SCHEDULE II

KEMPER CORPORATION

PARENT COMPANY BALANCE SHEETS

(Dollars in Millions)



	December 31,
	2017		2016
ASSETS
Investments in Subsidiaries	$	2,646.0	$	2,575.5
Fixed Maturities at Fair Value (Amortized Cost: 2017 – $0.3; 2016 – $46.3)	0.3		46.3
Equity Securities at Fair Value (Cost: 2017 – $6.1; 2016 – $5.2)	6.7		5.3
Fair Value Option Investments	77.5		111.4
Short-term Investments	104.4		120.0
Cash	8.4		15.7
Other Receivables	3.8		3.4
Current Income Taxes	—		2.4
Other Assets	5.8		7.5
Total Assets	$	2,852.9	$	2,887.5
LIABILITIES AND SHAREHOLDERS’ EQUITY
Senior Notes Payable, 6.00% due 2017 (Fair Value: 2016 – $365.3)	$	—	$	359.8
Senior Notes Payable, 4.35% due 2025 (Fair Value: 2017 – $458.1; 2016 – $248.5)	448.1		247.7
Subordinated Debentures due 2054 (Fair Value: 2017 – $156.5; 2016 – $157.1)	144.2		144.1
Current Income Tax Liability	14.0		—
Deferred Income Tax Liability	16.9		34.0
Liabilities for Benefit Plans	104.9		118.7
Accrued Expenses and Other Liabilities	9.2		8.0
Total Liabilities	737.3		912.3
Shareholders’ Equity:
Common Stock	5.1		5.1
Additional Paid-in Capital	673.1		660.3
Retained Earnings	1,243.0		1,172.8
Accumulated Other Comprehensive Income	194.4		137.0
Total Shareholders’ Equity	2,115.6		1,975.2
Total Liabilities and Shareholders’ Equity	$	2,852.9	$	2,887.5

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,
	2017			2016			2015
Net Investment Income	$	3.0		$	2.0		$	1.7
Net Realized Gains (Losses) on Sales of Investments	0.6			0.1			(0.1		)
Net Impairment Losses Recognized in Earnings	—			—			(1.6		)
Total Revenues	3.6			2.1			—
Interest Expense	36.6			45.2			47.3
Loss from Early Extinguishment of Debt	—			—			9.1
Other Operating (Benefits) Expenses	(5.1		)	(6.1		)	17.6
Total Operating Expenses	31.5			39.1			74.0
Loss before Income Taxes and Equity in Net Income of Subsidiaries	(27.9		)	(37.0		)	(74.0		)
Income Tax Benefit	21.2			13.4			26.5
Loss before Equity in Net Income of Subsidiaries	(6.7		)	(23.6		)	(47.5		)
Equity in Net Income of Subsidiaries	127.6			40.4			133.2
Net Income	$	120.9		$	16.8		$	85.7

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,
	2017			2016			2015
Net Income	$	120.9		$	16.8		$	85.7
Other Comprehensive Income (Loss):
Unrealized Holding Gains (Losses) Arising During the Year:
Securities Held by Subsidiaries	119.5			(2.6		)	(150.4		)
Securities Held by Parent	(0.4		)	0.2			(1.5		)
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	(35.3		)	0.2			(26.9		)
Securities Held by Parent	—			—			1.5
Unrealized Holding Gains (Losses)	83.8			(2.2		)	(177.3		)
Unrecognized Postretirement Benefit Costs Arising During the Year	3.9			14.2			3.0
Reclassification Adjustments for Amounts Included in Net Income:
Curtailment Cost Recognized	—			1.0			—
Amortization of Unrecognized Postretirement Benefit Costs	(0.6		)	5.3			23.1
Total Reclassification Adjustments for Amounts Included in Net Income	(0.6		)	6.3			23.1
Net Unrecognized Postretirement Benefit Costs	3.3			20.5			26.1
Foreign Currency Translation Adjustments on Investments Held by Subsidiaries	1.7			(0.3		)	(1.4		)
Gain on Cash Flow Hedge	(6.7		)	1.6			—
Other Comprehensive Income (Loss) before Income Taxes	82.1			19.6			(152.6		)
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year:
Securities Held by Subsidiaries	(38.3		)	1.1			53.4
Securities Held by Parent	0.1			(0.1		)	0.5
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	12.3			(0.1		)	9.4
Securities Held by Parent	—			—			(0.5		)
Unrealized Holding Gains and Losses	(25.9		)	0.9			62.8
Unrecognized Postretirement Benefit Costs Arising During the Year	(0.8		)	(5.0		)	(1.1		)
Reclassification Adjustments for Amounts Included in Net Income:
Curtailment Cost Recognized	—			(0.4		)	—
Amortization of Unrecognized Postretirement Benefit Costs	0.2			(1.9		)	(8.0		)
Total Reclassification Adjustments for Amounts Included in Net Income	0.2			(2.3		)	(8.0		)
Net Unrecognized Postretirement Benefit Costs	(0.6		)	(7.3		)	(9.1		)
Foreign Currency Translation Adjustments on Investments Held by Subsidiaries	(0.6		)	0.1			0.5
Gain on Cash Flow Hedge	2.4			(0.6		)	—
Income Tax Benefit (Expense)	(24.7		)	(6.9		)	54.2
Other Comprehensive Income (Loss)	57.4			12.7			(98.4		)
Total Comprehensive Income (Loss)	$	178.3		$	29.5		$	(12.7	)

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,
	2017			2016			2015
Operating Activities:
Net Income	$	120.9		$	16.8		$	85.7
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
Equity in Net Income of Subsidiaries	(127.6		)	(40.4		)	(133.2		)
Cash Dividends from Subsidiaries	108.1			77.7			285.0
Cash Received for Benefit Plan from Subsidiary	—			1.4			—
Cash Contribution to Defined Benefit Plan	—			(9.0		)	—
Net Realized (Gains) Losses on Sales of Investments	(0.6		)	(0.1		)	0.1
Net Impairment Losses Recognized in Earnings	—			—			1.6
Loss from Early Extinguishment of Debt	—			—			9.1
Other, Net	0.7			(9.3		)	41.6
Net Cash Provided by Operating Activities	101.5			37.1			289.9
Investing Activities:
Capital Contributed to Subsidiary	—			(52.9		)	(105.0		)
Sales, Paydowns and Maturities of Fixed Maturities	45.7			73.5			11.8
Purchases of Fixed Maturities	—			(77.9		)	(14.8		)
Sales of Equity Securities	—			3.5			9.4
Sales of Fair Value Option Investments	42.2			72.2			—
Purchases of Fair Value Option Investments	(7.0		)	(21.0		)	(111.0		)
Acquisition of Business	—			—			(71.0		)
Change in Short-term Investments	15.6			14.8			90.3
Net Cash Provided (Used) by Investing Activities	96.5			12.2			(190.3		)
Financing Activities:
Net Proceeds from Issuance of Debt	200.2			—			247.3
Repayments of Debt	(360.0		)	—			(258.8		)
Cash Dividends Paid	(49.5		)	(49.2		)	(49.7		)
Common Stock Repurchases	—			(3.8		)	(45.0		)
Cash Exercise of Stock Options	4.0			3.5			3.9
Excess Tax Benefits on Share Based Awards	—			—			0.7
Net Cash Used by Financing Activities	(205.3		)	(49.5		)	(101.6		)
Decrease in Cash	(7.3		)	(0.2		)	(2.0		)
Cash, Beginning of Year	15.7			15.9			17.9
Cash, End of Year	$	8.4		$	15.7		$	15.9

See Accompanying Report of Independent Registered Public Accounting Firm.