Acquisition of Business

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisition of Business

NOTE 3. ACQUISITION OF BUSINESS

On April 30, 2015, Kemper acquired 100% of the outstanding common stock of Alliance United Group and its wholly-owned subsidiaries, Alliance United Insurance Company and Alliance United Insurance Services, (individually and collectively referred to herein as “Alliance United”) in a cash transaction for a total purchase price of $71.0 million, of which $17.5 million was placed in escrow to secure the sellers’ potential indemnification obligations under the purchase agreement. After completing the transaction, Kemper contributed $75.0 million to support the book of business acquired and commuted a quota share reinsurance agreement whereby Alliance United ceded a portion of its business to an unaffiliated reinsurer. The results of Alliance United are included in the Consolidated Financial Statements from the date of acquisition and are reported in the Company’s Property & Casualty Insurance segment. Alliance United is a provider of nonstandard personal automobile insurance in California. As a result of the acquisition, the Company increased its presence in the California nonstandard automobile insurance market by gaining access to additional brokers and gained expertise in serving the Hispanic market.

The Company has completed the allocation of the purchase price to the assets acquired and liabilities assumed. The final allocation of the purchase price to the fair values of the assets acquired and liabilities assumed is presented below.

DOLLARS IN MILLIONS
Investments	$	187.0
Cash	13.4
Receivables from Policyholders	44.4
Other Receivables	52.8
Value of Intangible Assets Acquired (Reported in Other Assets)	32.6
Goodwill	11.2
Current Income Taxes	1.4
Other Assets	5.9
Property and Casualty Insurance Reserves	(155.8		)
Unearned Premiums	(85.6		)
Liabilities for Income Taxes	(1.5		)
Accrued Expenses and Other Liabilities	(34.8		)
Total Purchase Price	$	71.0

Under the purchase agreement, the Company is indemnified up to $12.5 million on an after-tax basis for, among other things, breaches of customary representations and warranties, loss and LAE reserve development and pre-closing income taxes. In addition, the Company is indemnified up to $5.0 million on an after-tax basis, for certain employment related matters. Other Receivables in the preceding table include an indemnification receivable of $5.4 million. Other Receivables in the Consolidated Balance Sheets at December 31, 2016 and 2015 include an indemnification receivable of $16.0 million and $15.9 million, respectively.

NOTE 3. ACQUISITION OF BUSINESS (Continued)

The carrying amount, net of accumulated amortization, of the intangible assets acquired by class at December 31, 2016, December 31, 2015 and the acquisition date are presented below.

DOLLARS IN MILLIONS	Dec 31, 2016		Dec 31, 2015		At Acquisition Date
P&C Broker Relationships	$	16.8	$	18.1	$	18.9
Value of In Force Policies	—		0.2		9.2
Other	2.5		3.7		4.5
Value of Intangible Assets Acquired	$	19.3	$	22.0	$	32.6

P&C Broker Relationships are being amortized over 15 years on a straight-line basis. Value of In Force Policies (“P&C VIF”) was amortized pro ratably as premiums were earned over the remaining terms of the underlying policies. Other intangible assets acquired are generally being amortized on a straight-line basis over 2 years to 5 years.