)	(0.1		)
Tax Effects from Postretirement Benefit Plans	(30.4		)	4.6			15.9
Tax Effects from Long-Term Equity-based Compensation included in Paid-in Capital	0.2			(0.1		)	(1.0		)
Comprehensive Income Tax Expense	$	(2.8	)	$	(68.4	)	$	(70.1	)

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Pension Benefits - Actuarial Assumptions Pension Expense (Details) (Pension Plans, Defined Benefit [Member])	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	4.05%	4.60%	5.35%
Rate of Increase in Future Compensation Levels	3.08%	3.27%	2.47%
Expected Long Term Rate of Return on Plan Assets	7.00%	7.00%	7.00%

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Notes Payable (Tables)

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Total amortized cost of debt outstanding at December 31, 2013 and 2012 was:

DOLLARS IN MILLIONS	2013		2012
Senior Notes:
6.00% Senior Notes due May 15, 2017	$	357.9	$	357.3
6.00% Senior Notes due November 30, 2015	249.0		248.6
Mortgage Note Payable due September 1, 2013	—		5.5
Total Notes Payable	$	606.9	$	611.4

Schedule of Interest Expense

Interest Expense, including facility fees, accretion of discount and write-off of unamortized credit agreement issuance costs for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013			2012			2011
Notes Payable under Revolving Credit Agreement	$	1.4		$	1.9		$	2.0
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	22.2			22.1			22.0
6.00% Senior Notes due November 30, 2015	15.4			15.4			15.4
Mortgage Note Payable	0.2			0.4			0.4
Interest Expense before Capitalization of Interest	39.2			39.8			39.8
Capitalization of Interest	(0.9		)	(1.8		)	(2.5		)
Total Interest Expense	$	38.3		$	38.0		$	37.3

Schedule of Interest Paid

Interest Paid on Notes Payable, including facility fees, for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Notes Payable under Revolving Credit Agreement	$	0.8	$	2.3	$	1.2
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	21.6		21.6		21.6
6.00% Senior Notes due November 30, 2015	15.0		15.0		15.2
Mortgage Note Payable	0.3		0.4		0.4
Total Interest Paid	$	37.7	$	39.3	$	38.4

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Postretirement Benefits Other Than Pensions (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Amortization of Unrecognized Postretirement Benefit Costs	$ (25.0)	$ (16.2)	$ (8.7)
Other Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Amortization of Unrecognized Postretirement Benefit Costs	1.2	1.2	0.6
Other Postretirement Benefit Plan, Number of Retired Employees Covered	600
Other Postretirement Benefit Plan, Number of Active Employees Covered	300
Defined Benefit Plan, Effect of One Percentage Point Increase on Accumulated Postretirement Benefit Obligation	2.1	2.8
Defined Benefit Plan, Effect of One Percentage Point Increase on Service and Interest Cost Components	0.1	0.1
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year	1.5
Defined Benefit Plan, Estimated Future Employer Contributions in Next Fiscal Year	$ 3.7
Medical Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Health Care Cost Trend Rate Assumed for Next Fiscal Year	8.50%	7.00%
Defined Benefit Plan, Health Care Cost Trend Rate Assumed for Future Years	5.00%	5.00%
Prescription Drug Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Health Care Cost Trend Rate Assumed for Next Fiscal Year	8.00%	8.50%
Defined Benefit Plan, Health Care Cost Trend Rate Assumed for Future Years	5.00%	5.00%

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Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net Income	$ 217.7	$ 103.4	$ 74.5
Unrealized Holding Gains (Losses)	(362.8)	96.7	201.2
Foreign Currency Translation Adjustments	0.2	1.6	0.4
Decrease (Increase) in Net Unrecognized Postretirement Benefit Costs	86.6	(13.2)	(45.2)
Other Comprehensive Income (Loss) Before Income Taxes	(276.0)	85.1	156.4
Other Comprehensive Income Tax Benefit (Expense)	98.6	(30.4)	(55.8)
Other Comprehensive Income (Loss)	(177.4)	54.7	100.6
Total Comprehensive Income	$ 40.3	$ 158.1	$ 175.1

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Insurance Expenses (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Insurance Expenses [Abstract]
Commissions									$ 345.7	$ 366.1	$ 363.5
General Expenses									257.1	262.9	270.1
Taxes, Licenses and Fees									42.8	44.7	46.4
Total Costs Incurred									645.6	673.7	680.0
Policy Acquisition Costs:
Deferred									(253.4)	(266.4)	(268.5)
Amortized									253.9	257.0	260.7
Net Policy Acquisition Costs Deferred									0.5	(9.4)	(7.8)
Amortization of Value of Business Acquired and Customer Relationships Acquired									8.3	8.0	11.4
Insurance Expenses	$ 162.9	$ 170.1	$ 163.1	$ 158.3	$ 169.5	$ 172.7	$ 167.7	$ 162.4	$ 654.4	$ 672.3	$ 683.6

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Investments

12 Months Ended

Dec. 31, 2013

Investments Disclosures [Abstract]

Investments

NOTE 3. INVESTMENTS

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2013 were:

DOLLARS IN MILLIONS	Amortized Cost		Gross Unrealized					Fair Value
			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	351.1	$	22.8	$	(11.7	)	$	362.2
States and Political Subdivisions	1,327.4		53.8		(20.2		)	1,361.0
Corporate Securities:
Bonds and Notes	2,636.4		205.0		(47.7		)	2,793.7
Redeemable Preferred Stocks	6.6		0.8		—			7.4
Mortgage and Asset-backed	49.0		1.8		(0.1		)	50.7
Investments in Fixed Maturities	$	4,370.5	$	284.2	$	(79.7	)	$	4,575.0

Included in the fair value of Mortgage and Asset-backed investments at December 31, 2013 are $44.7 million of collateralized loan obligations, $4.6 million of collateralized debt obligations, $1.2 million of non-governmental residential mortgage-backed securities and $0.2 million of other asset-backed securities.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2012 were:

