EX-99.2 3 kmpr201812312018ex992suppl.htm EXHIBIT 99.2 - INVESTOR SUPPLEMENT Exhibit
Exhibit 99.2


kemperlogocolorwebfinal.jpg


Investor Supplement
Fourth Quarter 2018
The financial statements and financial exhibits included herein are unaudited. These financial statements and exhibits should be read in conjunction with the Company’s periodic reports on Form 10-K, Form 10-Q and Form 8-K. The results of operations for interim periods should not be considered indicative of results to be expected for the full year.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures to analyze the Company’s operating performance for the periods presented. Because the Company’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company’s non-GAAP financial measures to those of other companies. For detailed disclosures on non-GAAP financial measures please refer to the “Definitions of Non-GAAP Financial Measures” on Page 32.
Caution Regarding Forward-Looking Statements
This Investor Supplement may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events, and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts.
Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of February 11, 2019, the date this Investor Supplement was included as an exhibit to the Company's Current Report on Form 8-K. Forward-looking statements involve a number of risks and uncertainties that are difficult to predict, and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are those listed in periodic reports filed by Kemper with the Securities and Exchange Commission (the “SEC”). No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. Kemper assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this 2018 Investor Supplement. The reader is advised, however, to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.
    



Kemper Corporation
Investor Supplement
Fourth Quarter 2018
Table of Contents
 
 
 
 
Page
Consolidated Financial Highlights
3
Consolidated Statements of Operations
4
Consolidated Balance Sheets
5
Consolidated Statements of Cash Flows
6-7
Capital Metrics
8
Debt Outstanding and Ratings
9
Segment Summary Results:
 
Revenues
10
Operating Profit (Loss)
11
Net Operating Income (Loss)
11
Catastrophe Frequency and Severity
12
Preferred Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information
13 - 14
Preferred Personal Automobile Insurance
15
Homeowners and Other Personal Insurance
16
Homeowners Insurance
17
Other Personal Insurance
18
Specialty Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information
19
Specialty Personal Automobile Insurance
20
Commercial Automobile Insurance
21
Life & Health Insurance Segment - Results of Operations and Selected Financial Information
22
Life Insurance
23
Accident and Health Insurance
23
Property Insurance
24
Insurance Expenses and Interest and Other Expenses
25
Details of Investment Performance
26
Details of Invested Assets
27 - 28
Investment Concentration
29
Municipal Bond Securities
30
Investments in Limited Liability Companies and Limited Partnerships
31
Definitions of Non-GAAP Financial Measures
32 - 33
As Adjusted for Acquisition
34
As Adjusted - Selected Consolidated Financial Information
35
As Adjusted - Specialty Property & Casualty Insurance Segment Selected Financial Information
36
As Adjusted - Specialty Personal Automobile Insurance Selected Financial Information
37
 



Kemper Corporation
Consolidated Financial Highlights
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
For Period Ended
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
1,063.6

 
$
1,052.9

 
$
658.1

 
$
609.8

 
$
605.9

 
$
598.2

 
$
582.5

 
$
563.4

 
$
3,384.4

 
$
2,350.0

Net Investment Income
 
91.3

 
92.0

 
78.4

 
79.2

 
82.6

 
85.9

 
77.1

 
81.6

 
340.9

 
327.2

Other Income
 
2.0

 
37.8

 
1.2

 
1.2

 
1.1

 
1.0

 
1.0

 
0.9

 
42.2

 
4.0

Income from Change in Fair Value of Equity Securities
 
(76.4
)
 
11.0

 
0.4

 
0.7

 
—

 
—

 
—

 
—

 
(64.3
)
 
—

Net Investment Gains (Losses)
 
14.2

 
1.8

 
3.8

 
2.1

 
7.7

 
5.2

 
23.8

 
5.5

 
21.9

 
42.2

Total Revenues
 
$
1,094.7

 
$
1,195.5

 
$
741.9

 
$
693.0

 
$
697.3

 
$
690.3

 
$
684.4

 
$
651.4

 
$
3,725.1

 
$
2,723.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
6.5

 
$
92.2

 
$
37.6

 
$
53.8

 
$
36.9

 
$
47.7

 
$
36.6

 
$
(0.3
)

$
190.1


$
120.9

Income (Loss) from Continuing Operations
 
$
5.0

 
$
92.3

 
$
37.5

 
$
53.6

 
$
35.9

 
$
47.8

 
$
36.6

 
$
(0.4
)
 
$
188.4

 
$
119.9

Adjusted Consolidated Net Operating Income (Loss)1
 
$
59.9

 
$
104.5

 
$
36.5

 
$
57.5

 
$
31.0

 
$
44.4

 
$
21.0

 
$
(3.9
)
 
$
258.4

 
$
92.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Unrestricted Common Share Amounts:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
0.10

 
$
1.42

 
$
0.73

 
$
1.03

 
$
0.71

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.25

 
$
2.34

Income (Loss) from Continuing Operations
 
$
0.08

 
$
1.42

 
$
0.73

 
$
1.03

 
$
0.69

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.22

 
$
2.32

Adjusted Consolidated Net Operating Income (Loss)1
 
$
0.92

 
$
1.61

 
$
0.70

 
$
1.11

 
$
0.60

 
$
0.85

 
$
0.41

 
$
(0.08
)
 
$
4.42

 
$
1.79

Diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
0.10

 
$
1.40

 
$
0.73

 
$
1.02

 
$
0.71

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.22

 
$
2.33

Income (Loss) from Continuing Operations
 
$
0.08

 
$
1.40

 
$
0.73

 
$
1.02

 
$
0.69

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.19

 
$
2.31

Adjusted Consolidated Net Operating Income (Loss)1
 
$
0.91

 
$
1.59

 
$
0.70

 
$
1.10

 
$
0.60

 
$
0.85

 
$
0.41

 
$
(0.08
)
 
$
4.37

 
$
1.78

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends Paid to Shareholders Per Share
 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.96

 
$
0.96

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At Period End
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets
 
$
11,544.9

 
$
11,772.6

 
$
8,840.5

 
$
8,371.0

 
$
8,376.2

 
$
8,301.0

 
$
8,211.4

 
$
8,306.8

 
 
 
 
Insurance Reserves
 
$
5,433.6

 
$
5,370.5

 
$
4,603.2

 
$
4,539.4

 
$
4,537.8

 
$
4,478.3

 
$
4,466.7

 
$
4,473.4

 
 
 
 
Debt
 
$
909.0

 
$
1,123.7

 
$
951.8

 
$
592.3

 
$
592.3

 
$
592.2

 
$
592.1

 
$
751.8

 
 
 
 
Shareholders’ Equity
 
$
3,050.1

 
$
3,063.8

 
$
2,045.7

 
$
2,063.8

 
$
2,115.6

 
$
2,082.4

 
$
2,033.4

 
$
1,983.6

 
 
 
 
Shareholders’ Equity Excluding Goodwill
 
$
1,937.7

 
$
1,972.6

 
$
1,722.7

 
$
1,740.8

 
$
1,792.6

 
$
1,759.4

 
$
1,710.4

 
$
1,660.6

 
 
 
 
Common Shares Issued and Outstanding (In Millions)
 
64.757

 
64.738

 
51.559

 
51.533

 
51.462

 
51.448

 
51.294

 
51.295

 
 
 
 
Book Value Per Share2
 
$
47.10

 
$
47.33

 
$
39.68

 
$
40.05

 
$
41.11

 
$
40.48

 
$
39.64

 
$
38.67

 
 
 
 
Book Value Per Share Excluding Goodwill1,2
 
$
29.92

 
$
30.47

 
$
33.41

 
$
33.78

 
$
34.83

 
$
34.20

 
$
33.35

 
$
32.37

 
 
 
 
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1,2
 
$
45.40

 
$
45.66

 
$
36.85

 
$
36.35

 
$
35.57

 
$
35.87

 
$
35.13

 
$
34.81

 
 
 
 
Debt to Total Capitalization2
 
23.0
%
 
26.8
%
 
31.8
%
 
22.3
%
 
21.9
%
 
22.1
%
 
22.6
%
 
27.5
%
 
 
 
 
Rolling 12 Months Return on 5-point Average Shareholders Equity2,3
 
7.7
%
 
9.7
%
 
8.5
%
 
8.5
%
 
5.9
%
 
5.7
%
 
2.5
%
 
0.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Non-GAAP Measure. See page 32 for definition.
 
 
 
 
2 See Capital Metrics on page 8 for detail calculations.
 
 
 
 
3 Rolling 12 Months Return on 5-point Average Shareholders Equity is calculated by taking the last 12 months of Net Income (Loss) divided by the 5-point average Shareholders’ Equity. The 5-point Average Shareholders’ Equity is calculated by using a 5-point quarter average of Shareholders’ Equity for the 12 month period.
 

Page 3

Kemper Corporation
Consolidated Statements of Operations
(Dollars in Millions, Except Per Share Amounts)
 (Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
1,063.6

 
$
1,052.9

 
$
658.1

 
$
609.8

 
$
605.9

 
$
598.2

 
$
582.5

 
$
563.4

 
$
3,384.4

 
$
2,350.0

Net Investment Income
 
91.3

 
92.0

 
78.4

 
79.2

 
82.6

 
85.9

 
77.1

 
81.6

 
340.9

 
327.2

Other Income
 
2.0

 
37.8

 
1.2

 
1.2

 
1.1

 
1.0

 
1.0

 
0.9

 
42.2

 
4.0

Income from Change in Fair Value of Equity and Convertible Securities
 
(76.4
)
 
11.0

 
0.4

 
0.7

 
—

 
—

 
—

 
—

 
(64.3
)
 
—

Net Realized Gains on Sales of Investments
 
16.4

 
3.6

 
3.8

 
2.6

 
11.5

 
8.1

 
26.4

 
10.5

 
26.4

 
56.5

Other-than-temporary Impairment Losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Other-than-temporary Impairment Losses
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(3.7
)
 
(2.9
)
 
(2.6
)
 
(5.2
)
 
(4.5
)
 
(14.4
)
Portion of Losses Recognized in Other Comprehensive Income
 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
—

 
0.2

 
—

 
0.1

Net Impairment Losses Recognized in Earnings
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(3.8
)
 
(2.9
)
 
(2.6
)
 
(5.0
)
 
(4.5
)
 
(14.3
)
Total Revenues
 
1,094.7

 
1,195.5

 
741.9

 
693.0

 
697.3

 
690.3

 
684.4

 
651.4

 
3,725.1

 
2,723.4

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses
 
772.8

 
757.3

 
499.5

 
436.9

 
472.5

 
440.1

 
447.4

 
477.4

 
2,466.5

 
1,837.4

Insurance Expenses
 
273.2

 
296.0

 
171.2

 
160.1

 
159.1

 
163.7

 
163.5

 
158.0

 
900.5

 
644.3

Interest and Other Expenses
 
42.6

 
61.7

 
25.7

 
29.0

 
21.5

 
18.2

 
21.4

 
19.5

 
159.0

 
80.6

Total Expenses
 
1,088.6

 
1,115.0

 
696.4

 
626.0

 
653.1

 
622.0

 
632.3

 
654.9

 
3,526.0

 
2,562.3

Income (Loss) from Continuing Operations before Income Taxes
 
6.1

 
80.5

 
45.5

 
67.0

 
44.2

 
68.3

 
52.1

 
(3.5
)
 
199.1

 
161.1

Income Tax Benefit (Expense)
 
(1.1
)
 
11.8

 
(8.0
)
 
(13.4
)
 
(8.3
)
 
(20.5
)
 
(15.5
)
 
3.1

 
(10.7
)
 
(41.2
)
Income (Loss) from Continuing Operations
 
5.0

 
92.3

 
37.5

 
53.6

 
35.9

 
47.8

 
36.6

 
(0.4
)
 
188.4

 
119.9

Discontinued Operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) from Discontinued Operations before Income Taxes
 
2.1

 
(0.2
)
 
0.1

 
0.3

 
1.5

 
(0.1
)
 
—

 
0.1

 
2.3

 
1.5

Income Tax Expense
 
(0.6
)
 
0.1

 
—

 
(0.1
)
 
(0.5
)
 
—

 
—

 
—

 
(0.6
)
 
(0.5
)
Income (Loss) from Discontinued Operations
 
1.5

 
(0.1
)
 
0.1

 
0.2

 
1.0

 
(0.1
)
 
—

 
0.1

 
1.7

 
1.0

Net Income (Loss)
 
$
6.5

 
$
92.2

 
$
37.6

 
$
53.8

 
$
36.9

 
$
47.7

 
$
36.6

 
$
(0.3
)
 
$
190.1

 
$
120.9

Income (Loss) from Continuing Operations Per Unrestricted Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.08

 
$
1.42

 
$
0.73

 
$
1.03

 
$
0.69

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.22

 
$
2.32

Diluted
 
$
0.08

 
$
1.40

 
$
0.73

 
$
1.02

 
$
0.69

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.19

 
$
2.31

Net Income (Loss) Per Unrestricted Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.10

 
$
1.42

 
$
0.73

 
$
1.03

 
$
0.71

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.25

 
$
2.34

Diluted
 
$
0.10

 
$
1.40

 
$
0.73

 
$
1.02

 
$
0.71

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.22

 
$
2.33

Dividends Paid to Shareholders Per Share
 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.96

 
$
0.96

Weighted Average Unrestricted Common Shares Outstanding (in Millions)
 
64.748

 
64.580

 
51.550

 
51.503

 
51.456

 
51.367

 
51.286

 
51.273

 
58.149

 
51.346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 4

Kemper Corporation
Consolidated Balance Sheets
(Dollars in Millions)
 (Unaudited)
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Maturities at Fair Value
 
$
6,424.2

 
$
6,108.6

 
$
5,260.3

 
$
5,301.2

 
$
5,382.7

 
$
5,242.8

 
$
5,263.9

 
$
5,240.3

Equity Securities at Fair Value
 
684.4

 
815.8

 
514.9

 
568.2

 
526.0

 
512.1

 
500.0

 
497.4

Equity Securities at Modified Cost
 
41.5

 
50.9

 
54.1

 
59.3

 
—

 
—

 
—

 
—

Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings
 
187.0

 
170.0

 
170.9

 
168.8

 
161.0

 
160.1

 
152.8

 
157.4

Convertible Securities at Fair Value
 
31.5

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Fair Value Option Investments
 
