SCHEDULE II

KEMPER CORPORATION

PARENT COMPANY BALANCE SHEETS

(Dollars in Millions)



	December 31,
	2014		2013
ASSETS
Investments in Subsidiaries	$	2,677.5	$	2,614.0
Fixed Maturities at Fair Value (Amortized Cost: 2014 – $12.2)	12.2		—
Equity Securities at Fair Value (Cost: 2014 – $21.9; 2013 – $4.7)	21.8		5.0
Fair Value Option Investments	53.3		—
Short-term Investments	225.1		130.8
Cash	17.9		20.8
Other Receivables	6.9		4.9
Current and Deferred Income Taxes	4.7		35.0
Other Assets	5.6		7.3
Total Assets	$	3,025.0	$	2,817.8
LIABILITIES AND SHAREHOLDERS’ EQUITY
Senior Notes Payable, 6.00% due 2017 (Fair Value: 2014 – $390.2; 2013 – $395.5)	$	358.5	$	357.9
Senior Notes Payable, 6.00% due 2015 (Fair Value: 2014 – $260.2; 2013 – $271.6)	249.5		249.0
Subordinated Debentures due 2054 (Fair Value: 2014 – $154.0)	144.1		—
Liabilities for Income Taxes	14.5		90.5
Liabilities for Benefit Plans	160.2		63.9
Accrued Expenses and Other Liabilities	7.5		5.0
Total Liabilities	934.3		766.3
Shareholders’ Equity:
Common Stock	5.2		5.6
Additional Paid-in Capital	660.1		694.8
Retained Earnings	1,202.7		1,215.8
Accumulated Other Comprehensive Income	222.7		135.3
Total Shareholders’ Equity	2,090.7		2,051.5
Total Liabilities and Shareholders’ Equity	$	3,025.0	$	2,817.8

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,
	2014			2013			2012
Net Investment Income	$	0.9		$	0.2		$	0.2
Net Realized Gains (Losses) on Sales of Investments	(0.2		)	0.6			0.3
Net Impairment Losses Recognized in Earnings	(1.7		)	—			—
Total Revenues	(1.0		)	0.8			0.5
Interest Expense	47.9			39.0			39.5
Other Operating Expenses	2.7			21.6			13.6
Total Operating Expenses	50.6			60.6			53.1
Loss before Income Taxes and Equity in Net Income of Subsidiaries	(51.6		)	(59.8		)	(52.6		)
Income Tax Benefit	18.9			20.8			18.2
Loss before Equity in Net Income of Subsidiaries	(32.7		)	(39.0		)	(34.4		)
Equity in Net Income of Subsidiaries	147.2			256.7			137.8
Net Income	$	114.5		$	217.7		$	103.4

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,
	2014			2013			2012
Net Income	$	114.5		$	217.7		$	103.4
Other Comprehensive Income (Loss):
Unrealized Holding Gains (Losses) Arising During the Year:
Securities Held by Subsidiaries	261.7			(324.9		)	157.9
Securities Held by Parent	(2.0		)	—			—
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	(26.8		)	(37.9		)	(61.2		)
Securities Held by Parent	1.7			—			—
Unrealized Holding Gains (Losses)	234.6			(362.8		)	96.7
Unrecognized Postretirement Benefit Costs Arising During the Year	(106.4		)	61.6			(29.4		)
Amortization of Unrecognized Postretirement Benefit Costs	7.9			25.0			16.2
Net Unrecognized Postretirement Benefit Costs	(98.5		)	86.6			(13.2		)
Foreign Currency Translation Adjustments	(1.0		)	0.2			1.6
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	(1.0		)	0.2			1.6
Other Comprehensive Income (Loss) before Income Taxes	135.1			(276.0		)	85.1
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year:
Securities Held by Subsidiaries	(92.3		)	115.9			(55.9		)
Securities Held by Parent	0.7			—			—
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	9.4			13.2			21.5
Securities Held by Parent	(0.6		)	—			—
Unrealized Holding Gains and Losses	(82.8		)	129.1			(34.4		)
Unrecognized Postretirement Benefit Costs Arising During the Year	37.5			(21.6		)	10.3
Amortization of Unrecognized Postretirement Benefit Costs	(2.8		)	(8.8		)	(5.7		)
Net Unrecognized Postretirement Benefit Costs	34.7			(30.4		)	4.6
Foreign Currency Translation Adjustments	0.4			(0.1		)	(0.6		)
Reclassification Adjustment for Amounts Included in Net Income	—			—			—
Foreign Currency Translation Adjustments	0.4			(0.1		)	(0.6		)
Income Tax Benefit (Expense)	(47.7		)	98.6			(30.4		)
Other Comprehensive Income (Loss)	87.4			(177.4		)	54.7
Total Comprehensive Income	$	201.9		$	40.3		$	158.1

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,
	2014			2013			2012
Operating Activities:
Net Income	$	114.5		$	217.7		$	103.4
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
Equity in Net Income of Subsidiaries	(147.2		)	(256.7		)	(137.8		)
Cash Dividends from Subsidiaries	159.1			95.0			95.0
Cash Contribution to Defined Benefit Plan	—			(55.0		)	—
Net Realized (Gains) Losses on Sales of Investments	0.2			(0.6		)	(0.3		)
Net Impairment Losses Recognized in Earnings	1.7			—			—
Other, Net	10.5			67.3			8.5
Net Cash Provided by Operating Activities	138.8			67.7			68.8
Investing Activities:
Capital Distribution from Subsidiary	1.1			50.5			20.0
Sales, Paydowns and Maturities of Fixed Maturities	11.5			—			13.1
Sales of Equity Securities	15.1			—			—
Sales of Fair Value Option Investments	6.9			—			—
Purchases of Fair Value Option Investments	(60.9		)	—			—
Change in Short-term Investments	(94.3		)	52.7			(106.3		)
Net Cash Provided (Used) by Investing Activities	(120.6		)	103.2			(73.2		)
Financing Activities:
Net Proceeds from Issuance of Subordinated Debentures	144.0			—			—
Cash Dividends Paid	(51.8		)	(54.9		)	(56.9		)
Common Stock Repurchases	(114.0		)	(100.4		)	(60.7		)
Cash Exercise of Stock Options	0.5			1.7			1.3
Excess Tax Benefits on Share Based Awards	0.2			1.3			0.5
Net Cash Used by Financing Activities	(21.1		)	(152.3		)	(115.8		)
Increase (Decrease) in Cash	(2.9		)	18.6			(120.2		)
Cash, Beginning of Year	20.8			2.2			122.4
Cash, End of Year	$	17.9		$	20.8		$	2.2

See Accompanying Report of Independent Registered Public Accounting Firm.