	Amortized Cost		Gross Unrealized					Fair Value
DOLLARS IN MILLIONS			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	384.0	$	45.1	$	(0.2	)	$	428.9
States and Political Subdivisions	1,251.0		150.5		(0.1		)	1,401.4
Corporate Securities:
Bonds and Notes	2,615.5		385.4		(7.5		)	2,993.4
Redeemable Preferred Stocks	30.1		2.5		—			32.6
Mortgage and Asset-backed	3.2		1.0		(0.3		)	3.9
Investments in Fixed Maturities	$	4,283.8	$	584.5	$	(8.1	)	$	4,860.2

Included in the fair value of Mortgage and Asset-backed investments at December 31, 2012 are $2.3 million of collateralized debt obligations, $1.3 million of non-governmental residential mortgage-backed securities and $0.3 million of other asset-backed securities.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2013 by contractual maturity were:

DOLLARS IN MILLIONS	Amortized Cost		Fair Value
Due in One Year or Less	$	81.3	$	82.9
Due after One Year to Five Years	724.8		766.0
Due after Five Years to Ten Years	1,304.4		1,324.4
Due after Ten Years	2,051.1		2,183.4
Asset-backed Securities Not Due at a Single Maturity Date	208.9		218.3
Investments in Fixed Maturities	$	4,370.5	$	4,575.0

The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments in Asset-backed Securities Not Due at a Single Maturity Date at December 31, 2013 consisted of securities issued by the Government National Mortgage Association with a fair value of $155.9 million, securities issued by the Federal National Mortgage Association with a fair value of $11.3 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $0.4 million and securities of other non-governmental issuers with a fair value of $50.7 million.

NOTE 3. INVESTMENTS (Continued)

Other Receivables at December 31, 2013 includes a receivable of $2.5 million primarily from sales of Investments in Fixed Maturities that settled in January 2014. There were no unsettled purchases of Investments in Fixed Maturities at December 31, 2013. Accrued Expenses and Other Liabilities at December 31, 2012 includes a payable of $1.5 million for purchases of Investments in Fixed Maturities that settled in January 2013. There were no unsettled sales of Investments in Fixed Maturities at December 31, 2012.

Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2013 were:

DOLLARS IN MILLIONS	Cost		Gross Unrealized					Fair Value
			Gains		Losses
Preferred Stocks:
Finance, Insurance and Real Estate	$	85.4	$	2.9	$	(2.5	)	$	85.8
Other Industries	20.1		4.4		(0.1		)	24.4
Common Stocks:
Manufacturing	83.4		21.3		(0.1		)	104.6
Other Industries	68.8		17.0		(0.9		)	84.9
Other Equity Interests:
Exchange Traded Funds	122.0		3.9		(1.0		)	124.9
Limited Liability Companies and Limited Partnerships	150.3		25.2		(1.6		)	173.9
Investments in Equity Securities	$	530.0	$	74.7	$	(6.2	)	$	598.5

Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2012 were:

DOLLARS IN MILLIONS			Gross Unrealized
	Cost		Gains		Losses			Fair Value
Preferred Stocks:
Finance, Insurance and Real Estate	$	75.4	$	3.9	$	(0.1	)	$	79.2
Other Industries	18.4		3.8		(0.9		)	21.3
Common Stocks:
Manufacturing	67.0		20.9		(0.4		)	87.5
Other Industries	59.1		8.1		(0.5		)	66.7
Other Equity Interests:
Exchange Traded Funds	119.6		6.3		—			125.9
Limited Liability Companies and Limited Partnerships	123.2		19.5		(1.4		)	141.3
Investments in Equity Securities	$	462.7	$	62.5	$	(3.3	)	$	521.9

NOTE 3. INVESTMENTS (Continued)

An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	95.8	$	(10.9	)	$	4.4	$	(0.8	)	$	100.2	$	(11.7	)
States and Political Subdivisions	222.9		(20.1		)	2.0		(0.1		)	224.9		(20.2		)
Corporate Securities:
Bonds and Notes	699.8		(39.4		)	103.2		(8.3		)	803.0		(47.7		)
Mortgage and Asset-backed	13.9		(0.1		)	1.1		—			15.0		(0.1		)
Total Fixed Maturities	1,032.4		(70.5		)	110.7		(9.2		)	1,143.1		(79.7		)
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	22.5		(2.5		)	2.5		—			25.0		(2.5		)
Other Industries	4.3		(0.1		)	0.7		—			5.0		(0.1		)
Common Stocks:
Manufacturing	5.0		(0.1		)	0.2		—			5.2		(0.1		)
Other Industries	14.2		(0.9		)	0.5		—			14.7		(0.9		)
Other Equity Interests:
Exchange Traded Funds	67.6		(1.0		)	—		—			67.6		(1.0		)
Limited Liability Companies and Limited Partnerships	53.1		(0.9		)	5.0		(0.7		)	58.1		(1.6		)
Total Equity Securities	166.7		(5.5		)	8.9		(0.7		)	175.6		(6.2		)
Total	$	1,199.1	$	(76.0	)	$	119.6	$	(9.9	)	$	1,318.7	$	(85.9	)

The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. The credit loss portions of the declines in the fair values of investments that are determined to be other than temporary are reported as losses in the Consolidated Statements of Income in the periods when such determinations are made.

NOTE 3. INVESTMENTS (Continued)

Unrealized losses on fixed maturities, which the Company has determined to be temporary at December 31, 2013, were $79.7 million, of which $9.2 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. There were no unrealized losses at December 31, 2013 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “Less Than 12 Months.” Included in the preceding table under the heading “12 Months or Longer” there were unrealized losses of $0.3 million at December 31, 2013 related to securities for which the Company has recognized credit losses in earnings. Investment-grade fixed maturity investments comprised $74.2 million and below-investment-grade fixed maturity investments comprised $5.5 million of the unrealized losses on investments in fixed maturities at December 31, 2013. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was less than 5% of the amortized cost basis of the investment. At December 31, 2013, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2013 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date.

For equity securities, the Company considers various factors when determining whether a decline in the fair value is other than temporary, including, but not limited to:

• The financial condition and prospects of the issuer;

• The length of time and magnitude of the unrealized loss;

• The volatility of the investment;

• Analyst recommendations and near term price targets;

• Opinions of the Company’s external investment managers;

• Market liquidity;

• Debt-like characteristics of perpetual preferred stocks and issuer ratings; and

• The Company’s intentions to sell or ability to hold the investments until recovery.