—

 
—

 
—

 
—

 
77.5

 
77.1

 
77.0

 
90.5

Short-term Investments at Cost which Approximates Fair Value
 
286.1

 
688.5

 
169.0

 
188.8

 
235.5

 
239.0

 
129.9

 
244.6

Other Investments
 
414.8

 
412.8

 
411.7

 
413.0

 
422.2

 
420.0

 
430.0

 
437.7

Total Investments
 
8,069.5

 
8,246.6

 
6,580.9

 
6,699.3

 
6,804.9

 
6,651.1

 
6,553.6

 
6,667.9

Cash
 
75.1

 
92.8

 
649.9

 
115.4

 
45.7

 
137.6

 
160.9

 
120.0

Receivables from Policyholders
 
1,007.1

 
1,029.9

 
407.5

 
386.0

 
366.0

 
374.8

 
353.7

 
347.9

Other Receivables
 
245.4

 
243.1

 
189.2

 
187.9

 
194.3

 
182.4

 
190.1

 
206.1

Deferred Policy Acquisition Costs
 
470.0

 
447.4

 
388.9

 
378.0

 
365.3

 
361.7

 
348.5

 
339.9

Goodwill
 
1,112.4

 
1,091.2

 
323.0

 
323.0

 
323.0

 
323.0

 
323.0

 
323.0

Current Income Tax Assets
 
38.9

 
58.1

 
0.9

 
—

 
6.1

 
0.9

 
7.4

 
10.1

Deferred Income Tax Assets
 
—

 
—

 
10.6

 
—

 
—

 
—

 
5.4

 
26.4

Other Assets
 
526.5

 
563.5

 
289.6

 
281.4

 
270.9

 
269.5

 
268.8

 
265.5

Total Assets
 
$
11,544.9

 
$
11,772.6

 
$
8,840.5

 
$
8,371.0

 
$
8,376.2

 
$
8,301.0

 
$
8,211.4

 
$
8,306.8

Liabilities and Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life and Health
 
$
3,558.7

 
$
3,551.4

 
$
3,543.5

 
$
3,534.3

 
$
3,521.0

 
$
3,509.8

 
$
3,499.7

 
$
3,489.0

Property and Casualty
 
1,874.9

 
1,819.1

 
1,059.7

 
1,005.1

 
1,016.8

 
968.5

 
967.0

 
984.4

Total Insurance Reserves
 
5,433.6

 
5,370.5

 
4,603.2

 
4,539.4

 
4,537.8

 
4,478.3

 
4,466.7

 
4,473.4

Unearned Premiums
 
1,424.3

 
1,470.9

 
723.8

 
690.2

 
653.9

 
672.0

 
650.5

 
640.1

Current Income Tax Liabilities
 
—

 
—

 
—

 
0.2

 
—

 
—

 
—

 
—

Deferred Income Tax Liabilities
 
26.2

 
40.4

 
—

 
1.1

 
14.8

 
11.9

 
—

 
—

Liability for Unrecognized Tax Benefits
 
4.4

 
4.5

 
9.2

 
8.1

 
8.1

 
6.8

 
7.0

 
6.9

Long-term Debt, Current and Non-current, at Amortized Cost
 
909.0

 
1,123.7

 
951.8

 
592.3

 
592.3

 
592.2

 
592.1

 
751.8

Accrued Expenses and Other Liabilities
 
697.3

 
698.8

 
506.8

 
475.9

 
453.7

 
457.4

 
461.7

 
451.0

Total Liabilities
 
8,494.8

 
8,708.8

 
6,794.8

 
6,307.2

 
6,260.6

 
6,218.6

 
6,178.0

 
6,323.2

Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
6.5

 
6.5

 
5.2

 
5.1

 
5.1

 
5.1

 
5.1

 
5.1

Paid-in Capital
 
1,666.3

 
1,661.3

 
681.5

 
676.9

 
673.1

 
672.1

 
666.9

 
663.7

Retained Earnings
 
1,355.5

 
1,365.1

 
1,289.4

 
1,264.9

 
1,243.0

 
1,218.8

 
1,184.8

 
1,160.7

Accumulated Other Comprehensive Income
 
21.8

 
30.9

 
69.6

 
116.9

 
194.4

 
186.4

 
176.6

 
154.1

Total Shareholders’ Equity
 
3,050.1

 
3,063.8

 
2,045.7

 
2,063.8

 
2,115.6

 
2,082.4

 
2,033.4

 
1,983.6

Total Liabilities and Shareholders’ Equity
 
$
11,544.9

 
$
11,772.6

 
$
8,840.5

 
$
8,371.0

 
$
8,376.2

 
$
8,301.0

 
$
8,211.4

 
$
8,306.8


Page 5

Kemper Corporation
Consolidated Statements of Cash Flows
(Dollars in Millions)
 (Unaudited)
 
 
Year Ended
 
 
Dec 31,
2018
 
Dec 31,
2017
Operating Activities:
 
 
 
 
Net Income
 
$
190.1

 
$
120.9

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
 
Amortization of Intangible Assets Acquired
 
156.3

 
5.1

Equity in Earnings of Equity Method Limited Liability Investments
 
(11.0
)
 
(24.8
)
Distribution of Accumulated Earnings of Equity Method Limited Liability Investments
 
13.9

 
19.6

Decrease (Increase) in Value of Fair Value Option Investments Reported in Net Investment Income
 
—

 
(1.3
)
Decrease (Increase) in Value of Equity Securities at Fair Value
 
64.4

 
—

Amortization of Investment Securities and Depreciation of Investment Real Estate
 
7.7

 
16.7

Net Realized Gains on Sales of Investments
 
(26.4
)
 
(56.5
)
Net Impairment Losses Recognized in Earnings
 
4.5

 
14.3

Depreciation of Property and Equipment
 
15.6

 
13.1

Increase in Receivables
 
(80.7
)
 
(29.2
)
Increase in Deferred Policy Acquisition Costs
 
(104.6
)
 
(33.3
)
Increase in Insurance Reserves
 
183.2

 
131.1

Increase in Unearned Premiums
 
54.7

 
35.2

Change in Income Taxes
 
13.1

 
28.9

Change in Accrued Expenses and Other Liabilities
 
49.9

 
2.9

Other, Net
 
9.3

 
(2.1
)
Net Cash Provided by Operating Activities (Carryforward to page 7)
 
540.0

 
240.6


Page 6

Kemper Corporation
Consolidated Statements of Cash Flows
(Dollars in Millions)
 (Unaudited)
 
 
Year Ended
 
 
Dec 31,
2018
 
Dec 31,
2017
Net Cash Provided by Operating Activities (Carryforward from page 6)
 
540.0

 
240.6

Investing Activities:
 
 
 
 
Sales, Paydowns and Maturities of Fixed Maturities
 
1,819.1

 
528.2

Purchases of Fixed Maturities
 
(1,589.0
)
 
(710.1
)
Sales of Equity Securities
 
351.9

 
342.0

Purchases of Equity Securities
 
(478.5
)
 
(342.7
)
Return of Investment of Equity Method Limited Liability Investments
 
14.1

 
48.1

Acquisitions of Equity Method Limited Liability Investments
 
(43.1
)
 
(27.9
)
Sales of Fair Value Option Investments
 
—

 
42.2

Purchases of Fair Value Option Investments
 
—

 
(7.0
)
Decrease (Increase) in Short-term Investments
 
52.7

 
39.4

Improvements of Investment Real Estate
 
(1.5
)
 
(1.5
)
Sales of Investment Real Estate
 
—

 
26.7

Acquisition of Business, Net of Cash Acquired
 
(560.6
)
 
—

Increase in Other Investments
 
(2.0
)
 
(4.5
)
Acquisition of Software
 
(65.3
)
 
(35.5
)
Other, Net
 
4.6

 
(2.8
)
Net Cash Provided (Used) by Investing Activities
 
(497.6
)
 
(105.4
)
Financing Activities:
 
 
 
 
Net Proceeds from Issuances of Long-term Debt
 
248.6

 
200.2

Repayments of Long-term Debt
 
(215.0
)
 
(360.0
)
Dividends and Dividend Equivalents Paid
 
(56.4
)
 
(49.5
)
Proceeds from Advances from FHLB
 
10.0

 
—

Cash Exercise of Stock Options
 
0.9

 
4.0

Other, Net
 
(1.1
)
 
0.1

Net Cash Used by Financing Activities
 
(13.0
)
 
(205.2
)
Increase (Decrease) in Cash
 
29.4

 
(70.0
)
Cash, Beginning of Year
 
45.7

 
115.7

Cash, End of Period
 
$
75.1

 
$
45.7

 
 
 
 
 

Page 7

Kemper Corporation
Capital Metrics
(Dollars and Shares in Millions, Except Per Share Amounts)
(Unaudited)
 
 
Three Months Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
Book Value Per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders’ Equity
 
$
3,050.1

 
$
3,063.8

 
$
2,045.7

 
$
2,063.8

 
$
2,115.6

 
$
2,082.4

 
$
2,033.4

 
$
1,983.6

Less: Goodwill
 
(1,112.4
)
 
(1,091.2
)
 
(323.0
)
 
(323.0
)
 
(323.0
)
 
(323.0
)
 
(323.0
)
 
(323.0
)
Shareholders’ Equity Excluding Goodwill
 
$
1,937.7

 
$
1,972.6

 
$
1,722.7

 
$
1,740.8

 
$
1,792.6

 
$
1,759.4

 
$
1,710.4

 
$
1,660.6

Shareholders’ Equity
 
$
3,050.1

 
$
3,063.8

 
$
2,045.7

 
$
2,063.8

 
$
2,115.6

 
$
2,082.4

 
$
2,033.4

 
$
1,983.6

Less: Net Unrealized Gains on Fixed Maturities
 
(110.4
)
 
(107.6
)
 
(145.6
)
 
(190.5
)
 
(285.3
)
 
(237.1
)
 
(231.4
)
 
(198.2
)
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities
 
$
2,939.7

 
$
2,956.2

 
$
1,900.1

 
$
1,873.3

 
$
1,830.3

 
$
1,845.3

 
$
1,802.0

 
$
1,785.4

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Shares Issued and Outstanding
 
64.757

 
64.738

 
51.559

 
51.533

 
51.462

 
51.448

 
51.294

 
51.295

Book Value Per Share
 
$
47.10

 
$
47.33

 
$
39.68

 
$
40.05

 
$
41.11

 
$
40.48

 
$
39.64

 
$
38.67

Book Value Per Share Excluding Goodwill
 
$
29.92

 
$
30.47

 
$
33.41

 
$
33.78

 
$
34.83

 
$
34.20

 
$
33.35

 
$
32.37

Book Value Per Share Excluding Unrealized on Fixed Maturities
 
$
45.40

 
$
45.66

 
$
36.85

 
$
36.35

 
$
35.57

 
$
35.87

 
$
35.13

 
$
34.81

Return on Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rolling 12 Months Net Income
 
$
190.1

 
$
220.5

 
$
176.0

 
$
175.0

 
$
120.9

 
$
115.2

 
$
51.2

 
$
18.6

Denominator (5-point Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5-point Average Shareholders’ Equity
 
$
2,467.8

 
$
2,274.3

 
$
2,068.2

 
$
2,055.8

 
$
2,038.0

 
$
2,029.6

 
$
2,034.2

 
$
2,035.7

Rolling 12 Months Return on Average Shareholders' Equity (5-point Average)
 
7.7
%
 
9.7
%
 
8.5
%
 
8.5
%
 
5.9
%
 
5.7
%
 
2.5
%
 
0.9
%
Return on Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Denominator (5-point Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5-point Average Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities
 
$
2,299.9

 
$
2,081.0

 
$
1,850.2

 
$
1,827.3

 
$
1,811.5

 
$
1,796.3

 
$
1,782.9

 
$
1,780.1

Rolling 12 Months Return on Average Shareholders' Equity Excluding Net Unrealized Gains on Fixed Maturities (5-point Average)
 
8.3
%
 
10.6
%
 
9.5
%
 
9.6
%
 
6.7
%
 
6.4
%
 
2.9
%
 
1.0
%
Debt and Total Capitalization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt
 
$
909.0

 
$
1,123.7

 
$
951.8

 
$
592.3

 
$
592.3

 
$
592.2

 
$
592.1

 
$
751.8

Shareholders’ Equity
 
3,050.1

 
3,063.8

 
2,045.7

 
2,063.8

 
2,115.6

 
2,082.4

 
2,033.4

 
1,983.6

Total Capitalization
 
$
3,959.1

 
$
4,187.5

 
$
2,997.5

 
$
2,656.1

 
$
2,707.9

 
$
2,674.6

 
$
2,625.5

 
$
2,735.4

Ratio of Debt to Shareholders’ Equity
 
29.8
%
 
36.7
%
 
46.5
%
 
28.7
%
 
28.0
%
 
28.4
%
 
29.1
%
 
37.9
%
Ratio of Debt to Total Capitalization
 
23.0
%
 
26.8
%
 
31.8
%
 
22.3
%
 
21.9
%
 
22.1
%
 
22.6
%
 
27.5
%
Parent Company Liquidity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Holding Company Cash and Investments
 
$
100.6

 
$
91.3

 
$
708.6

 
$
184.4

 
$
197.3

 
$
188.2

 
$
188.4

 
$
288.2

Borrowings Available Under Credit Agreement
 
300.0

 
300.0

 
300.0

 
225.0

 
225.0

 
225.0

 
225.0

 
225.0

Parent Company Liquidity
 
$
400.6

 
$
391.3

 
$
1,008.6

 
$
409.4

 
$
422.3

 
$
413.2

 
$
413.4

 
$
513.2

Capital Returned to Shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Dividends Paid
 
15.6

 
15.6

 
12.4

 
12.5

 
12.4

 
12.4

 
12.4

 
12.3

Total Capital Returned to Shareholders
 
$
15.6

 
$
15.6

 
$
12.4

 
$
12.5

 
$
12.4

 
$
12.4

 
$
12.4

 
$
12.3

 

Page 8

Kemper Corporation
Debt Outstanding and Ratings
(Dollars in Millions)
(Unaudited)
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
Kemper Corporation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% Senior Notes due May 15, 2017
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
359.9

Term Loan due June 29, 2020
 
34.9

 
249.4

 
249.4

 
—

 
—

 
—

 
—

 
—

5.0% Senior Notes due September 19, 2022
 
281.5

 
281.7

 
—

 
—

 
—

 
—

 
—

 
—

4.35% Senior Notes due February 15, 2025
 
448.4

 
448.4

 
448.2

 
448.1

 
448.1

 
448.1

 
448.0

 
247.8

7.375% Subordinated Debentures due February 27, 2054 at Amortized Cost
 
144.2

 
144.2

 
144.2

 
144.2

 
144.2

 
144.1

 
144.1

 
144.1

Debt Outstanding
 
$
909.0

 
$
1,123.7

 
$
841.8

 
$
592.3

 
$
592.3

 
$
592.2

 
$
592.1

 
$
751.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsidiary Debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank of Dallas
 
$
—

 
$
—

 
$
55.0

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Federal Home Loan Bank of Chicago
 
