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