The Company concluded that the unrealized losses on its investments in preferred and common stocks at December 31, 2013 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability companies and limited liability partnerships that primarily invest in distressed debt, mezzanine debt and secondary transactions. By the nature of their underlying investments, the Company believes that its investments in the limited liability companies and limited liability partnerships also exhibit debt-like characteristics which, among other factors, the Company considers when evaluating these investments for impairment. Based on Company’s evaluations of the factors in the preceding paragraph, the Company concluded that the declines in the fair values of the Company’s investments in equity securities presented in the preceding table were temporary at December 31, 2013.

NOTE 3. INVESTMENTS (Continued)

An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	40.8	$	(0.2	)	$	—	$	—		$	40.8	$	(0.2	)
States and Political Subdivisions	6.3		(0.1		)	0.3		—			6.6		(0.1		)
Corporate Securities:
Bonds and Notes	268.5		(5.2		)	38.1		(2.3		)	306.6		(7.5		)
Redeemable Preferred Stocks	—		—			0.4		—			0.4		—
Mortgage and Asset-backed	—		—			1.7		(0.3		)	1.7		(0.3		)
Total Fixed Maturities	315.6		(5.5		)	40.5		(2.6		)	356.1		(8.1		)
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		—			2.4		(0.1		)	2.4		(0.1		)
Other Industries	2.3		(0.8		)	3.7		(0.1		)	6.0		(0.9		)
Common Stocks:
Manufacturing	6.3		(0.4		)	—		—			6.3		(0.4		)
Other Industries	14.2		(0.4		)	1.3		(0.1		)	15.5		(0.5		)
Other Equity Interests:
Limited Liability Companies and Limited Partnerships	5.5		(0.5		)	6.7		(0.9		)	12.2		(1.4		)
Total Equity Securities	28.3		(2.1		)	14.1		(1.2		)	42.4		(3.3		)
Total	$	343.9	$	(7.6	)	$	54.6	$	(3.8	)	$	398.5	$	(11.4	)

Unrealized losses on fixed maturities, which the Company determined to be temporary at December 31, 2012, were $8.1 million, of which $2.6 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. Included in the preceding table under the heading “Less Than 12 Months” there were unrealized losses of $0.3 million at December 31, 2012 related to securities for which the Company has recognized credit losses in earnings. There were no unrealized losses at December 31, 2012 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “12 Months or Longer.” Included in the preceding table under the heading “12 Months or Longer” are unrealized losses of $0.1 million at December 31, 2012 related to securities for which the Company has recognized foreign currency losses in earnings. Investment-grade fixed maturity investments comprised $3.8 million and below-investment-grade fixed maturity investments comprised $4.3 million of the unrealized losses on investments in fixed maturities at December 31, 2012. Unrealized losses for below-investment-grade fixed maturities included unrealized losses totaling $0.1 million for one issuer that the Company recognized foreign currency impairment losses in earnings for the year ended December 31, 2012. For the other remaining below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was less than 3% of the amortized cost basis of the investment. At December 31, 2012, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2012 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date.

The Company concluded that the unrealized losses on its investments in preferred and common stocks at December 31, 2012 were temporary based on the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability partnerships that primarily invest in distressed debt,

NOTE 3. INVESTMENTS (Continued)

mezzanine debt and secondary transactions. By the nature of their underlying investments, the Company believes that its investments in the limited liability partnerships also exhibit debt-like characteristics which, among other factors, the Company considers when evaluating these investments for impairment. Based on evaluations of the factors described above that the Company considers when determining whether a decline in the fair value of an investment in equity securities is other than temporary, the Company concluded that the declines in the fair values of the Company’s investments in equity securities presented in the preceding table were temporary at December 31, 2012.

The following table sets forth the pre-tax amount of OTTI credit losses, recognized in Retained Earnings for Investments in Fixed Maturities held by the Company as of December 31, 2013, 2012 and 2011, for which a portion of the OTTI loss has been recognized in Accumulated Other Comprehensive Income, and the corresponding changes in such amounts.

DOLLARS IN MILLIONS	2013			2012			2011
Balance at Beginning of Year	$	4.6		$	3.9		$	2.4
Additions for Previously Unrecognized OTTI Credit Losses	1.8			1.1			2.2
Increases to Previously Recognized OTTI Credit Losses	7.3			—			—
Reductions to Previously Recognized OTTI Credit Losses	—			(0.1		)	(0.7		)
Reductions for Change in Impairment Status:
From Status of Credit Loss to Status of Intent-to-sell or Required-to-sell	(3.2		)	—			—
Reductions for Investments Sold During Period	(0.6		)	(0.3		)	—
Balance at End of Year	$	9.9		$	4.6		$	3.9

Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting. The Company’s investments in Equity Method Limited Liability Investments are generally of a passive nature in that the Company does not take an active role in the management of the investment entity. In 2012, aggregate investment income (losses) from Equity Method Limited Liability Investments exceeded 10% of the Company’s pretax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for its Equity Method Limited Liability Investments. Such aggregated summarized financial data does not represent the Company’s proportionate share of the Equity Method Limited Liability Investment assets or earnings. Aggregate total assets of the Equity Method Limited Liability Investments in which the Company invested totaled $3,392.1 million and $3,643.6 million as of December 31, 2013 and 2012, respectively. Aggregate total liabilities of the Equity Method Limited Liability Investments in which the Company invested totaled $576.3 million and $421.0 million as of December 31, 2013 and 2012, respectively. Aggregate net income of the Equity Method Limited Liability Investments in which the Company invested totaled $181.1 million and $134.6 million for the years ended December 31, 2013 and 2012, respectively. Aggregate net loss of the Equity Method Limited Liability Investments in which the Company invested totaled $13.8 million for the year endedDecember 31, 2011. The aggregate summarized financial data is based on the most recent and sufficiently-timely financial information available to the Company as of the respective reporting dates and periods. The Company’s maximum exposure to loss at December 31, 2013 is limited to the total carrying value of $245.1 million. In addition, the Company had outstanding commitments totaling approximately $50.4 million to fund Equity Method Limited Liability Investments at December 31, 2013.