10.0

 
10.0

 
65.0

 
10.0

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A.M. Best
 
Moody’s
 
S&P
 
Fitch
 
 
 
 
 
 
 
 
As of Date of Financial Supplement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Debt Ratings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Notes Payable
 
bbb-
 
Baa3
 
BBB-
 
BBB-
 
 
 
 
 
 
 
 
Subordinated Debentures
 
bb+
 
Ba1
 
BB
 
BB
 
 
 
 
 
 
 
 
Insurance Company Financial Strength Ratings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trinity Universal Insurance Company
 
A-
 
A3
 
A-
 
A-
 
 
 
 
 
 
 
 
United Insurance Company of America
 
A-
 
A3
 
A-
 
A-
 
 
 
 
 
 
 
 
Reserve National Insurance Company
 
A-
 
NR
 
NR
 
NR
 
 
 
 
 
 
 
 
Infinity Property and Casualty
 
A-
 
A3
 
A-
 
NR
 
 
 
 
 
 
 
 



NR - Not Rated


Page 9

Kemper Corporation
Segment Revenues
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Property & Casualty Insurance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Automobile
 
$
115.2

 
$
111.4

 
$
108.7

 
$
104.9

 
$
106.5

 
$
106.5

 
$
105.5

 
$
104.3

 
$
440.2

 
$
422.8

Homeowners
 
63.6

 
62.5

 
62.2

 
61.8

 
65.2

 
66.7

 
66.6

 
66.3

 
250.1

 
264.8

Other Personal
 
10.0

 
10.1

 
10.2

 
10.1

 
10.5

 
10.7

 
10.8

 
10.7

 
40.4

 
42.7

Total Preferred Property & Casualty Insurance Earned Premium
 
188.8

 
184.0

 
181.1

 
176.8

 
182.2

 
183.9

 
182.9

 
181.3

 
730.7

 
730.3

Net Investment Income
 
14.0

 
20.1

 
14.0

 
13.7

 
13.0

 
17.7

 
12.5

 
15.7

 
61.8

 
58.9

Total Preferred Property & Casualty Insurance Revenues
 
202.8

 
204.1

 
195.1

 
190.5

 
195.2

 
201.6

 
195.4

 
197.0

 
792.5

 
789.2

Specialty Property & Casualty Insurance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Automobile
 
660.5

 
655.3

 
307.5

 
266.2

 
257.8

 
246.5

 
233.6

 
216.4

 
1,889.5

 
954.3

Commercial Automobile
 
57.3

 
55.9

 
12.5

 
12.2

 
12.9

 
13.1

 
12.7

 
12.7

 
137.9

 
51.4

Total Specialty Property & Casualty Insurance Earned Premium
 
717.8

 
711.2

 
320.0

 
278.4

 
270.7

 
259.6

 
246.3

 
229.1

 
2,027.4

 
1,005.7

Net Investment Income
 
22.6

 
20.7

 
10.2

 
9.9

 
9.4

 
10.9

 
8.8

 
10.1

 
63.4

 
39.2

Other Income
 
0.8

 
0.9

 
0.4

 
0.3

 
0.2

 
0.4

 
0.3

 
0.2

 
2.4

 
1.1

Total Specialty Property & Casualty Insurance Revenues
 
741.2

 
732.8

 
330.6

 
288.6

 
280.3

 
270.9

 
255.4

 
239.4

 
2,093.2

 
1,046.0

Life & Health Insurance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life
 
94.1

 
95.2

 
95.4

 
93.7

 
94.1

 
94.5

 
95.4

 
95.7

 
378.4

 
379.7

Accident and Health
 
45.5

 
44.9

 
43.8

 
43.3

 
41.1

 
42.0

 
39.5

 
39.1

 
177.5

 
161.7

Property
 
17.4

 
17.6

 
17.8

 
17.6

 
17.8

 
18.2

 
18.4

 
18.2

 
70.4

 
72.6

Total Life & Health Insurance Earned Premiums
 
157.0

 
157.7

 
157.0

 
154.6

 
153.0

 
154.7

 
153.3

 
153.0

 
626.3

 
614.0

Net Investment Income
 
51.7

 
51.0

 
54.5

 
53.7

 
58.3

 
56.3

 
55.3

 
53.3

 
210.9

 
223.2

Other Income
 
1.1

 
1.2

 
0.9

 
0.8

 
0.7

 
0.7

 
0.6

 
0.6

 
4.0

 
2.6

Total Life & Health Insurance Revenues
 
209.8

 
209.9

 
212.4

 
209.1

 
212.0

 
211.7

 
209.2

 
206.9

 
841.2

 
839.8

Total Segment Revenues
 
1,153.8

 
1,146.8

 
738.1

 
688.2

 
687.5

 
684.2

 
660.0

 
643.3

 
3,726.9

 
2,675.0

Income (Loss) from Change in Fair Value of Equity and Convertible Securities
 
(76.4
)
 
11.0

 
0.4

 
0.7

 
—

 
—

 
—

 
—

 
(64.3
)
 
—

Net Realized Gains on Sales of Investments
 
16.4

 
3.6

 
3.8

 
2.6

 
11.5

 
8.1

 
26.4

 
10.5

 
26.4

 
56.5

Net Impairment Losses Recognized in Earnings
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(3.8
)
 
(2.9
)
 
(2.6
)
 
(5.0
)
 
(4.5
)
 
(14.3
)
Other
 
3.1

 
35.9

 
(0.4
)
 
2.0

 
2.1

 
0.9

 
0.6

 
2.6

 
40.6

 
6.2

Total Revenues
 
$
1,094.7

 
$
1,195.5

 
$
741.9

 
$
693.0

 
$
697.3

 
$
690.3

 
$
684.4

 
$
651.4

 
$
3,725.1

 
$
2,723.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 10

Kemper Corporation
Segment Operating Results
(Dollars in Millions)
 (Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Segment Operating Profit (Loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Property & Casualty Insurance
 
$
6.6

 
$
14.1

 
$
(8.7
)
 
$
16.6

 
$
(19.3
)
 
$
2.5

 
$
(13.6
)
 
$
(47.7
)
 
$
28.6

 
$
(78.1
)
Specialty Property & Casualty Insurance
 
61.5

 
26.9

 
28.2

 
29.0

 
20.7

 
29.1

 
18.5

 
12.2

 
145.6

 
80.5

Life & Health Insurance
 
18.3

 
33.5

 
33.8

 
30.3

 
39.3

 
36.4

 
31.6

 
32.9

 
115.9

 
140.2

Total Segment Operating Profit (Loss)
 
86.4

 
74.5

 
53.3

 
75.9

 
40.7

 
68.0

 
36.5

 
(2.6
)
 
290.1

 
142.6

Corporate and Other Operating Loss
 
(11.4
)
 
21.4

 
(8.4
)
 
(5.5
)
 
(4.2
)
 
(4.9
)
 
(8.2
)
 
(6.4
)
 
(3.9
)
 
(23.7
)
Total Operating Profit (Loss)
 
75.0

 
95.9

 
44.9

 
70.4

 
36.5

 
63.1

 
28.3

 
(9.0
)
 
286.2

 
118.9

Income (Loss) From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
(76.4
)
 
11.0

 
0.4

 
0.7

 
—

 
—

 
—

 
—

 
(64.3
)
 
—

Net Realized Gains on Sales of Investments
 
16.4

 
3.6

 
3.8

 
2.6

 
11.5

 
8.1

 
26.4

 
10.5

 
26.4

 
56.5

Net Impairment Losses Recognized in Earnings
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(3.8
)
 
(2.9
)
 
(2.6
)
 
(5.0
)
 
(4.5
)
 
(14.3
)
Acquisition Related Transaction Integration and Other Costs
 
(6.7
)
 
(28.2
)
 
(3.6
)
 
(6.2
)
 
—

 
—

 
—

 
—

 
(44.7
)
 
—

Income (Loss) from Continuing Operations before Income Taxes
 
$
6.1

 
$
80.5

 
$
45.5

 
$
67.0

 
$
44.2

 
$
68.3

 
$
52.1

 
$
(3.5
)
 
$
199.1

 
$
161.1

Segment Net Operating Income (Loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Property & Casualty Insurance
 
$
6.0

 
$
12.2

 
$
(6.0
)
 
$
13.5

 
$
(11.7
)
 
$
3.6

 
$
(7.7
)
 
$
(29.6
)
 
$
25.7

 
$
(45.4
)
Specialty Property & Casualty Insurance
 
48.5

 
21.5

 
22.4

 
23.4

 
14.3

 
20.0

 
13.1

 
8.9

 
115.8

 
56.3

Life & Health Insurance
 
13.6

 
27.1

 
26.7

 
24.1

 
25.7

 
23.7

 
20.8

 
21.7

 
91.5

 
91.9

Total Segment Net Operating Income (Loss)
 
68.1

 
60.8

 
43.1

 
61.0

 
28.3

 
47.3

 
26.2

 
1.0

 
233.0

 
102.8

Corporate and Other Net Operating Income (Loss) From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effects of Tax Law Changes
 
0.4

 
26.0

 
—

 
—

 
7.4

 
—

 
—

 
—

 
26.4

 
7.4

Partial Satisfaction of Legal Judgment
 
—

 
28.2

 
—

 
—

 
—

 
—

 
—

 
—

 
28.2

 
—

Other
 
(8.6
)
 
(10.5
)
 
(6.6
)
 
(3.5
)
 
(4.7
)
 
(2.9
)
 
(5.2
)
 
(4.9
)
 
(29.2
)
 
(17.7
)
Corporate and Other Net Operating Income (Loss)
 
(8.2
)
 
43.7

 
(6.6
)
 
(3.5
)
 
2.7

 
(2.9
)
 
(5.2
)
 
(4.9
)
 
25.4

 
(10.3
)
Adjusted Consolidated Net Operating Income (Loss)
 
59.9

 
104.5

 
36.5

 
57.5

 
31.0

 
44.4

 
21.0

 
(3.9
)
 
258.4

 
92.5

Net Income (Loss) From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
(60.4
)
 
8.7

 
0.3

 
0.6

 
—

 
—

 
—

 
—

 
(50.8
)
 
—

Net Realized Gains on Sales of Investments
 
13.0

 
2.8

 
3.0

 
2.1

 
7.4

 
5.3

 
17.2

 
6.8

 
20.9

 
36.7

Net Impairment Losses Recognized in Earnings
 
(1.8
)
 
(1.4
)
 
—

 
(0.4
)
 
(2.5
)
 
(1.9
)
 
(1.6
)
 
(3.3
)
 
(3.6
)
 
(9.3
)
Acquisition Related Transaction, Integration and Other Costs
 
(5.7
)
 
(22.3
)
 
(2.3
)
 
(6.2
)
 
—

 
—

 
—

 
—

 
(36.5
)
 
—

Income (Loss) from Continuing Operations
 
$
5.0


$
92.3


$
37.5


$
53.6


$
35.9

 
$
47.8

 
$
36.6

 
$
(0.4
)
 
$
188.4


$
119.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Page 11

Kemper Corporation
Catastrophe Frequency and Severity
(Dollars in Millions)
(Unaudited)
 
 
Year Ended December 31, 2018
 
 
Preferred Property & Casualty Insurance Segment
 
Specialty Property & Casualty Insurance Segment
 
Life & Health Insurance Segment
 
Consolidated
 
 
Number of Events
 
Losses and LAE
 
Number of Events
 
Losses and LAE
 
Number of Events
 
Losses and LAE
 
Number of Events
 
Losses and LAE
Range of Losses and LAE Per Event:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Below $5
 
45

 
$
32.9

 
35

 
4.7

 
24

 
$
4.0

 
45

 
$
34.7

$5 - $10
 
3

 
21.3

 
—

 
—

 
—

 
—

 
4

 
27.6

$10 - $15
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

$15 - $20
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

$20 - $25
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Greater Than $25
 
1

 
33.1

 
—

 
—

 
—

 
—

 
1

 
33.7

Total
 
49

 
$
87.3

 
35

 
$
4.7

 
24

 
$
4.0

 
50

 
$
96.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2017
 
 
Preferred Property & Casualty Insurance Segment
 
Specialty Property & Casualty Insurance Segment
 
Life & Health Insurance Segment
 
Consolidated
 
 
Number of Events
 
Losses and LAE
 
Number of Events
 
Losses and LAE
 
Number of Events
 
Losses and LAE
 
Number of Events
 
Losses and LAE
Range of Losses and LAE Per Event:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Below $5
 
39

 
$
53.2

 
$
32

 
$
5.5

 
30

 
$
5.9

 
39

 
$
61.3

$5 - $10
 
2

 
14.4

 
—

 
—

 
—

 
—

 
1

 
5.3

$10 - $15
 
1

 
10.0

 
—

 
—

 
—

 
—

 
2

 
21.4

$15 - $20
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

$20 - $25
 
1

 
24.3

 
—

 
—

 
—

 
—

 
1

 
24.4

Greater Than $25
 
2

 
71.6

 
—

 
—

 
—

 
—

 
2

 
72.5

Total
 
45

 
$
173.5

 
32

 
$
5.5

 
30

 
$
5.9

 
45

 
$
184.9


Page 12

Kemper Corporation
Preferred Property & Casualty Insurance Segment
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
184.7

 
$
195.6

 
$
198.0

 
$
170.5

 
$
172.9

 
$
194.3

 
$
189.9

 
$
169.0

 
$
748.8

 
$
726.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
188.8

 
$
184.0

 
$
181.1

 
$
176.8

 
$
182.2

 
$
183.9

 
$
182.9

 
$
181.3

 
$
730.7

 
$
730.3

Net Investment Income
 
14.0

 
20.1

 
14.0

 
13.7

 
13.0

 
17.7

 
12.5

 
15.7

 
61.8

 
58.9

Total Revenues
 
202.8

 
204.1

 
195.1

 
190.5

 
195.2

 
201.6

 
195.4

 
197.0

 
792.5

 
789.2

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
120.8

 
116.6

 
107.8

 
114.2

 
112.4

 
116.3

 
115.0

 
116.6

 
459.4

 
460.3

Catastrophe Losses and LAE
 
21.4

 
18.3

 
40.3

 
7.3

 
51.6

 
28.1

 
31.7

 
62.1

 
87.3

 
173.5

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(3.0
)
 
(1.9
)
 
0.6

 
4.2

 
(0.2
)
 
0.8

 
9.0

 
10.8

 
(0.1
)
 
20.4

Catastrophe Losses and LAE
 
(0.8
)
 
(0.2
)
 
(1.8
)
 
(5.4
)
 
(0.6
)
 
(1.0
)
 
(2.0
)
 
(1.1
)
 
(8.2
)
 
