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.