NOTE 3. INVESTMENTS (Continued)

The carrying values of the Company’s Other Investments at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Loans to Policyholders at Unpaid Principal	$	275.4	$	266.3
Real Estate at Depreciated Cost	167.1		226.2
Trading Securities at Fair Value	5.0		4.5
Other	0.5		0.5
Total	$	448.0	$	497.5

In the third quarter of 2013, the Company sold the 41-story office building where Kemper’s corporate offices are headquartered for a gain of $43.6 million before income taxes. Proceeds from the sale, net of transaction costs, were $101.5 million.

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Investments - Amortized Cost and Estimated Fair Value of investments (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Amortized Cost	$ 4,370.5	$ 4,283.8
Gross Unrealized Gains	284.2	584.5
Gross Unrealized Losses	(79.7)	(8.1)
Investments in Fixed Maturities, Fair Value	4,575.0	4,860.2
US Government and Government Agencies and Authorities [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Amortized Cost	351.1	384.0
Gross Unrealized Gains	22.8	45.1
Gross Unrealized Losses	(11.7)	(0.2)
Investments in Fixed Maturities, Fair Value	362.2	428.9
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Amortized Cost	1,327.4	1,251.0
Gross Unrealized Gains	53.8	150.5
Gross Unrealized Losses	(20.2)	(0.1)
Investments in Fixed Maturities, Fair Value	1,361.0	1,401.4
Corporate Bonds and Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Amortized Cost	2,636.4	2,615.5
Gross Unrealized Gains	205.0	385.4
Gross Unrealized Losses	(47.7)	(7.5)
Investments in Fixed Maturities, Fair Value	2,793.7	2,993.4
Redeemable Preferred Stocks [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Amortized Cost	6.6	30.1
Gross Unrealized Gains	0.8	2.5
Gross Unrealized Losses	0	0
Investments in Fixed Maturities, Fair Value	7.4	32.6
Mortgage and Asset Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Amortized Cost	49.0	3.2
Gross Unrealized Gains	1.8	1.0
Gross Unrealized Losses	(0.1)	(0.3)
Investments in Fixed Maturities, Fair Value	50.7	3.9
Collateralized Loan Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Fair Value	44.7
Collateralized Debt Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Fair Value	4.6	2.3
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Fair Value	1.2	1.3
Other Asset Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in Fixed Maturities, Fair Value	$ 0.2	$ 0.3

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Other Comprehensive Income And Accumulated Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Other Comprehensive Income (Loss) Before Income Taxes:
Unrealized Holding Gains (Losses) Arising During the Period Before Reclassification Adjustment	$ (324.9)	$ 157.9	$ 232.1
Reclassification Adjustment for Amounts Included in Net Income	(37.9)	(61.2)	(30.9)
Unrealized Holding Gains (Losses)	(362.8)	96.7	201.2
Foreign Currency Translation Adjustments Arising During the Period Before Reclassification Adjustment	0.2	1.6	0.4
Reclassification Adjustment for Amounts Included in Net Income	0	0	0
Foreign Currency Translation Adjustments	0.2	1.6	0.4
Unrecognized Postretirement Benefit Costs Arising During the Year	61.6	(29.4)	(53.9)
Amortization of Unrecognized Postretirement Benefit Costs	25.0	16.2	8.7
Net Unrecognized Postretirement Benefit Costs	86.6	(13.2)	(45.2)
Other Comprehensive Income (Loss) Before Income Taxes	(276.0)	85.1	156.4
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Period Before Reclassification Adjustment	115.9	(55.9)	(82.5)
Reclassification Adjustment for Amounts Included in Net Income	13.2	21.5	10.9
Unrealized Holding Gains and Losses	129.1	(34.4)	(71.6)
Foreign Currency Translation Adjustments Arising During the Period Before Reclassification Adjustment	(0.1)	(0.6)	(0.1)
Reclassification Adjustment for Amounts Included in Net Income	0	0	0
Foreign Currency Translation Adjustment	(0.1)	(0.6)	(0.1)
Unrecognized Postretirement Benefit Costs Arising During the Year	(21.6)	10.3	19.0
Amortization of Unrecognized Postretirement Benefit Costs	(8.8)	(5.7)	(3.1)
Net Unrecognized Postretirement Benefit Costs	(30.4)	4.6	15.9
Other Comprehensive Income Tax Benefit (Expense)	$ 98.6	$ (30.4)	$ (55.8)

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Pension Benefits - Pension Benefit Payments (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Unrecognized Postretirement Benefit Costs Arising During the Year	$ 61.6	$ (29.4)	$ (53.9)
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected Future Benefit Payments In 2013	24.4
Expected Future Benefit Payments in 2014	25.4
Expected Future Benefit Payments in 2015	26.7
Expected Future Benefit Payments in 2016	27.9
Expected Future Benefit Payments in 2017	29.1
Expected Future Benefit Payments in 2018-2022	163.4
Unrecognized Postretirement Benefit Costs Arising During the Year	53.8	(34.8)	(52.4)
Supplemental Employee Retirement Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Unrecognized Postretirement Benefit Costs Arising During the Year	$ 1.5	$ 1.3	$ 2.9

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Notes Payable - Interest Expense on Notes Payable (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Interest Costs Incurred	$ 39.2	$ 39.8	$ 39.8
Capitalization of Interest	(0.9)	(1.8)	(2.5)
Total Interest Expense	38.3	38.0	37.3
Notes Payable under Revolving Credit Agreement
Debt Instrument [Line Items]
Interest Costs Incurred	1.4	1.9	2.0
Senior Notes [Member] | Senior Notes, 6% Due May 15, 2017 [Member]
Debt Instrument [Line Items]
Interest Costs Incurred	22.2	22.1	22.0
Senior Notes [Member] | Senior Notes, 6% Due November 30, 2015 [Member]
Debt Instrument [Line Items]
Interest Costs Incurred	15.4	15.4	15.4
Mortgage Note Payable [Member]
Debt Instrument [Line Items]
Interest Costs Incurred	$ 0.2	$ 0.4	$ 0.4

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Catatrophe Reinsurance

12 Months Ended

Dec. 31, 2013

Reinsurance Transactions [Abstract]

Catastrophe Reinsurance

NOTE 20. CATASTROPHE REINSURANCE

Catastrophes and natural disasters are inherent risks of the property and casualty insurance business. These catastrophic events and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and winter storms. Such events result in insured losses that are, and will continue to be, a material factor in the results of operations and financial position of the Company’s property and casualty insurance companies. Further, because the level of these insured losses occurring in any one year cannot be accurately predicted, these losses may contribute to material year-to-year fluctuations in the results of operations and financial position of these companies. Specific types of catastrophic events are more likely to occur at certain times within the year than others. This factor adds an element of seasonality to property and casualty insurance claims. The Company has adopted the industry-wide catastrophe classifications of storms and other events promulgated by ISO to track and report losses related to catastrophes. ISO classifies a disaster as a catastrophe when the event causes $25.0 million or more in direct insured losses to property and affects a significant number of policyholders and insurers. ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry. The discussions that follow utilize ISO’s definition of catastrophes.