(4.7
)
Total Incurred Losses and LAE
 
138.4

 
132.8

 
146.9

 
120.3

 
163.2

 
144.2

 
153.7

 
188.4

 
538.4

 
649.5

Insurance Expenses
 
57.8

 
57.2

 
56.9

 
53.6

 
51.3

 
54.9

 
55.3

 
56.3

 
225.5

 
217.8

Operating Profit (Loss)
 
6.6

 
14.1

 
(8.7
)
 
16.6

 
(19.3
)
 
2.5

 
(13.6
)
 
(47.7
)
 
28.6

 
(78.1
)
Income Tax Benefit (Expense)
 
(0.6
)
 
(1.9
)
 
2.7

 
(3.1
)
 
7.6

 
1.1

 
5.9

 
18.1

 
(2.9
)
 
32.7

Segment Net Operating Income (Loss)
 
$
6.0

 
$
12.2

 
$
(6.0
)
 
$
13.5

 
$
(11.7
)
 
$
3.6

 
$
(7.7
)
 
$
(29.6
)
 
$
25.7

 
$
(45.4
)
Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
64.0
 %
 
63.4
 %
 
59.5
 %
 
64.6
 %
 
61.7
 %
 
63.2
 %
 
62.9
 %
 
64.2
 %
 
62.9
 %
 
62.9
 %
Current Year Catastrophe Losses and LAE Ratio
 
11.3

 
9.9

 
22.3

 
4.1

 
28.3

 
15.3

 
17.3

 
34.3

 
11.9

 
23.8

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.6
)
 
(1.0
)
 
0.3

 
2.4

 
(0.1
)
 
0.4

 
4.9

 
6.0

 
—

 
2.8

Prior Years Catastrophe Losses and LAE Ratio
 
(0.4
)
 
(0.1
)
 
(1.0
)
 
(3.1
)
 
(0.3
)
 
(0.5
)
 
(1.1
)
 
(0.6
)
 
(1.1
)
 
(0.6
)
Total Incurred Loss and LAE Ratio
 
73.3

 
72.2

 
81.1

 
68.0

 
89.6

 
78.4

 
84.0

 
103.9

 
73.7

 
88.9

Insurance Expense Ratio
 
30.6

 
31.1

 
31.4

 
30.3

 
28.2

 
29.9

 
30.2

 
31.1

 
30.9

 
29.8

Combined Ratio
 
103.9
 %
 
103.3
 %
 
112.5
 %
 
98.3
 %
 
117.8
 %
 
108.3
 %
 
114.2
 %
 
135.0
 %
 
104.6
 %
 
118.7
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
64.0
 %
 
63.4
 %
 
59.5
 %
 
64.6
 %
 
61.7
 %
 
63.2
 %
 
62.9
 %
 
64.2
 %
 
62.9
 %
 
62.9
 %
Insurance Expense Ratio
 
30.6

 
31.1

 
31.4

 
30.3

 
28.2

 
29.9

 
30.2

 
31.1

 
30.9

 
29.8

Underlying Combined Ratio
 
94.6
 %
 
94.5
 %
 
90.9
 %
 
94.9
 %
 
89.9
 %
 
93.1
 %
 
93.1
 %
 
95.3
 %
 
93.8
 %
 
92.7
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio as Reported
 
103.9
 %
 
103.3
 %
 
112.5
 %
 
98.3
 %
 
117.8
 %
 
108.3
 %
 
114.2
 %
 
135.0
 %
 
104.6
 %
 
118.7
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
11.3

 
9.9

 
22.3

 
4.1

 
28.3

 
15.3

 
17.3

 
34.3

 
11.9

 
23.8

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.6
)
 
(1.0
)
 
0.3

 
2.4

 
(0.1
)
 
0.4

 
4.9

 
6.0

 
—

 
2.8

Prior Years Catastrophe Losses and LAE Ratio
 
(0.4
)
 
(0.1
)
 
(1.0
)
 
(3.1
)
 
(0.3
)
 
(0.5
)
 
(1.1
)
 
(0.6
)
 
(1.1
)
 
(0.6
)
Underlying Combined Ratio
 
94.6
 %
 
94.5
 %
 
90.9
 %
 
94.9
 %
 
89.9
 %
 
93.1
 %
 
93.1
 %
 
95.3
 %
 
93.8
 %
 
92.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.


Page 13

Kemper Corporation
Preferred Property & Casualty Insurance Segment
Results of Operations and Selected Financial Information (continued)
(Dollars in Millions)
(Unaudited)
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Automobile
 
$
270.0

 
$
272.3

 
$
276.3

 
$
278.8

 
$
285.6

 
$
281.6

 
$
282.1

 
$
278.5

Homeowners
 
147.9

 
139.4

 
137.2

 
124.6

 
139.7

 
111.8

 
110.7

 
133.6

Other Personal
 
35.0

 
32.6

 
34.8

 
35.3

 
36.6

 
37.1

 
39.4

 
36.1

Insurance Reserves
 
$
452.9

 
$
444.3

 
$
448.3

 
$
438.7

 
$
461.9

 
$
430.5

 
$
432.2

 
$
448.2

Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Case
 
$
312.5

 
$
304.4

 
$
307.7

 
$
313.6

 
$
336.2

 
$
306.0

 
$
315.0

 
$
316.1

Incurred but Not Reported
 
110.0

 
109.0

 
109.6

 
95.5

 
95.3

 
93.4

 
85.7

 
98.6

Total Loss Reserves
 
422.5

 
413.4

 
417.3

 
409.1

 
431.5

 
399.4

 
400.7

 
414.7

LAE Reserves
 
30.4

 
30.9

 
31.0

 
29.6

 
30.4

 
31.1

 
31.5

 
33.5

Insurance Reserves
 
$
452.9

 
$
444.3

 
$
448.3

 
$
438.7

 
$
461.9

 
$
430.5

 
$
432.2

 
$
448.2



Page 14

Kemper Corporation
Preferred Property & Casualty Insurance Segment
Preferred Personal Automobile Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
115.7

 
$
119.3

 
$
120.9

 
$
106.2

 
$
103.0

 
$
112.6

 
$
108.7

 
$
100.1

 
$
462.1

 
$
424.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
115.2

 
$
111.4

 
$
108.7

 
$
104.9

 
$
106.5

 
$
106.5

 
$
105.5

 
$
104.3

 
$
440.2

 
$
422.8

Net Investment Income
 
6.5

 
9.3

 
6.5

 
6.3

 
5.9

 
8.1

 
5.8

 
7.2

 
28.6

 
27.0

Total Revenues
 
121.7

 
120.7

 
115.2

 
111.2

 
112.4

 
114.6

 
111.3

 
111.5

 
468.8

 
449.8

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
85.6

 
74.9

 
74.7

 
73.6

 
81.1

 
74.2

 
76.8

 
76.9

 
308.8

 
309.0

Catastrophe Losses and LAE
 
0.4

 
2.3

 
3.9

 
0.6

 
(0.1
)
 
2.8

 
3.9

 
4.7

 
7.2

 
11.3

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(2.2
)
 
(2.6
)
 
(1.4
)
 
0.5

 
1.3

 
0.8

 
6.6

 
10.8

 
(5.7
)
 
19.5

Catastrophe Losses and LAE
 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
(0.2
)
 
—

 
(0.1
)
 
(0.2
)
Total Incurred Losses and LAE
 
83.8

 
74.6

 
77.1

 
74.7

 
82.3

 
77.8

 
87.1

 
92.4

 
310.2

 
339.6

Insurance Expenses
 
34.9

 
34.0

 
32.1

 
31.7

 
29.9

 
31.5

 
32.0

 
32.2

 
132.7

 
125.6

Operating Profit (Loss)
 
3.0

 
12.1

 
6.0

 
4.8

 
0.2

 
5.3

 
(7.8
)
 
(13.1
)
 
25.9

 
(15.4
)
Income Tax Benefit (Expense)
 
(0.3
)
 
(2.0
)
 
(1.0
)
 
(0.8
)
 
0.5

 
(3.5
)
 
3.3

 
5.2

 
(4.1
)
 
5.5

Total Product Line Net Operating Income (Loss)
 
$
2.7

 
$
10.1

 
$
5.0

 
$
4.0

 
$
0.7

 
$
1.8

 
$
(4.5
)
 
$
(7.9
)
 
$
21.8

 
$
(9.9
)
Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
74.3
 %
 
67.2
 %
 
68.7
 %
 
70.1
%
 
76.2
 %
 
69.7
%
 
72.8
 %
 
73.7
%
 
70.2
 %
 
73.0
%
Current Year Catastrophe Losses and LAE Ratio
 
0.3

 
2.1

 
3.6

 
0.6

 
(0.1
)
 
2.6

 
3.7

 
4.5

 
1.6

 
2.7

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.9
)
 
(2.3
)
 
(1.3
)
 
0.5

 
1.2

 
0.8

 
6.3

 
10.4

 
(1.3
)
 
4.6

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
(0.2
)
 
—

 
—

 
—

Total Incurred Loss and LAE Ratio
 
72.7

 
67.0

 
70.9

 
71.2

 
77.3

 
73.1

 
82.6

 
88.6

 
70.5

 
80.3

Insurance Expense Ratio
 
30.3

 
30.5

 
29.5

 
30.2

 
28.1

 
29.6

 
30.3

 
30.9

 
30.1

 
29.7

Combined Ratio
 
103.0
 %
 
97.5
 %
 
100.4
 %
 
101.4
%
 
105.4
 %
 
102.7
%
 
112.9
 %
 
119.5
%
 
100.6
 %
 
110.0
%
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
74.3
 %
 
67.2
 %
 
68.7
 %
 
70.1
%
 
76.2
 %
 
69.7
%
 
72.8
 %
 
73.7
%
 
70.2
 %
 
73.0
%
Insurance Expense Ratio
 
30.3

 
30.5

 
29.5

 
30.2

 
28.1

 
29.6

 
30.3

 
30.9

 
30.1

 
29.7

Underlying Combined Ratio
 
104.6
 %
 
97.7
 %
 
98.2
 %
 
100.3
%
 
104.3
 %
 
99.3
%
 
103.1
 %
 
104.6
%
 
100.3
 %
 
102.7
%
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
103.0
 %
 
97.5
 %
 
100.4
 %
 
101.4
%
 
105.4
 %
 
102.7
%
 
112.9
 %
 
119.5
%
 
100.6
 %
 
110.0
%
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
0.3

 
2.1

 
3.6

 
0.6

 
(0.1
)
 
2.6

 
3.7

 
4.5

 
1.6

 
2.7

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.9
)
 
(2.3
)
 
(1.3
)
 
0.5

 
1.2

 
0.8

 
6.3

 
10.4

 
(1.3
)
 
4.6

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
(0.2
)
 
—

 
—

 
—

Underlying Combined Ratio
 
104.6
 %
 
97.7
 %
 
98.2
 %
 
100.3
%
 
104.3
 %
 
99.3
%
 
103.1
 %
 
104.6
%
 
100.3
 %
 
102.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 15

Kemper Corporation
Preferred Property & Casualty Insurance Segment
Homeowners and Other Personal Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
69.0

 
$
76.3

 
$
77.1

 
$
64.3

 
$
69.9

 
$
81.7

 
$
81.2

 
$
68.9

 
$
286.7

 
$
301.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
73.6

 
$
72.6

 
$
72.4

 
$
71.9

 
$
75.7

 
$
77.4

 
$
77.4

 
$
77.0

 
$
290.5

 
$
307.5

Net Investment Income
 
7.5

 
10.8

 
7.5

 
7.4

 
7.1

 
9.6

 
6.7

 
8.5

 
33.2

 
31.9

Total Revenues
 
81.1

 
83.4

 
79.9

 
79.3

 
82.8

 
87.0

 
84.1

 
85.5

 
323.7

 
339.4

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
35.2

 
41.7

 
33.1

 
40.6

 
31.3

 
42.1

 
38.2

 
39.7

 
150.6

 
151.3

Catastrophe Losses and LAE
 
21.0

 
16.0

 
36.4

 
6.7

 
51.7

 
25.3

 
27.8

 
57.4

 
80.1

 
162.2

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(0.8
)
 
0.7

 
2.0

 
3.7

 
(1.5
)
 
—

 
2.4

 
—

 
5.6

 
0.9

Catastrophe Losses and LAE
 
(0.8
)
 
(0.2
)
 
(1.7
)
 
(5.4
)
 
(0.6
)
 
(1.0
)
 
(1.8
)
 
(1.1
)
 
(8.1
)
 
(4.5
)
Total Incurred Losses and LAE
 
54.6

 
58.2

 
69.8

 
45.6

 
80.9

 
66.4

 
66.6

 
96.0

 
228.2

 
309.9

Insurance Expenses
 
22.9

 
23.2


24.8

 
21.9

 
21.4

 
23.4

 
23.3

 
24.1

 
92.8

 
92.2

Operating Profit
 
3.6

 
2.0

 
(14.7
)
 
11.8

 
(19.5
)
 
(2.8
)
 
(5.8
)
 
(34.6
)
 
2.7

 
(62.7
)
Income Tax Expense
 
(0.3
)
 
0.1

 
3.7

 
(2.3
)
 
7.1

 
4.6

 
2.6

 
12.9

 
1.2

 
27.2

Total Product Line Net Operating Income (Loss)
 
$
3.3

 
$
2.1

 
$
(11.0
)
 
$
9.5

 
$
(12.4
)
 
$
1.8

 
$
(3.2
)
 
$
(21.7
)
 
$
3.9

 
$
(35.5
)
Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
47.9
 %
 
57.5
 %
 
45.6
 %
 
56.5
 %
 
41.4
 %
 
54.4
 %
 
49.3
 %
 
51.6
 %
 
51.9
 %
 
49.3
 %
Current Year Catastrophe Losses and LAE Ratio
 
28.5

 
22.0

 
50.3

 
9.3

 
68.3

 
32.7

 
35.9

 
74.5

 
27.6

 
52.7

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.1
)
 
1.0

 
2.8

 
5.1

 
(2.0
)
 
—

 
3.1

 
—

 
1.9

 
0.3

Prior Years Catastrophe Losses and LAE Ratio
 
(1.1
)
 
(0.3
)
 
(2.3
)
 
(7.5
)
 
(0.8
)
 
(1.3
)
 
(2.3
)
 
(1.4
)
 
(2.8
)
 