The Company manages its exposure to catastrophes and other natural disasters through a combination of geographical diversification, restrictions on the amount and location of new business production in certain regions, and reinsurance. To limit its exposures to catastrophic events, the Company maintains various catastrophe reinsurance programs for its property and casualty insurance businesses.

Coverage for each catastrophe reinsurance program effective January 1, 2013 to December 31, 2013 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred, Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
4th Layer of Coverage	350.0		450.0		50.0

The catastrophe reinsurance program for the Kemper Preferred segment in 2013 also included reinsurance coverage, under a policy that expired on June 1, 2013, for catastrophe losses in North Carolina at retentions lower than those presented in the preceding table. The catastrophe reinsurance program for the Life and Health Insurance and Kemper Direct segments in 2013 also included reinsurance coverage from the FHCF for hurricane losses in Florida at retentions lower than those described above.

NOTE 20. CATASTROPHE REINSURANCE (Continued)

Coverage for each catastrophe reinsurance program effective January 1, 2012 to December 31, 2012 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred, Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
4th Layer of Coverage	350.0		450.0		50.0
Life and Health Segment—Property Insurance Operations:
Retained	$	—	$	8.0	—	%
1st Layer of Coverage	8.0		15.0		70.0
2nd Layer of Coverage	15.0		40.0		70.0

The catastrophe reinsurance program for the Kemper Preferred segment in 2012 also included reinsurance coverage for catastrophe losses in North Carolina at retentions lower than those presented in the preceding table. The catastrophe reinsurance program for the Life and Health Insurance and Kemper Direct segments in 2012 also included reinsurance coverage from the FHCF for hurricane losses in Florida at retentions lower than those described above.

Coverage for each catastrophe reinsurance program effective January 1, 2011 to December 31, 2011 is provided in various layers as presented below:

DOLLARS IN MILLIONS	Catastrophe Losses and LAE				Percentage of Coverage
	In Excess of		Up to
Kemper Preferred Segment:
Retained	$	—	$	50.0	—	%
1st Layer of Coverage	50.0		100.0		65.0
2nd Layer of Coverage	100.0		200.0		95.0
3rd Layer of Coverage	200.0		350.0		90.0
Kemper Direct and Kemper Specialty Segments:
Retained	$	—	$	3.0	—	%
1st Layer of Coverage	3.0		16.0		100.0
Life and Health Segment—Property Insurance Operations:
Retained	$	—	$	8.0	—	%
1st Layer of Coverage	8.0		15.0		70.0
2nd Layer of Coverage	15.0		40.0		100.0

The catastrophe reinsurance program for the Kemper Preferred segment in 2011 also included reinsurance coverage for catastrophe losses in North Carolina at retentions lower than those presented in the preceding table. The catastrophe reinsurance program for the Life and Health Insurance and Kemper Direct segments in 2011 also included reinsurance coverage from the FHCF for hurricane losses in Florida at retentions lower than those described above.

In the event that the Company’s incurred catastrophe losses and LAE covered by any of its catastrophe reinsurance programs presented in the three preceding tables exceed the retention for that particular layer, each of the programs required one reinstatement of such coverage. In such an instance, the Company is required to pay a reinstatement premium to the reinsurers to reinstate the full amount of reinsurance available under such layer. The reinstatement premium is a percentage of the original premium based on the ratio of the losses in excess of the Company’s retention to the reinsurers’ coverage limit.

NOTE 20. CATASTROPHE REINSURANCE (Continued)

Reinsurance premiums for the Company’s primary catastrophe reinsurance programs, the Kemper Preferred NC Program and the FHCF Program reduced earned premiums for the years ended December 31, 2013, 2012 and 2011 by the following:

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	23.2	$	24.6	$	20.0
Kemper Specialty	0.1		0.1		0.1
Kemper Direct	0.3		0.4		0.8
Life and Health Insurance	—		2.0		2.3
Total Ceded Catastrophe Reinsurance Premiums	$	23.6	$	27.1	$	23.2

Catastrophe losses and LAE (including reserve development), net of reinsurance recoveries, for the years ended December 31, 2013, 2012 and 2011 by business segment are presented below.

DOLLARS IN MILLIONS	2013		2012		2011
Kemper Preferred	$	29.2	$	99.2	$	138.7
Kemper Specialty	3.7		4.9		3.9
Kemper Direct	1.7		8.0		7.2
Life and Health Insurance	1.6		6.1		7.6
Total Catastrophe Losses and LAE	$	36.2	$	118.2	$	157.4

Total Catastrophe loss and LAE reserves, net of reinsurance recoverables, developed favorably by $14.5 million, $6.3 million and $6.4 million in 2013, 2012 and 2011, respectively. The Kemper Preferred segment reported favorable catastrophe reserve development of $11.9 million, $6.2 million and $5.5 million in 2013, 2012 and 2011, respectively. The Life and Health Insurance segment reported favorable catastrophe reserve development of $2.0 million and $1.5 million in 2013 and 2011, respectively, and adverse catastrophe reserve development of $0.1 million in 2012.

In late October 2012, Superstorm Sandy, at one point a level two hurricane while over the Atlantic Ocean, caused a significant amount of damage in several northeastern states. Catastrophe losses and LAE for the year ended December 31, 2012 include $48.5 million related to Superstorm Sandy, of which $44.0 million is included in the Kemper Preferred segment.

In the second quarter of 2011, the United States experienced a high volume of spring storms, including a record level of tornadoes in April. In the third quarter of 2011, the Company incurred claims related to Hurricane Irene. Catastrophe losses and LAE for the year ended December 31, 2011 include $23.0 million related to Hurricane Irene, of which $22.1 million is included in the Kemper Preferred segment.

The process of estimating and establishing reserves for catastrophe losses is inherently uncertain and the actual ultimate cost of a claim, net of actual reinsurance recoveries, may vary materially from the estimated amount reserved. The Company’s estimates of direct catastrophe losses are generally based on inspections by claims adjusters and historical loss development experience for areas that have not been inspected or for claims that have not yet been reported. The Company’s estimates of direct catastrophe losses are based on the coverages provided by its insurance policies. The Company’s homeowners and dwelling insurance policies do not provide coverage for losses caused by floods, but generally provide coverage for physical damage caused by wind or wind driven rain. Accordingly, the Company’s estimates of direct losses for homeowners and dwelling insurance do not include losses caused by flood. Depending on the policy, automobile insurance may provide coverage for losses caused by flood. Estimates of the number and severity of claims ultimately reported are influenced by many variables, including, but not limited to, repair or reconstruction costs and determination of cause of loss that are difficult to quantify and will influence the final amount of claim settlements. All these factors, coupled with the impact of the availability of labor and material on costs, require significant judgment in the reserve setting process. A change in any one or more of these factors is likely to result in an ultimate net claim cost different from the estimated reserve. The Company’s estimates of indirect losses from wind pools and joint underwriting associations are based on a variety of factors, including, but not limited to, actual or estimated assessments provided by or received from such entities, insurance industry estimates of losses, and estimates of the Company’s market share in the assessable states. Actual assessments may differ materially from these estimated amounts.

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Business Segments - Segment Net Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net Operating Income									$ 159.2	$ 53.8	$ 47.1
Income from Continuing Operations	54.8	68.6	32.5	58.6	(1.7)	55.6	1.6	36.3	214.5	91.8	61.7
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net Operating Income									189.9	79.9	73.6
Kemper Preferred [Member]
Segment Reporting Information [Line Items]
Net Operating Income									63.1	(11.2)	(17.6)
Kemper Specialty [Member]
Segment Reporting Information [Line Items]
Net Operating Income									10.4	1.2	19.8
Kemper Direct [Member]
Segment Reporting Information [Line Items]
Net Operating Income									27.1	(0.9)	(27.5)
Life and Health Insurance [Member]
Segment Reporting Information [Line Items]
Net Operating Income									89.3	90.8	98.9
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Net Operating Income									(30.7)	(26.1)	(26.5)
Net Realized Gains on Sale of Investments, Net of Tax									64.4	42.5	21.9
Net Impairment Losses Recognized in Earnings, Net of Tax									$ 9.1	$ 4.5	$ 7.3

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Related Parties (Details) (Director [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Related Party Transaction [Line Items]
Related Party Transaction Amount of Assets in Defined Contributions Plans	$ 22.8	$ 20.4	$ 19.3
Related Party Transaction Percent of Assets in Defined Contribution Plan Assets	6.00%	7.00%	7.00%
Trinity [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Assets Managed by Investment Advisory Firm under Director's Management	154.7	125.2	115.2
Related Party Transaction, Expenses from Transactions with Related Party	0.4	0.3	0.3
Pension Plans, Defined Benefit [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	0.3	0.3	0.3
Related Party Transaction Amount of Assets Under Management in Defined Benefit Plans	$ 148.6	$ 120.7	$ 107.1

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Other Reinsurance Assumed Insurance (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended								3 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Capitol [Member] employees director	Dec. 31, 2013 ORCC [Member] employees director	Dec. 31, 2013 Capitol [Member]	Dec. 31, 2012 Capitol [Member]	Dec. 31, 2011 Capitol [Member]	Sep. 30, 2012 Capitol [Member] Trinity [Member]	Dec. 31, 2013 Capitol [Member] Trinity [Member]	Dec. 31, 2013 ORCC [Member]	Dec. 31, 2012 ORCC [Member]	Dec. 31, 2011 ORCC [Member]	Dec. 31, 2013 ORCC [Member] Trinity [Member]	Dec. 31, 2013 Non-Catastrophe Reinsurance [Member]	Dec. 31, 2012 Non-Catastrophe Reinsurance [Member]	Dec. 31, 2011 Non-Catastrophe Reinsurance [Member]
Assumed Insurance [Line Items]
Assumed Premiums Earned	$ 52.7	$ 44.0	$ 43.7			$ 22.4	$ 25.0	$ 27.9			$ 7.2	$ 8.2	$ 9.0		$ 52.7	$ 44.0	$ 43.7
Earned Premiums Assumed, Percentage										100.00%				100.00%
Change in Policyholder Benefits and Incurred Losses and LAE as Result of Quota Share Revision									$ (2.6)
Number of Company Employee Board Members				5	9
Number of Board of Director Members				5	9

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Long-term Equity-based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended						0 Months Ended	36 Months Ended	0 Months Ended	36 Months Ended		1 Months Ended	36 Months Ended
	May 02, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Performance Based Restricted Stock [Member]	Dec. 31, 2013 Options Granted Prior to May 1, 2013 [Domain]	Dec. 31, 2013 Performance Period, 2012 to 2014 [Member] Performance Based Restricted Stock [Member]	Feb. 01, 2014 Performance Period, 2011 to 2013 [Member] Performance Based Restricted Stock [Member]	Dec. 31, 2013 Performance Period, 2011 to 2013 [Member] Performance Based Restricted Stock [Member]	Feb. 02, 2013 Performance Period, 2010 to 2012 [Member] Performance Based Restricted Stock [Member]	Dec. 31, 2012 Performance Period, 2010 to 2012 [Member] Performance Based Restricted Stock [Member]	Dec. 31, 2013 Performance Period, 2013 to 2015 [Member] Performance Based Restricted Stock [Member]	Jan. 31, 2012 Performance Period, 2009 to 2011 [Member] Performance Based Restricted Stock [Member]	Dec. 31, 2011 Performance Period, 2009 to 2011 [Member] Performance Based Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual Awards of Deferred Stock Units to be Issued to each Non-Employee Director	500
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		10,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		8,750,768
Reduction in Share Authorization if Maximum Performance Level is Met or Exceeded					390,486		179,325					180,450
Allocated Share-based Compensation Expense		$ 5.5	$ 5.8	$ 5.3
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized		$ 5.4
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition		1 year 4 months 24 days
Share-based Compensation,Initial Grant For Non-Employee Director, Shares		4,000
Share Based Compensation Arrangement By Share Based Payment Award, Automatic Annual Grant, Non-Employee Directors, Options		4,000
Share Based Compensation Arrangement By Share Based Payment Award, Automatic Annual Grant, Non-Employee Directors, Options, Vesting Period						1 year
Share Based Compensation Arrangement By Share Based Payment Award, Automatic Annual Grant, Non-Employee Directors, Options, Expiration Date						10 years
Performance Period					3 years
Number of Additional Shares To Be Granted If Maximum Perfornance Level Is Met or Exceeded							59,775					60,150
Payout Percentage for Exceeding Performance Target									118.00%		114.00%			183.00%
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures								9,014		6,996			40,727
Deferred Stock Units Issued	4,000
Fair Value per Deferred Stock Unit Issued	$ 31.50