(1.5
)
Total Incurred Loss and LAE Ratio
 
74.2

 
80.2

 
96.4

 
63.4

 
106.9

 
85.8

 
86.0

 
124.7

 
78.6

 
100.8

Insurance Expense Ratio
 
31.1

 
32.0

 
34.3

 
30.5

 
28.3

 
30.2

 
30.1

 
31.3

 
31.9

 
30.0

Combined Ratio
 
105.3
 %
 
112.2
 %
 
130.7
 %
 
93.9
 %
 
135.2
 %
 
116.0
 %
 
116.1
 %
 
156.0
 %
 
110.5
 %
 
130.8
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
47.9
 %
 
57.5
 %
 
45.6
 %
 
56.5
 %
 
41.4
 %
 
54.4
 %
 
49.3
 %
 
51.6
 %
 
51.9
 %
 
49.3
 %
Insurance Expense Ratio
 
31.1

 
32.0

 
34.3

 
30.5

 
28.3

 
30.2

 
30.1

 
31.3

 
31.9

 
30.0

Underlying Combined Ratio
 
79.0
 %
 
89.5
 %
 
79.9
 %
 
87.0
 %
 
69.7
 %
 
84.6
 %
 
79.4
 %
 
82.9
 %
 
83.8
 %
 
79.3
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
105.3
 %
 
112.2
 %
 
130.7
 %
 
93.9
 %
 
135.2
 %
 
116.0
 %
 
116.1
 %
 
156.0
 %
 
110.5
 %
 
130.8
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
28.5

 
22.0

 
50.3

 
9.3

 
68.3

 
32.7

 
35.9

 
74.5

 
27.6

 
52.7

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.1
)
 
1.0

 
2.8

 
5.1

 
(2.0
)
 
—

 
3.1

 
—

 
1.9

 
0.3

Prior Years Catastrophe Losses and LAE Ratio
 
(1.1
)
 
(0.3
)
 
(2.3
)
 
(7.5
)
 
(0.8
)
 
(1.3
)
 
(2.3
)
 
(1.4
)
 
(2.8
)
 
(1.5
)
Underlying Combined Ratio
 
79.0
 %
 
89.5
 %
 
79.9
 %
 
87.0
 %
 
69.7
 %
 
84.6
 %
 
79.4
 %
 
82.9
 %
 
83.8
 %
 
79.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 16

Kemper Corporation
Preferred Property & Casualty Insurance Segment
Homeowners Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
59.6

 
$
66.0

 
$
66.6

 
$
55.1

 
$
60.4

 
$
70.8

 
$
70.1

 
$
59.2

 
$
247.3

 
$
260.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
63.6

 
$
62.5

 
$
62.2

 
$
61.8

 
$
65.2

 
$
66.7

 
$
66.6

 
$
66.3

 
$
250.1

 
$
264.8

Net Investment Income
 
6.7

 
9.3

 
6.5

 
6.3

 
6.1

 
8.1

 
6.0

 
7.1

 
28.8

 
27.3

Total Revenues
 
70.3

 
71.8

 
68.7

 
68.1

 
71.3

 
74.8

 
72.6

 
73.4

 
278.9

 
292.1

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
30.7

 
36.8

 
28.8

 
35.2

 
26.3

 
36.9

 
32.5

 
33.8

 
131.5

 
129.5

Catastrophe Losses and LAE
 
16.8

 
16.0

 
35.9

 
6.5

 
49.3

 
24.8

 
26.7

 
56.5

 
75.2

 
157.3

Prior Years:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Non-catastrophe Losses and LAE
 
0.3

 
1.8

 
2.7

 
5.6

 
1.6

 
0.9

 
1.5

 
0.7

 
10.4

 
4.7

Catastrophe Losses and LAE
 
(0.7
)
 
(0.1
)
 
(1.3
)
 
(5.1
)
 
(0.5
)
 
(0.8
)
 
(1.8
)
 
(0.6
)
 
(7.2
)
 
(3.7
)
Total Incurred Losses and LAE
 
47.1

 
54.5

 
66.1

 
42.2

 
76.7

 
61.8

 
58.9

 
90.4

 
209.9

 
287.8

Insurance Expenses
 
20.0

 
20.5

 
21.9

 
19.2

 
18.7

 
20.3

 
20.6

 
21.0

 
81.6

 
80.6

Operating Profit (Loss)
 
3.2

 
(3.2
)
 
(19.3
)
 
6.7

 
(24.1
)
 
(7.3
)
 
(6.9
)
 
(38.0
)
 
(12.6
)
 
(76.3
)
Income Tax Benefit (Expense)
 
(0.3
)
 
1.4

 
4.4

 
(1.3
)
 
8.7

 
10.5

 
3.0

 
13.9

 
4.2

 
36.1

Total Product Line Net Operating Income (Loss)
 
$
2.9

 
$
(1.8
)
 
$
(14.9
)
 
$
5.4

 
$
(15.4
)
 
$
3.2

 
$
(3.9
)
 
$
(24.1
)
 
$
(8.4
)
 
$
(40.2
)
Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
48.3
 %
 
58.9
 %
 
46.4
 %
 
57.0
 %
 
40.3
 %
 
55.4
 %
 
48.7
 %
 
50.9
 %
 
52.5
 %
 
48.9
 %
Current Year Catastrophe Losses and LAE Ratio
 
26.4

 
25.6

 
57.7

 
10.5

 
75.6

 
37.2

 
40.1

 
85.2

 
30.1

 
59.4

Prior Years Non-catastrophe Losses and LAE Ratio
 
0.5

 
2.9

 
4.3

 
9.1

 
2.5

 
1.3

 
2.3

 
1.1

 
4.2

 
1.8

Prior Years Catastrophe Losses and LAE Ratio
 
(1.1
)
 
(0.2
)
 
(2.1
)
 
(8.3
)
 
(0.8
)
 
(1.2
)
 
(2.7
)
 
(0.9
)
 
(2.9
)
 
(1.4
)
Total Incurred Loss and LAE Ratio
 
74.1

 
87.2

 
106.3

 
68.3

 
117.6

 
92.7

 
88.4

 
136.3

 
83.9

 
108.7

Insurance Expense Ratio
 
31.4

 
32.8

 
35.2

 
31.1

 
28.7

 
30.4

 
30.9

 
31.7

 
32.6

 
30.4

Combined Ratio
 
105.5
 %
 
120.0
 %
 
141.5
 %
 
99.4
 %
 
146.3
 %
 
123.1
 %
 
119.3
 %
 
168.0
 %
 
116.5
 %
 
139.1
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
48.3
 %
 
58.9
 %
 
46.4
 %
 
57.0
 %
 
40.3
 %
 
55.4
 %
 
48.7
 %
 
50.9
 %
 
52.5
 %
 
48.9
 %
Insurance Expense Ratio
 
31.4

 
32.8

 
35.2

 
31.1

 
28.7

 
30.4

 
30.9

 
31.7

 
32.6

 
30.4

Underlying Combined Ratio
 
79.7
 %
 
91.7
 %
 
81.6
 %
 
88.1
 %
 
69.0
 %
 
85.8
 %
 
79.6
 %
 
82.6
 %
 
85.1
 %
 
79.3
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
105.5
 %
 
120.0
 %
 
141.5
 %
 
99.4
 %
 
146.3
 %
 
123.1
 %
 
119.3
 %
 
168.0
 %
 
116.5
 %
 
139.1
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
26.4

 
25.6

 
57.7

 
10.5

 
75.6

 
37.2

 
40.1

 
85.2

 
30.1

 
59.4

Prior Years Non-catastrophe Losses and LAE Ratio
 
0.5

 
2.9

 
4.3

 
9.1

 
2.5

 
1.3

 
2.3

 
1.1

 
4.2

 
1.8

Prior Years Catastrophe Losses and LAE Ratio
 
(1.1
)
 
(0.2
)
 
(2.1
)
 
(8.3
)
 
(0.8
)
 
(1.2
)
 
(2.7
)
 
(0.9
)
 
(2.9
)
 
(1.4
)
Underlying Combined Ratio
 
79.7
 %
 
91.7
 %
 
81.6
 %
 
88.1
 %
 
69.0
 %
 
85.8
 %
 
79.6
 %
 
82.6
 %
 
85.1
 %
 
79.3
 %
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 17

Kemper Corporation
Preferred Property & Casualty Insurance Segment
Other Personal Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
9.4

 
$
10.3

 
$
10.5

 
$
9.2

 
$
9.5

 
$
10.9

 
$
11.1

 
$
9.7

 
$
39.4

 
$
41.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
10.0

 
$
10.1

 
$
10.2

 
$
10.1

 
$
10.5

 
$
10.7

 
$
10.8

 
$
10.7

 
$
40.4

 
$
42.7

Net Investment Income
 
0.8

 
1.5

 
1.0

 
1.1

 
1.0

 
1.5

 
0.7

 
1.4

 
4.4

 
4.6

Total Revenues
 
10.8

 
11.6

 
11.2

 
11.2

 
11.5

 
12.2

 
11.5

 
12.1

 
44.8

 
47.3

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
4.5

 
4.9

 
4.3

 
5.4

 
5.0

 
5.2

 
5.7

 
5.9

 
19.1

 
21.8

Catastrophe Losses and LAE
 
4.2

 
—

 
0.5

 
0.2

 
2.4

 
0.5

 
1.1

 
0.9

 
4.9

 
4.9

Prior Years:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(1.1
)
 
(1.1
)
 
(0.7
)
 
(1.9
)
 
(3.1
)
 
(0.9
)
 
0.9

 
(0.7
)
 
(4.8
)
 
(3.8
)
Catastrophe Losses and LAE
 
(0.1
)
 
(0.1
)
 
(0.4
)
 
(0.3
)
 
(0.1
)
 
(0.2
)
 
—

 
(0.5
)
 
(0.9
)
 
(0.8
)
Total Incurred Losses and LAE
 
7.5

 
3.7

 
3.7

 
3.4

 
4.2

 
4.6

 
7.7

 
5.6

 
18.3

 
22.1

Insurance Expenses
 
2.9

 
2.7

 
2.9

 
2.7

 
2.7

 
3.1

 
2.7

 
3.1

 
11.2

 
11.6

Operating Profit
 
0.4

 
5.2

 
4.6

 
5.1

 
4.6

 
4.5

 
1.1

 
3.4

 
15.3

 
13.6

Income Tax Expense
 
—

 
(1.3
)
 
(0.7
)
 
(1.0
)
 
(1.6
)
 
(5.9
)
 
(0.4
)
 
(1.0
)
 
(3.0
)
 
(8.9
)
Total Product Line Net Operating Income (Loss)
 
$
0.4

 
$
3.9

 
$
3.9

 
$
4.1

 
$
3.0

 
$
(1.4
)
 
$
0.7

 
$
2.4

 
$
12.3

 
$
4.7

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
45.0
 %
 
48.5
 %
 
42.2
 %
 
53.5
 %
 
47.6
 %
 
48.6
 %
 
52.8
%
 
55.1
 %
 
47.3
 %
 
51.1
 %
Current Year Catastrophe Losses and LAE Ratio
 
42.0

 
—

 
4.9

 
2.0

 
22.9

 
4.7

 
10.2

 
8.4

 
12.1

 
11.5

Prior Years Non-catastrophe Losses and LAE Ratio
 
(11.0
)
 
(10.9
)
 
(6.9
)
 
(18.8
)
 
(29.5
)
 
(8.4
)
 
8.3

 
(6.5
)
 
(11.9
)
 
(8.9
)
Prior Years Catastrophe Losses and LAE Ratio
 
(1.0
)
 
(1.0
)
 
(3.9
)
 
(3.0
)
 
(1.0
)
 
(1.9
)
 
—

 
(4.7
)
 
(2.2
)
 
(1.9
)
Total Incurred Loss and LAE Ratio
 
75.0

 
36.6

 
36.3

 
33.7

 
40.0

 
43.0

 
71.3

 
52.3

 
45.3

 
51.8

Insurance Expense Ratio
 
29.0

 
26.7

 
28.4

 
26.7

 
25.7

 
29.0

 
25.0

 
29.0

 
27.7

 
27.2

Combined Ratio
 
104.0
 %
 
63.3
 %
 
64.7
 %
 
60.4
 %
 
65.7
 %
 
72.0
 %
 
96.3
%
 
81.3
 %
 
73.0
 %
 
79.0
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
45.0
 %
 
48.5
 %
 
42.2
 %
 
53.5
 %
 
47.6
 %
 
48.6
 %
 
52.8
%
 
55.1
 %
 
47.3
 %
 
51.1
 %
Insurance Expense Ratio
 
29.0

 
26.7

 
28.4

 
26.7

 
25.7

 
29.0

 
25.0

 
29.0

 
27.7

 
27.2

Underlying Combined Ratio
 
74.0
 %
 
75.2
 %
 
70.6
 %
 
80.2
 %
 
73.3
 %
 
77.6
 %
 
77.8
%
 
84.1
 %
 
75.0
 %
 
78.3
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
104.0
 %
 
63.3
 %
 
64.7
 %
 
60.4
 %
 
65.7
 %
 
72.0
 %
 
96.3
%
 
81.3
 %
 
73.0
 %
 
79.0
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
42.0

 
—

 
4.9

 
2.0

 
22.9

 
4.7

 
10.2

 
8.4

 
12.1

 
11.5

Prior Years Non-catastrophe Losses and LAE Ratio
 
(11.0
)
 
(10.9
)
 
(6.9
)
 
(18.8
)
 
(29.5
)
 
(8.4
)
 
8.3

 
(6.5
)
 
(11.9
)
 
(8.9
)
Prior Years Catastrophe Losses and LAE Ratio
 
(1.0
)
 
(1.0
)
 
(3.9
)
 
(3.0
)
 
(1.0
)
 
(1.9
)
 
—

 
(4.7
)
 
(2.2
)
 
(1.9
)
Underlying Combined Ratio
 
74.0
 %
 
75.2
 %
 
70.6
 %
 
80.2
 %
 
73.3
 %
 
77.6
 %
 
77.8
%
 
84.1
 %
 
75.0
 %
 
78.3
 %
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 18

Kemper Corporation
Specialty Property & Casualty Insurance Segment
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
674.7

 
$
735.4

 
$
338.9

 
$
318.4

 
$
260.4

 
$
272.4

 
$
250.8

 
$
259.9

 
$
2,067.4

 
$
1,043.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
717.8

 
$
711.2

 
$
320.0

 
$
278.4

 
$
270.7

 
$
259.6

 
$
246.3

 
$
229.1

 
$
2,027.4

 
$
1,005.7

Net Investment Income
 
22.6

 
20.7

 
10.2

 
9.9

 
9.4

 
10.9

 
8.8

 
10.1

 
63.4

 
39.2

Other Income
 
0.8

 
0.9

 
0.4

 
0.3

 
0.2

 
0.4

 
0.3

 
0.2

 
2.4

 
1.1

Total Revenues
 
741.2

 
732.8

 
330.6

 
288.6

 
280.3

 
270.9

 
255.4

 
239.4

 
2,093.2

 
1,046.0

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
530.3

 
527.6

 
247.2

 
212.3

 
214.6

 
196.8

 
193.8

 
186.0

 
1,517.4

 
791.2

Catastrophe Losses and LAE
 
1.0

 
1.4

 
2.1

 
0.2

 
(0.8
)
 
1.7

 
2.8

 
1.8

 
4.7

 
5.5

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
—

 
(1.6
)
 
4.1

 
(0.5
)
 
1.7

 
0.8

 
0.6

 
1.0

 
2.0

 
4.1

Catastrophe Losses and LAE
 
—

 
—

 
—

 
(0.3
)
 
—

 
(0.2
)
 
—

 
(0.1
)
 
(0.3
)
 
(0.3
)
Total Incurred Losses and LAE
 
531.3

 
527.4

 
253.4

 
211.7

 
215.5

 
199.1

 
197.2

 
188.7

 
1,523.8

 
800.5

Insurance Expenses
 
148.0

 
176.8

 
49.0

 
47.9

 
44.1

 
42.7

 
39.7

 
38.5

 
421.7

 
165.0

Other Expenses
 
0.4

 
1.7

 
—

 
—

 
—

 
—

 
—

 
—

 
2.1

 
—

Operating Profit (Loss)
 
61.5

 
26.9

 
28.2

 
29.0

 
20.7

 
29.1

 
18.5

 
12.2

 
145.6

 
80.5

Income Tax Benefit (Expense)
 
(13.0
)
 
(5.4
)
 
(5.8
)
 
(5.6
)
 
(6.4
)
 
(9.1
)
 
(5.4
)
 
(3.3
)
 
(29.8
)
 
(24.2
)
Segment Net Operating Income
 
$
48.5

 
$
21.5

 
$
22.4

 
$
23.4

 
$
14.3

 
$
20.0

 
$
13.1

 
$
8.9

 
$
115.8

 
$
56.3

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
73.9
%
 
74.2
 %
 
77.2
%
 
76.2
 %
 
79.3
 %
 
75.8
 %
 
78.8
%
 
81.2
%
 
74.9
%
 
78.7
%
Current Year Catastrophe Losses and LAE Ratio
 
0.1

 
0.2

 
0.7

 
0.1

 
(0.3
)
 
0.7

 
1.1

 
0.8

 
0.2

 
0.5

Prior Years Non-catastrophe Losses and LAE Ratio
 
—

 
(0.2
)
 
1.3

 
(0.2
)
 
0.6

 
0.3

 
0.2

 
0.4

 
0.1

 
0.4

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
 
—

 
—

 
—

 
—

Total Incurred Loss and LAE Ratio
 
74.0

 
74.2

 
79.2

 
76.0

 
79.6

 
76.7

 
80.1

 
82.4

 
75.2

 
79.6

Insurance Expense Ratio
 
20.6

 
24.9

 
15.3

 
17.2

 
16.3

 
16.4

 
16.1

 
16.8

 
20.8

 
16.4

Combined Ratio
 
94.6
%
 
99.1
 %
 
94.5
%
 
93.2
 %
 
95.9
 %
 
93.1
 %
 
96.2
%
 
99.2
%
 
96.0
%
 
96.0
%
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
73.9
%
 
74.2
 %
 
77.2
%
 
76.2
 %
 
79.3
 %
 
75.8
 %
 
78.8
%
 
81.2
%
 
74.9
%
 
78.7
%
Insurance Expense Ratio
 
20.6

 
24.9

 
15.3

 
17.2

 
16.3

 
16.4

 
16.1

 
16.8

 
20.8

 
16.4

Underlying Combined Ratio
 
94.5
%
 
99.1
 %
 
92.5
%
 
93.4
 %
 
95.6
 %
 
92.2
 %
 
94.9
%
 
98.0
%
 
95.7
%
 
95.1
%
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio as Reported
 
94.6
%
 
99.1
 %
 
94.5
%
 
93.2
 %
 
95.9
 %
 
93.1
 %
 
96.2
%
 
99.2
%
 
96.0
%
 
96.0
%
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
0.1

 
0.2

 
0.7

 
0.1

 
(0.3
)
 
0.7

 
1.1

 
0.8

 
0.2

 
0.5

Prior Years Non-catastrophe Losses and LAE Ratio
 
—

 
(0.2
)
 
1.3

 
(0.2
)
 
0.6

 
0.3

 
0.2

 
0.4

 
0.1

 
0.4

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
 
—

 
—

 
—

 
—

Underlying Combined Ratio
 
94.5
%
 
99.1
 %
 
92.5
%
 
93.4
 %
 
95.6
 %
 
92.2
 %
 
94.9
%
 
98.0
%
 
95.7
%
 
95.1
%
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 19

Kemper Corporation
Specialty Property & Casualty Insurance Segment
Specialty Personal Automobile Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
618.5

 
$
679.1

 
$
325.4

 
$
304.9

 
$
249.8

 
$
259.8

 
$
237.5

 
$
245.2

 
$
1,927.9

 
$
992.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
660.5

 
$
655.3

 
$
307.5

 
$
266.2

 
$
257.8

 
$
246.5

 
$
233.6

 
$
216.4

 
$
1,889.5

 
$
954.3

Net Investment Income
 
19.1

 
17.2

 
8.8

 
8.4

 
7.9

 
9.1

 
7.3

 
8.5

 
53.5

 
32.8

Other Income
 
0.7

 
0.9

 
0.3

 
0.3

 
0.2

 
0.3

 
0.3

 
0.2

 
2.2

 
1.0

Total Revenues
 
680.3

 
673.4

 
316.6

 
274.9

 
265.9

 
255.9

 
241.2

 
225.1

 
1,945.2

 
988.1

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
492.0

 
485.6

 
237.8

 
202.8

 
204.6

 
185.5

 
183.9

 
176.4

 
1,418.2

 
750.4

Catastrophe Losses and LAE
 
0.7

 
1.3

 
1.7

 
0.2

 
(0.8
)
 
1.5

 
2.4

 
1.7

 
3.9

 
4.8

Prior Years:
 

 

 

 

 

 

 

 

 

 

Non-catastrophe Losses and LAE
 
2.4

 
(1.1
)
 
4.2

 
0.2

 
2.8

 
2.1

 
(1.0
)
 
(0.8
)
 
5.7

 
3.1

Catastrophe Losses and LAE
 
—

 
—

 
—

 
(0.2
)
 
—

 
(0.1
)
 
—

 
(0.1
)
 
(0.2
)
 
(0.2
)
Total Incurred Losses and LAE
 
495.1

 
485.8

 
243.7

 
203.0

 
206.6

 
189.0

 
185.3

 
177.2

 
1,427.6

 
758.1

Insurance Expenses
 
132.5

 
160.8

 
46.7

 
45.2

 
41.5

 
39.7

 
36.9

 
35.5

 
385.2

 
153.6

Other Expenses
 
0.4

 
1.6

 
—

 
—

 
—

 
—

 
—

 
—

 
2.0

 
—

Operating Profit (Loss)
 
52.3

 
25.2

 
26.2

 
26.7

 
17.8

 
27.2

 
19.0

 
12.4

 
130.4

 
76.4

Income Tax Benefit (Expense)
 
(10.9
)
 
(4.8
)
 
(5.4
)
 
(5.2
)
 
(5.5
)
 
(8.5
)
 
(5.7
)
 
(3.5
)
 
(26.3
)
 
(23.2
)
Total Product Line Net Operating Income (Loss)
 
$
41.4

 
$
20.4

 
$
20.8

 
$
21.5

 
$
12.3

 
$
18.7

 
$
13.3

 
$
8.9

 
$
104.1

 
$
53.2

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
74.5
%
 
74.1
 %
 
77.3
%
 
76.2
 %
 
79.3
 %
 
75.2
%
 
78.7
 %
 
81.5
 %
 
75.1
%
 
78.6
%
Current Year Catastrophe Losses and LAE Ratio
 
0.1

 
0.2

 
0.6

 
0.1

 
(0.3
)
 
0.6

 
1.0

 
0.8

 
0.2

 
0.5

Prior Years Non-catastrophe Losses and LAE Ratio
 
0.4

 
(0.2
)
 
1.4

 
0.1

 
1.1

 
0.9

 
(0.4
)
 
(0.4
)
 
0.3

 
0.3

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
—

 
—

 
—

Total Incurred Loss and LAE Ratio
 
75.0

 
74.1

 
79.3

 
76.3

 
80.1

 
76.7

 
79.3

 
81.9

 
75.6

 
79.4

Insurance Expense Ratio
 
20.1

 
24.5

 
15.2

 
17.0

 
16.1

 
16.1

 
15.8

 
16.4

 
20.4

 
16.1

Combined Ratio
 
95.2
%
 
98.6
 %
 
94.5
%
 
93.3
 %
 
96.2
 %
 
92.8
%
 
95.1
 %
 
98.3
 %
 
96.0
%
 
95.5
%
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
74.5
%
 
74.1
 %
 
77.3
%
 
76.2
 %
 
79.3
 %
 
75.2
%
 
78.7
 %
 
81.5
 %
 
75.1
%
 
78.6
%
Insurance Expense Ratio
 
20.1

 
24.5

 
15.2

 
17.0

 
16.1

 
16.1

 
15.8

 
16.4

 
20.4

 
16.1

Underlying Combined Ratio
 
94.7
%
 
98.6
 %
 
92.5
%
 
93.2
 %
 
95.4
 %
 
91.3
%
 
94.5
 %
 
97.9
 %
 
95.5
%
 
94.7
%
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
95.2
%
 
98.6
 %
 
94.5
%
 
93.3
 %
 
96.2
 %
 
92.8
%
 
95.1
 %
 
98.3
 %
 
96.0
%
 
95.5
%
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
0.1

 
0.2

 
0.6

 
0.1

 
(0.3
)
 
0.6

 
1.0

 
0.8

 
0.2

 
0.5

Prior Years Non-catastrophe Losses and LAE Ratio
 
0.4

 
(0.2
)
 
1.4

 
0.1

 
1.1

 
0.9

 
(0.4
)
 
(0.4
)
 
0.3

 
0.3

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
—

 
—

 
—

Underlying Combined Ratio
 
94.7
%
 
98.6
 %
 
92.5
%
 
93.2
 %
 
95.4
 %
 
91.3
%
 
94.5
 %
 
97.9
 %
 
95.5
%
 
94.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 20

Kemper Corporation
Specialty Property & Casualty Insurance Segment
Commercial Automobile Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
56.2

 
$
56.3

 
$
13.5

 
$
13.5

 
$
10.6

 
$
12.6

 
$
13.3

 
$
14.7

 
$
139.5

 
$
51.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
57.3

 
$
55.9

 
$
12.5

 
$
12.2

 
$
12.9

 
$
13.1

 
$
12.7

 
$
12.7

 
$
137.9

 
$
51.4

Net Investment Income
 
3.5

 
3.5

 
1.4

 
1.5

 
1.5

 
1.8

 
1.5

 
1.6

 
9.9

 
6.4

Other Income
 
0.1

 
—

 
0.1

 
—

 
—

 
0.1

 
—

 
—

 
0.2

 
0.1

Total Revenues
 
60.9

 
59.4

 
14.0

 
13.7

 
14.4

 
15.0

 
14.2

 
14.3

 
148.0

 
57.9

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
38.3

 
42.0

 
9.4

 
9.5

 
10.0

 
11.3

 
9.9

 
9.6

 
99.2

 
40.8

Catastrophe Losses and LAE
 
0.3

 
0.1

 
0.4

 
—

 
—

 
0.2

 
0.4

 
0.1

 
0.8

 
0.7

Prior Years:
 
 
 

 
 
 

 

 

 

 

 

 

Non-catastrophe Losses and LAE
 
(2.4
)
 
(0.5
)
 
(0.1
)
 
(0.7
)
 
(1.1
)
 
(1.3
)
 
1.6

 
1.8

 
(3.7
)
 
1.0

Catastrophe Losses and LAE
 
—

 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
 
—

 
—

 
(0.1
)
 
(0.1
)
Total Incurred Losses and LAE
 
36.2

 
41.6

 
9.7

 
8.7

 
8.9

 
10.1

 
11.9

 
11.5

 
96.2

 
42.4

Insurance Expenses
 
15.5

 
16.0

 
2.3

 
2.7

 
2.6

 
3.0

 
2.8

 
3.0

 
36.5

 
11.4

Other Expenses
 
—

 
0.1

 
—

 
—

 


 
—

 
—

 
—

 
0.1

 
—

Operating Profit (Loss)
 
9.2

 
1.7

 
2.0

 
2.3

 
2.9

 
1.9

 
(0.5
)
 
(0.2
)
 
15.2

 
4.1

Income Tax Benefit (Expense)
 
(2.1
)
 
(0.6
)
 
(0.4
)
 
(0.4
)
 
(0.9
)
 
(0.6
)
 
0.3

 
0.2

 
(3.5
)
 
(1.0
)
Total Product Line Net Operating Income (Loss)
 
$
7.1

 
$
1.1

 
$
1.6

 
$
1.9

 
$
2.0

 
$
1.3

 
$
(0.2
)
 
$
—

 
$
11.7

 
$
3.1

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
66.9
 %
 
75.1
 %
 
75.2
 %
 
77.8
 %
 
77.5
 %
 
86.3
 %
 
78.0
%
 
75.6
%
 
72.0
 %
 
79.4
 %
Current Year Catastrophe Losses and LAE Ratio
 
0.5

 
0.2

 
3.2

 
—

 
—

 
1.5

 
3.1

 
0.8

 
0.6

 
1.4

Prior Years Non-catastrophe Losses and LAE Ratio
 
(4.2
)
 
(0.9
)
 
(0.8
)
 
(5.7
)
 
(8.5
)
 
(9.9
)
 
12.6

 
14.2

 
(2.7
)
 
1.9

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
(0.8
)
 
—

 
(0.8
)
 
—

 
—

 
(0.1
)
 
(0.2
)
Total Incurred Loss and LAE Ratio
 
63.2

 
74.4

 
77.6

 
71.3

 
69.0

 
77.1

 
93.7

 
90.6

 
69.8

 
82.5

Insurance Expense Ratio
 
27.1

 
28.6

 
18.4

 
22.1

 
20.2

 
22.9

 
22.0

 
23.6

 
26.5

 
22.2

Combined Ratio
 
90.3
 %
 
103.0
 %
 
96.0
 %
 
93.4
 %
 
89.2
 %
 
100.0
 %
 
115.7
%
 
114.2
%
 
96.3
 %
 
104.7
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
66.9
 %
 
75.1
 %
 
75.2
 %
 
77.8
 %
 
77.5
 %
 
86.3
 %
 
78.0
%
 
75.6
%
 
72.0
 %
 
79.4
 %
Insurance Expense Ratio
 
27.1

 
28.6

 
18.4

 
22.1

 
20.2

 
22.9

 
22.0

 
23.6

 
26.5

 
22.2

Underlying Combined Ratio
 
94.0
 %
 
103.7
 %
 
93.6
 %
 
99.9
 %
 
97.7
 %
 
109.2
 %
 
100.0
%
 
99.2
%
 
98.5
 %
 
101.6
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
90.3
 %
 
103.0
 %
 
96.0
 %
 
93.4
 %
 
89.2
 %
 
100.0
 %
 
115.7
%
 
114.2
%
 
96.3
 %
 
104.7
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
0.5

 
0.2

 
3.2

 
—

 
—

 
1.5

 
3.1

 
0.8

 
0.6

 
1.4

Prior Years Non-catastrophe Losses and LAE Ratio
 
(4.2
)
 