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Investments (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Available-for-sale Securities [Line Items]

Schedule of Unrealized Loss on Investments

An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2013 is presented below:

DOLLARS IN MILLIONS	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	95.8	$	(10.9	)	$	4.4	$	(0.8	)	$	100.2	$	(11.7	)
States and Political Subdivisions	222.9		(20.1		)	2.0		(0.1		)	224.9		(20.2		)
Corporate Securities:
Bonds and Notes	699.8		(39.4		)	103.2		(8.3		)	803.0		(47.7		)
Mortgage and Asset-backed	13.9		(0.1		)	1.1		—			15.0		(0.1		)
Total Fixed Maturities	1,032.4		(70.5		)	110.7		(9.2		)	1,143.1		(79.7		)
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	22.5		(2.5		)	2.5		—			25.0		(2.5		)
Other Industries	4.3		(0.1		)	0.7		—			5.0		(0.1		)
Common Stocks:
Manufacturing	5.0		(0.1		)	0.2		—			5.2		(0.1		)
Other Industries	14.2		(0.9		)	0.5		—			14.7		(0.9		)
Other Equity Interests:
Exchange Traded Funds	67.6		(1.0		)	—		—			67.6		(1.0		)
Limited Liability Companies and Limited Partnerships	53.1		(0.9		)	5.0		(0.7		)	58.1		(1.6		)
Total Equity Securities	166.7		(5.5		)	8.9		(0.7		)	175.6		(6.2		)
Total	$	1,199.1	$	(76.0	)	$	119.6	$	(9.9	)	$	1,318.7	$	(85.9	)

An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2012 is presented below:

DOLLARS IN MILLIONS	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	40.8	$	(0.2	)	$	—	$	—		$	40.8	$	(0.2	)
States and Political Subdivisions	6.3		(0.1		)	0.3		—			6.6		(0.1		)
Corporate Securities:
Bonds and Notes	268.5		(5.2		)	38.1		(2.3		)	306.6		(7.5		)
Redeemable Preferred Stocks	—		—			0.4		—			0.4		—
Mortgage and Asset-backed	—		—			1.7		(0.3		)	1.7		(0.3		)
Total Fixed Maturities	315.6		(5.5		)	40.5		(2.6		)	356.1		(8.1		)
Equity Securities:
Preferred Stocks:
Finance, Insurance and Real Estate	—		—			2.4		(0.1		)	2.4		(0.1		)
Other Industries	2.3		(0.8		)	3.7		(0.1		)	6.0		(0.9		)
Common Stocks:
Manufacturing	6.3		(0.4		)	—		—			6.3		(0.4		)
Other Industries	14.2		(0.4		)	1.3		(0.1		)	15.5		(0.5		)
Other Equity Interests:
Limited Liability Companies and Limited Partnerships	5.5		(0.5		)	6.7		(0.9		)	12.2		(1.4		)
Total Equity Securities	28.3		(2.1		)	14.1		(1.2		)	42.4		(3.3		)
Total	$	343.9	$	(7.6	)	$	54.6	$	(3.8	)	$	398.5	$	(11.4	)

Other than Temporary Impairment, Credit Losses Recognized in Earnings

The following table sets forth the pre-tax amount of OTTI credit losses, recognized in Retained Earnings for Investments in Fixed Maturities held by the Company as of December 31, 2013, 2012 and 2011, for which a portion of the OTTI loss has been recognized in Accumulated Other Comprehensive Income, and the corresponding changes in such amounts.

DOLLARS IN MILLIONS	2013			2012			2011
Balance at Beginning of Year	$	4.6		$	3.9		$	2.4
Additions for Previously Unrecognized OTTI Credit Losses	1.8			1.1			2.2
Increases to Previously Recognized OTTI Credit Losses	7.3			—			—
Reductions to Previously Recognized OTTI Credit Losses	—			(0.1		)	(0.7		)
Reductions for Change in Impairment Status:
From Status of Credit Loss to Status of Intent-to-sell or Required-to-sell	(3.2		)	—			—
Reductions for Investments Sold During Period	(0.6		)	(0.3		)	—
Balance at End of Year	$	9.9		$	4.6		$	3.9

The components of Net Impairment Losses Recognized in Earnings reported in the Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities	$	(10.3	)	$	(1.9	)	$	(2.2	)
Equity Securities	(3.6		)	(1.9		)	(1.9		)
Real Estate	—			(3.1		)	(7.2		)
Net Impairment Losses Recognized in Earnings	$	(13.9	)	$	(6.9	)	$	(11.3	)

Schedule of Other Investments

The carrying values of the Company’s Other Investments at December 31, 2013 and 2012 were:

DOLLARS IN MILLIONS	2013		2012
Loans to Policyholders at Unpaid Principal	$	275.4	$	266.3
Real Estate at Depreciated Cost	167.1		226.2
Trading Securities at Fair Value	5.0		4.5
Other	0.5		0.5
Total	$	448.0	$	497.5

Investments in Fixed Maturities [Member]

Schedule of Available-for-sale Securities [Line Items]

Schedule of Available-for-sale Securities Reconciliation

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2012 were:

	Amortized Cost		Gross Unrealized					Fair Value
DOLLARS IN MILLIONS			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	384.0	$	45.1	$	(0.2	)	$	428.9
States and Political Subdivisions	1,251.0		150.5		(0.1		)	1,401.4
Corporate Securities:
Bonds and Notes	2,615.5		385.4		(7.5		)	2,993.4
Redeemable Preferred Stocks	30.1		2.5		—			32.6
Mortgage and Asset-backed	3.2		1.0		(0.3		)	3.9
Investments in Fixed Maturities	$	4,283.8	$	584.5	$	(8.1	)	$	4,860.2

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2013 were:

DOLLARS IN MILLIONS	Amortized Cost		Gross Unrealized					Fair Value
			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	351.1	$	22.8	$	(11.7	)	$	362.2
States and Political Subdivisions	1,327.4		53.8		(20.2		)	1,361.0
Corporate Securities:
Bonds and Notes	2,636.4		205.0		(47.7		)	2,793.7
Redeemable Preferred Stocks	6.6		0.8		—			7.4
Mortgage and Asset-backed	49.0		1.8		(0.1		)	50.7
Investments in Fixed Maturities	$	4,370.5	$	284.2	$	(79.7	)	$	4,575.0

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2013 by contractual maturity were:

DOLLARS IN MILLIONS	Amortized Cost		Fair Value
Due in One Year or Less	$	81.3	$	82.9
Due after One Year to Five Years	724.8		766.0
Due after Five Years to Ten Years	1,304.4		1,324.4
Due after Ten Years	2,051.1		2,183.4
Asset-backed Securities Not Due at a Single Maturity Date	208.9		218.3
Investments in Fixed Maturities	$	4,370.5	$	4,575.0

Investments in Equity Securities [Member]

Schedule of Available-for-sale Securities [Line Items]

Schedule of Available-for-sale Securities Reconciliation

Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2013 were:

DOLLARS IN MILLIONS	Cost		Gross Unrealized					Fair Value
			Gains		Losses
Preferred Stocks:
Finance, Insurance and Real Estate	$	85.4	$	2.9	$	(2.5	)	$	85.8
Other Industries	20.1		4.4		(0.1		)	24.4
Common Stocks:
Manufacturing	83.4		21.3		(0.1		)	104.6
Other Industries	68.8		17.0		(0.9		)	84.9
Other Equity Interests:
Exchange Traded Funds	122.0		3.9		(1.0		)	124.9
Limited Liability Companies and Limited Partnerships	150.3		25.2		(1.6		)	173.9
Investments in Equity Securities	$	530.0	$	74.7	$	(6.2	)	$	598.5

Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2012 were:

DOLLARS IN MILLIONS			Gross Unrealized
	Cost		Gains		Losses			Fair Value
Preferred Stocks:
Finance, Insurance and Real Estate	$	75.4	$	3.9	$	(0.1	)	$	79.2
Other Industries	18.4		3.8		(0.9		)	21.3
Common Stocks:
Manufacturing	67.0		20.9		(0.4		)	87.5
Other Industries	59.1		8.1		(0.5		)	66.7
Other Equity Interests:
Exchange Traded Funds	119.6		6.3		—			125.9
Limited Liability Companies and Limited Partnerships	123.2		19.5		(1.4		)	141.3
Investments in Equity Securities	$	462.7	$	62.5	$	(3.3	)	$	521.9

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Income From Investments

12 Months Ended

Dec. 31, 2013

Investment Income, Net [Abstract]

Income From Investments

NOTE 13. INCOME FROM INVESTMENTS

Net Investment Income for the years ended December 31, 2013, 2012 and 2011 was:

DOLLARS IN MILLIONS	2013		2012		2011
Investment Income:
Interest and Dividends on Fixed Maturities	$	235.5	$	246.1	$	246.6
Dividends on Equity Securities	38.0		25.7		25.2
Equity Method Limited Liability Investments	26.4		9.3		9.6
Short-term Investments	0.1		0.2		0.1
Real Estate	20.8		27.4		26.0
Loans to Policyholders	19.8		18.9		17.7
Other	—		0.1		0.3
Total Investment Income	340.6		327.7		325.5
Investment Expenses:
Real Estate	18.3		26.1		25.9
Other Investment Expenses	7.6		5.7		1.6
Total Investment Expenses	25.9		31.8		27.5
Net Investment Income	$	314.7	$	295.9	$	298.0

Other Receivables includes accrued investment income of $66.7 million and $72.4 million at December 31, 2013 and 2012, respectively.

NOTE 13. INCOME FROM INVESTMENTS (Continued)

The components of Net Realized Gains on Sales of Investments for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities:
Gains on Sales	$	30.9		$	56.9		$	14.2
Losses on Sales	(0.4		)	(0.1		)	(0.1		)
Equity Securities:
Gains on Sales	21.8			8.3			34.0
Losses on Sales	(0.5		)	(0.2		)	(13.5		)
Equity Method Limited Liability Investments:
Gains on Sales	2.5			—			—
Real Estate:
Gains on Sales	44.2			0.2			0.1
Other Investments:
Gains on Sales	0.1			—			—
Losses on Sales	(0.1		)	—			(0.1		)
Net Gains (Losses) on Trading Securities	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7
Gross Gains on Sales	$	99.5		$	65.4		$	48.3
Gross Losses on Sales	(1.0		)	(0.3		)	(13.7		)
Net Gains (Losses) on Trading Securities	0.6			0.3			(0.9		)
Net Realized Gains on Sales of Investments	$	99.1		$	65.4		$	33.7

The components of Net Impairment Losses Recognized in Earnings reported in the Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011 were:

DOLLARS IN MILLIONS	2013			2012			2011
Fixed Maturities	$	(10.3	)	$	(1.9	)	$	(2.2	)
Equity Securities	(3.6		)	(1.9		)	(1.9		)
Real Estate	—			(3.1		)	(7.2		)
Net Impairment Losses Recognized in Earnings	$	(13.9	)	$	(6.9	)	$	(11.3	)

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Pension Benefits - Weighted Average Asset Allocation for Pension Plans (Details) (Pension Plans, Defined Benefit [Member])	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	100.00%	100.00%
Cash and Short-term Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	8.00%	12.00%
Corporate Bonds and Notes [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	27.00%	33.00%
Common and Preferred Stocks [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	34.00%	31.00%
Exchange Traded Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	22.00%	17.00%
Other Assets [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	9.00%	7.00%