(0.9
)
 
(0.8
)
 
(5.7
)
 
(8.5
)
 
(9.9
)
 
12.6

 
14.2

 
(2.7
)
 
1.9

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
(0.8
)
 
—

 
(0.8
)
 
—

 
—

 
(0.1
)
 
(0.2
)
Underlying Combined Ratio
 
94.0
 %
 
103.7
 %
 
93.6
 %
 
99.9
 %
 
97.7
 %
 
109.2
 %
 
100.0
%
 
99.2
%
 
98.5
 %
 
101.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 21

Kemper Corporation
Life & Health Insurance Segment
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
157.0

 
$
157.7

 
$
157.0

 
$
154.6

 
$
153.0

 
$
154.7

 
$
153.3

 
$
153.0

 
$
626.3

 
$
614.0

Net Investment Income
 
51.7

 
51.0

 
54.5

 
53.7

 
58.3

 
56.3

 
55.3

 
53.3

 
210.9

 
223.2

Other Income
 
1.1

 
1.2

 
0.9

 
0.8

 
0.7

 
0.7

 
0.6

 
0.6

 
4.0

 
2.6

Total Revenues
 
209.8

 
209.9

 
212.4

 
209.1

 
212.0

 
211.7

 
209.2

 
206.9

 
841.2

 
839.8

Policyholders’ Benefits and Incurred Losses and LAE
 
103.1

 
97.0

 
99.2

 
104.9

 
93.8

 
96.8

 
96.5

 
100.3

 
404.2

 
387.4

Insurance Expenses
 
88.4

 
79.4

 
79.4

 
73.9

 
78.9

 
78.5

 
81.1

 
73.7

 
321.1

 
312.2

Operating Profit
 
18.3

 
33.5

 
33.8

 
30.3

 
39.3

 
36.4

 
31.6

 
32.9

 
115.9

 
140.2

Income Tax Expense
 
(4.7
)
 
(6.4
)
 
(7.1
)
 
(6.2
)
 
(13.6
)
 
(12.7
)
 
(10.8
)
 
(11.2
)
 
(24.4
)
 
(48.3
)
Segment Net Operating Income
 
$
13.6

 
$
27.1

 
$
26.7

 
$
24.1

 
$
25.7

 
$
23.7

 
$
20.8

 
$
21.7

 
$
91.5

 
$
91.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
Future Policyholder Benefits
 
$
3,400.4

 
$
3,389.4

 
$
3,379.8

 
$
3,366.7

 
$
3,357.5

 
$
3,345.7

Incurred Losses and LAE Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
Life
 
130.5

 
134.3

 
137.7

 
142.4

 
140.0

 
141.6

Accident and Health
 
27.8

 
27.7

 
26.0

 
25.2

 
23.5

 
22.5

Property
 
4.4

 
4.5

 
3.8

 
4.1

 
4.1

 
7.3

Total Incurred Losses and LAE Reserves
 
162.7

 
166.5

 
167.5

 
171.7

 
167.6

 
171.4

Insurance Reserves
 
$
3,563.1

 
$
3,555.9

 
$
3,547.3

 
$
3,538.4

 
$
3,525.1

 
$
3,517.1


 


Page 22

Kemper Corporation
Life & Health Insurance Segment
Life Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
94.1

 
$
95.2

 
$
95.4

 
$
93.7

 
$
94.1

 
$
94.5

 
$
95.4

 
$
95.7

 
$
378.4

 
$
379.7

Net Investment Income
 
49.6

 
48.9

 
52.4

 
51.7

 
56.5

 
54.5

 
53.3

 
51.7

 
202.6

 
216.0

Other Income
 
1.0

 
0.9

 
0.9

 
0.7

 
0.7

 
0.6

 
0.6

 
0.5

 
3.5

 
2.4

Total Revenues
 
144.7

 
145.0

 
148.7

 
146.1

 
151.3

 
149.6

 
149.3

 
147.9

 
584.5

 
598.1

Policyholders’ Benefits and Incurred Losses and LAE
 
69.9

 
66.7

 
69.4

 
73.4

 
66.8

 
66.4

 
68.8

 
72.1

 
279.4

 
274.1

Insurance Expenses
 
57.3

 
51.8

 
51.2

 
47.4

 
51.7

 
53.0

 
54.8

 
48.4

 
207.7

 
207.9

Operating Profit
 
17.5

 
26.5

 
28.1

 
25.3

 
32.8

 
30.2

 
25.7

 
27.4

 
97.4

 
116.1

Income Tax Expense
 
(5.1
)
 
(4.5
)
 
(6.0
)
 
(5.1
)
 
(11.3
)
 
(10.5
)
 
(8.8
)
 
(9.3
)
 
(20.7
)
 
(39.9
)
Total Product Line Operating Income
 
$
12.4

 
$
22.0

 
$
22.1

 
$
20.2

 
$
21.5

 
$
19.7

 
$
16.9

 
$
18.1

 
$
76.7

 
$
76.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Kemper Corporation
Life & Health Insurance Segment
Accident & Health Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
45.5

 
$
44.9

 
$
43.8

 
$
43.3

 
$
41.1

 
$
42.0

 
$
39.5

 
$
39.1

 
$
177.5

 
$
161.7

Net Investment Income
 
1.5

 
1.5

 
1.6

 
1.5

 
1.2

 
1.3

 
1.4

 
1.3

 
6.1

 
5.2

Other Income
 
0.1

 
0.3

 
—

 
0.1

 
—

 
0.1

 
—

 
0.1

 
0.5

 
0.2

Total Revenues
 
47.1

 
46.7

 
45.4

 
44.9

 
42.3

 
43.4

 
40.9

 
40.5

 
184.1

 
167.1

Policyholders’ Benefits and Incurred Losses and LAE
 
26.1

 
23.5

 
24.1

 
25.2

 
22.8

 
22.9

 
21.8

 
21.2

 
98.9

 
88.7

Insurance Expenses
 
23.3

 
19.7

 
19.7

 
19.5

 
19.2

 
17.6

 
17.6

 
17.3

 
82.2

 
71.7

Operating Profit
 
(2.3
)
 
3.5

 
1.6

 
0.2

 
0.3

 
2.9

 
1.5

 
2.0

 
3.0

 
6.7

Income Tax Expense
 
0.8

 
(1.0
)
 
(0.3
)
 
(0.1
)
 
(0.1
)
 
(1.2
)
 
(0.5
)
 
(0.7
)
 
(0.6
)
 
(2.5
)
Total Product Line Net Operating Income
 
$
(1.5
)
 
$
2.5

 
$
1.3

 
$
0.1

 
$
0.2

 
$
1.7

 
$
1.0

 
$
1.3

 
$
2.4

 
$
4.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Page 23

Kemper Corporation
Life & Health Insurance Segment
Property Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
17.4

 
$
17.6

 
$
17.8

 
$
17.6

 
$
17.8

 
$
18.2

 
$
18.4

 
$
18.2

 
$
70.4

 
$
72.6

Net Investment Income
 
0.6

 
0.6

 
0.5

 
0.5

 
0.6

 
0.5

 
0.6

 
0.3

 
2.2

 
2.0

Total Revenues
 
18.0

 
18.2

 
18.3

 
18.1

 
18.4

 
18.7

 
19.0

 
18.5

 
72.6

 
74.6

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
5.0

 
5.9

 
4.5

 
5.1

 
4.4

 
3.9

 
4.8

 
4.7

 
20.5

 
17.8

Catastrophe Losses and LAE
 
2.3

 
0.4

 
1.1

 
0.2

 
—

 
3.3

 
0.8

 
1.8

 
4.0

 
5.9

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(0.3
)
 
0.6

 
0.1

 
0.9

 
—

 
0.1

 
0.1

 
0.2

 
1.3

 
0.4

Catastrophe Losses and LAE
 
0.1

 
(0.1
)
 
—

 
0.1

 
(0.2
)
 
0.2

 
0.2

 
0.3

 
0.1

 
0.5

Total Incurred Losses and LAE
 
7.1

 
6.8

 
5.7

 
6.3

 
4.2

 
7.5

 
5.9

 
7.0

 
25.9

 
24.6

Insurance Expenses
 
7.8

 
7.9

 
8.5

 
7.0

 
8.0

 
7.9

 
8.7

 
8.0

 
31.2

 
32.6

Operating Profit
 
3.1

 
3.5

 
4.1

 
4.8

 
6.2

 
3.3

 
4.4

 
3.5

 
15.5

 
17.4

Income Tax Expense
 
(0.4
)
 
(0.9
)
 
(0.8
)
 
(1.0
)
 
(2.2
)
 
(1.0
)
 
(1.5
)
 
(1.2
)
 
(3.1
)
 
(5.9
)
Total Product Line Net Operating Income
 
$
2.7

 
$
2.6

 
$
3.3

 
$
3.8

 
$
4.0

 
$
2.3

 
$
2.9

 
$
2.3

 
$
12.4

 
$
11.5

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
28.7
 %
 
33.5
 %
 
25.2
%
 
29.0
%
 
24.7
 %
 
21.5
%
 
26.2
%
 
25.9
%
 
29.2
%
 
24.5
%
Current Year Catastrophe Losses and LAE Ratio
 
13.2

 
2.3

 
6.2

 
1.1

 
—

 
18.1

 
4.3

 
9.9

 
5.7

 
8.1

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.7
)
 
3.4

 
0.6

 
5.1

 
—

 
0.5

 
0.5

 
1.1

 
1.8

 
0.6

Prior Years Catastrophe Losses and LAE Ratio
 
0.6

 
(0.6
)
 
—

 
0.6

 
(1.1
)
 
1.1

 
1.1

 
1.6

 
0.1

 
0.7

Total Incurred Loss and LAE Ratio
 
40.8

 
38.6

 
32.0

 
35.8

 
23.6

 
41.2

 
32.1

 
38.5

 
36.8

 
33.9

Insurance Expense Ratio
 
44.8

 
44.9

 
47.8

 
39.8

 
44.9

 
43.4

 
47.3

 
44.0

 
44.3

 
44.9

Combined Ratio
 
85.6
 %
 
83.5
 %
 
79.8
%
 
75.6
%
 
68.5
 %
 
84.6
%
 
79.4
%
 
82.5
%
 
81.1
%
 
78.8
%
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
28.7
 %
 
33.5
 %
 
25.2
%
 
29.0
%
 
24.7
 %
 
21.5
%
 
26.2
%
 
25.9
%
 
29.2
%
 
24.5
%
Insurance Expense Ratio
 
44.8

 
44.9

 
47.8

 
39.8

 
44.9

 
43.4

 
47.3

 
44.0

 
44.3

 
44.9

Underlying Combined Ratio
 
73.5
 %
 
78.4
 %
 
73.0
%
 
68.8
%
 
69.6
 %
 
64.9
%
 
73.5
%
 
69.9
%
 
73.5
%
 
69.4
%
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
85.6
 %
 
83.5
 %
 
79.8
%
 
75.6
%
 
68.5
 %
 
84.6
%
 
79.4
%
 
82.5
%
 
81.1
%
 
78.8
%
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
13.2

 
2.3

 
6.2

 
1.1

 
—

 
18.1

 
4.3

 
9.9

 
5.7

 
8.1

Prior Years Non-catastrophe Losses and LAE Ratio
 
(1.7
)
 
3.4

 
0.6

 
5.1

 
—

 
0.5

 
0.5

 
1.1

 
1.8

 
0.6

Prior Years Catastrophe Losses and LAE Ratio
 
0.6

 
(0.6
)
 
—

 
0.6

 
(1.1
)
 
1.1

 
1.1

 
1.6

 
0.1

 
0.7

Underlying Combined Ratio
 
73.5
 %
 
78.4
 %
 
73.0
%
 
68.8
%
 
69.6
 %
 
64.9
%
 
73.5
%
 
69.9
%
 
73.5
%
 
69.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 24

Kemper Corporation
Insurance Expenses and Interest and Other Expenses
(Dollars in Millions)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Insurance Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
 
$
158.7

 
$
166.6

 
$
123.1

 
$
110.3

 
$
105.1

 
$
109.6

 
$
109.0

 
$
101.9

 
$
558.7

 
$
425.6

General Expenses
 
116.3

 
164.0

 
42.9

 
45.7

 
46.0

 
50.2

 
48.3

 
49.6

 
368.9

 
194.1

Taxes, Licenses and Fees
 
19.8

 
22.8

 
16.1

 
14.5

 
12.4

 
13.8

 
13.4

 
13.2

 
73.2

 
52.8

Total Costs Incurred
 
294.8

 
353.4

 
182.1

 
170.5

 
163.5

 
173.6

 
170.7

 
164.7

 
1,000.8

 
672.5

Policy Acquisition Costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred
 
(122.8
)
 
(156.1
)
 
(106.1
)
 
(96.5
)
 
(89.3
)
 
(91.6
)
 
(87.2
)
 
(83.5
)
 
(481.5
)
 
(351.6
)
Amortized
 
99.4

 
98.2

 
93.7

 
85.8

 
83.7

 
80.4

 
78.6

 
75.6

 
377.1

 
318.3

Net Policy Acquisition Costs Deferred
 
(23.4
)
 
(57.9
)
 
(12.4
)
 
(10.7
)
 
(5.6
)
 
(11.2
)
 
(8.6
)
 
(7.9
)
 
(104.4
)
 
(33.3
)
Amortization of Insurance in Force
 
1.8

 
0.5

 
1.5

 
0.3

 
1.2

 
1.3

 
1.4

 
1.2

 
4.1

 
5.1

Insurance Expenses
 
273.2

 
296.0

 
171.2

 
160.1

 
159.1

 
163.7

 
163.5

 
158.0

 
900.5

 
644.3

Interest and Other Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Expense
 
14.1

 
13.4

 
8.0

 
7.9

 
8.0

 
7.8

 
8.3

 
10.8

 
43.4

 
34.9

Other Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on Cash Flow Hedge
 
—

 
(0.2
)
 
—

 
0.2

 
—

 
—

 
1.1

 
—

 
—

 
1.1

Acquisition Related Transaction, Integration and Other Costs
 
6.7

 
28.2

 
3.6

 
6.2

 
—

 
—

 
—

 
—

 
44.7

 
—

Other
 
21.8

 
20.3

 
14.1

 
14.7

 
13.5

 
10.4

 
12.0

 
8.7

 
70.9

 
44.6

Other Expenses
 
28.5

 
48.3

 
17.7

 
21.1

 
13.5

 
10.4

 
13.1

 
8.7

 
115.6

 
45.7

Interest and Other Expenses
 
42.6

 
61.7

 
25.7

 
29.0

 
21.5

 
18.2

 
21.4

 
19.5

 
159.0

 
80.6

Total Expenses
 
$
315.8

 
$
357.7

 
$
196.9

 
$
189.1

 
$
180.6

 
$
181.9

 
$
184.9

 
$
177.5

 
$
1,059.5

 
$
724.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 25

Kemper Corporation
Details of Investment Performance
(Dollars in Millions)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Net Investment Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest on Fixed Income Securities
 
$
71.5

 
$
70.6

 
$
64.4

 
$
62.4

 
$
62.6

 
$
61.8

 
$
62.1

 
$
60.1

 
$
268.9

 
$
246.6

Dividends on Equity Securities Excluding Alternative Investments
 
6.6

 
2.5

 
2.6

 
1.9

 
2.3

 
2.6

 
2.3

 
2.1

 
13.6

 
9.3

Alternative Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Method Limited Liability Investments
 
2.9

 
(0.4
)
 
1.4

 
7.1

 
2.9

 
11.1

 
4.0

 
6.8

 
11.0

 
24.8

Fair Value Option Investments
 
—

 
—

 
—

 
—

 
0.3

 
0.5

 
(0.6
)
 
1.1

 
—

 
1.3

Limited Liability Investments Included in Equity Securities
 
3.6

 
13.7

 
5.2

 
3.9

 
9.9

 
5.9

 
5.4

 
7.4

 
26.4

 
28.6

Total Alternative Investments
 
6.5

 
13.3

 
6.6

 
11.0

 
13.1

 
17.5

 
8.8

 
15.3

 
37.4

 
54.7

Short-term Investments
 
2.7

 
2.3

 
1.2

 
0.8

 
0.6

 
0.5

 
0.2

 
0.3

 
7.0

 
1.6

Real Estate
 
2.4

 
2.4

 
2.4

 
2.4

 
2.4

 
2.6

 
2.8

 
2.9

 
9.6

 
10.7

Loans to Policyholders
 
6.0

 
5.5

 
5.5

 
5.5

 
5.9

 
4.9

 
5.3

 
5.5

 
22.5

 
21.6

Other
 
0.3

 
0.2

 
0.4

 
—

 
0.3

 
0.1

 
0.1

 
—

 
0.9

 
0.5

Total Investment Income
 
96.0

 
96.8

 
83.1

 
84.0

 
87.2

 
90.0

 
81.6

 
86.2

 
359.9

 
345.0

Investment Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
2.2

 
2.6

 
2.6

 
2.3

 
2.8

 
2.6

 
2.5

 
2.6

 
9.7

 
10.5

Other Investment Expenses
 
2.5

 
2.2

 
2.1

 
2.5

 
1.8

 
1.5

 
2.0

 
2.0

 
9.3

 
7.3

Total Investment Expenses
 
4.7

 
4.8

 
4.7

 
4.8

 
4.6

 
4.1

 
4.5

 
4.6

 
19.0

 
17.8

Net Investment Income
 
$
91.3

 
$
92.0

 
$
78.4

 
$
79.2

 
$
82.6

 
$
85.9

 
$
77.1

 
$
81.6

 
$
340.9

 
$
327.2

Net Realized Gains on Sales of Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains on Sales
 
$
14.1

 
$
5.9

 
$
1.2

 
$
4.1

 
$
1.1

 
$
2.4

 
$
3.5

 
$
1.4

 
$
25.3

 
$
8.4

Losses on Sales
 
(4.6
)
 
(2.5
)
 
(1.9
)
 
(2.1
)
 
(0.5
)
 
—

 
(0.2
)
 
(0.2
)
 
(11.1
)
 
(0.9
)
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains on Sales
 
6.9

 
0.2

 
4.6

 
0.6

 
10.9

 
3.9

 
18.3

 
8.9

 
12.3

 
42.0

Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains on Sales
 
—

 
—

 
—

 
—

 
—

 
1.6

 
4.7

 
0.1

 
—

 
6.4

Other Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains on Sales
 
—

 
—

 
—

 
—

 
0.1

 
—

 
—

 
—

 
—

 
0.1

Losses on Sales
 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
 
(0.1
)
Trading Securities Net Gains (Losses)
 
—

 
—

 
—

 
—

 
(0.1
)
 
0.2

 
0.2

 
0.3

 
—

 
0.6

Net Realized Gains on Sales of Investments
 
$
16.4

 
$
3.6

 
$
3.8

 
$
2.6

 
$
11.5

 
$
8.1

 
$
26.4

 
$
10.5

 
$
26.4

 
$
56.5

Net Impairment Losses Recognized in Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Maturities
 
$
(1.5
)
 
$
(0.2
)
 
$
—

 
$
(0.3
)
 
$
(2.3
)
 
$
(2.9
)
 
$
(2.2
)
 
$
(4.7
)
 
$
(2.0
)
 
$
(12.1
)
Equity Securities
 
(0.7
)
 
(1.6
)
 
—

 
(0.2
)
 
(1.5
)
 
—

 
(0.4
)
 
(0.3
)
 
(2.5
)
 
(2.2
)
Net Impairment Losses Recognized in Earnings
 
$
(2.2
)
 
$
(1.8
)
 
$
—

 
$
(0.5
)
 
$
(3.8
)
 
$
(2.9
)
 
$
(2.6
)
 
$
(5.0
)
 
$
(4.5
)
 
$
(14.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    

Page 26

Kemper Corporation
Details of Invested Assets
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2018
 
Dec 31, 2017
 
Dec 31, 2016
 
 
Carrying
Value
 
Percent
of Total1
 
Carrying
Value
 
Percent
of Total1
 
Carrying
Value
 
Percent
of Total1
Fixed Maturities Reported at Fair Value:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and Government Agencies and Authorities
 
$
865.7

 
10.7
%
 
$
556.1

 
8.2
%
 
$
336.3

 
5.1
%
States and Political Subdivisions
 
1,619.1

 
20.1

 
1,701.8

 
25.0

 
1,714.9

 
26.0

Foreign Governments
 
5.9

 
0.1

 
3.2

 
—

 
3.4

 
0.1

Corporate Securities:
 
 
 

 
 
 

 
 
 

Bonds and Notes
 
3,393.8

 
42.1

 
2,980.6

 
43.8

 
2,944.8

 
44.6

Redeemable Preferred Stocks
 
—

 
—

 
0.1

 
—

 
0.6

 
—

Collaterized Loan Obligations
 
524.0

 
6.5

 
139.8

 
2.1

 
122.8

 
1.9

Other Mortgage- and Asset-backed
 
15.7

 
0.2

 
1.1

 
—

 
2.1

 
—

Total Fixed Maturities Reported at Fair Value
 
6,424.2

 
79.6

 
5,382.7

 
79.1

 
5,124.9

 
77.7

Equity Securities Reported at Fair Value:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stocks
 
54.2

 
0.7

 
78.8

 
1.2

 
82.5

 
1.2

Common Stocks
 
10.9

 
0.1

 
24.8

 
0.4

 
45.2

 
0.7

Other Equity Interests:
 
 
 
 
 
 
 
 
 
 
 
 
Exchange Traded Funds
 
427.3

 
5.3

 
219.5

 
3.2

 
151.1

 
2.3

Limited Liability Companies and Limited Partnerships
 
192.0

 
2.4

 
202.9

 
3.0

 
202.9

 
3.1

Total Equity Securities Reported at Fair Value
 
684.4

 
8.5

 
526.0

 
7.7

 
481.7

 
7.3

Equity Securities Reported at Modified Cost:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stocks
 
9.2

 
0.1

 
—

 
—

 
—

 
—

Common Stocks
 
8.8

 
0.1

 
—

 
—

 
—

 
—

Limited Liability Companies and Limited Partnerships
 
23.5

 
0.3

 
—

 
—

 
—

 
—

Total Equity Securities Reported at Modified Cost
 
41.5

 
0.5

 
—

 
—

 
—

 
—

Convertible Securities at Fair Value
 
31.5

 
0.4

 
—

 
—

 
—

 
—

Equity Method Limited Liability Investments
 
187.0

 
2.3

 
161.0

 
2.4

 
175.9

 
2.7

Fair Value Option Investments
 
—

 
—

 
77.5

 
1.1

 
111.4

 
1.7

Short-term Investments at Cost which Approximates Fair Value
 
286.1

 
3.5

 
235.5

 
3.5

 
273.7

 
4.1

Other Investments:
 
 
 
 
 
 
 
 
 
 
 
 
Loans to Policyholders at Unpaid Principal
 
300.6

 
3.7

 
298.6

 
4.4

 
294.2

 
4.5

Real Estate at Depreciated Cost
 
114.2

 
1.4

 
116.8

 
1.7

 
140.2

 
2.1

Trading Securities at Fair Value
 
—

 
—

 
6.7

 
0.1

 
5.3

 
0.1

Other
 
—

 
—

 
0.1

 
—

 
0.2

 
—

Total Other Investments
 
414.8

 
5.1

 
422.2

 
6.2

 
439.9

 
6.7

Total Investments
 
$
8,069.5

 
100.0
%
 
$
6,804.9

 
100.0
%
 
$
6,607.5

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Sum of percentages for individual lines may not equal subtotals and grand total due to rounding.
 
 
 
 
 
 

Page 27

Kemper Corporation
Details of Invested Assets (continued)
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2018
 
Dec 31, 2017
 
Dec 31, 2016
 
 
Carrying
Value
 
Percent
of Total1
 
Carrying
Value
 
Percent
of Total1
 
Carrying
Value
 
Percent
of Total1
S&P Equivalent Rating for Fixed Maturities
 
 
 
 
 
 
 
 
 
 
 
 
AAA, AA, A
 
$
4,156.6

 
64.7
%
 
$
3,481.8

 
64.7
%
 
$
3,280.4

 
64.0
%
BBB
 
1,752.6

 
27.3

 
1,335.2

 
24.8

 
1,338.2

 
26.1

BB, B
 
333.7

 
5.2

 
357.2

 
6.6

 
321.6

 
6.3

CCC or Lower
 
181.3

 
2.8

 
208.5

 
3.9

 
184.7

 
3.6

Total Investments in Fixed Maturities
 
$
6,424.2

 
100.0
%
 
$
5,382.7

 
100.0
%
 
$
5,124.9

 
100.0
%
Duration (in Years)
 
 
 
 
 
 
 
 
 
 
 
 
Total Investments in Fixed Maturities
 
6.2

 
 
 
6.2

 
 
 
6.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Sum of percentages for individual lines may not equal subtotals and grand total due to rounding.
 
 
 
 
 
 


Page 28

Kemper Corporation
Investment Concentration
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2018
 
Dec 31, 2017
 
Dec 31, 2016
Fair Value of Non-governmental Fixed Maturities by Industry
 
Amount
 
Percent
of Total
Investments
 
Amount
 
Percent
of Total
Investments
 
Amount
 
Percent
of Total
Investments
Manufacturing
 
$
1,270.0

 
15.7
%
 
$
1,168.8

 
17.2
%
 
$
1,227.8

 
18.6
%
Finance, Insurance and Real Estate
 
1,269.3

 
15.7

 
780.2

 
11.5

 
742.6

 
11.2

Services
 
516.4

 
6.4

 
453.3

 
6.7

 
391.6

 
5.9

Transportation, Communication and Utilities
 
449.0

 
5.6

 
353.7

 
5.2

 
364.1

 
5.5

Mining
 
158.6

 
2.0

 
163.5

 
2.4

 
157.2

 
2.4

Retail Trade
 
164.8

 
2.0

 
102.6

 
1.5

 
101.9

 
1.5

Wholesale Trade
 
78.4

 
1.0

 
81.3

 
1.2

 
69.2

 
1.0

Agriculture, Forestry and Fishing
 
13.7

 
0.2

 
14.5

 
0.2

 
14.4

 
0.2

Other
 
13.3

 
0.2

 
3.7

 
0.1

 
1.5

 
—

Total Fair Value of Non-governmental Fixed Maturities
 
$
3,933.5

 
48.8
%
 
$
3,121.6

 
46.0
%
 
$
3,070.3

 
46.3
%
 
 
 
 
 
Dec 31, 2018
Ten Largest Investment Exposures 1
 
Fair
Value
 
Percent
of Total
Investments
Fixed Maturities:
 
 
 
 
States including their Political Subdivisions:
 
 
 
 
Texas
 
$
132.9

 
1.6
%
Georgia
 
89.1

 
1.1

Michigan
 
81.7

 
1.0

Colorado
 
80.8

 
1.0

Louisiana
 
71.7

 
0.9

Virginia
 
62.9

 
0.8

California
 
62.1

 
0.8

Washington
 
58.1

 
0.7

Equity Securities at Fair Value—Other Equity Interests:
 
 
 
 
Vanguard World Stock ETF
 
77.6

 
1.0

iShares® Core MSCI Total International Stock ETF
 
68.9

 
0.9

Total
 
$
785.8

 
9.8
%
 
1 
Excluding Investments in U.S. Government and Government Agencies and Authorities at December 31, 2018.

 


Page 29

Kemper Corporation
Municipal Bond Securities
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2018
 
 
State
General
Obligation
 
Political
Subdivision
General
Obligation
 
Revenue
 
Total Fair
Value
 
Percent
of Total
Muni Bond1
 
Percent
of Total
Investments1
Texas
 
$
30.2

 
$
17.2

 
$
85.5

 
$
132.9

 
8.2
%
 
1.6
%
Georgia
 
55.4

 
5.1

 
28.6

 
89.1

 
5.5

 
1.1

Michigan
 
38.1

 
—

 
43.6

 
81.7

 
5.0

 
1.0

Colorado
 
—

 
14.6

 
66.2

 
80.8

 
5.0

 
1.0

Louisiana
 
44.4

 
8.0

 
19.3

 
71.7

 
4.4

 
0.9

Virginia
 
26.3

 
19.1

 
17.5

 
62.9

 
3.9

 
0.8

California
 
6.9

 
9.4

 
45.8

 
62.1

 
3.8

 
0.8

Washington
 
14.3

 
0.3

 
43.6

 
58.2

 
3.6

 
0.7

New York
 
6.2

 
2.6

 
45.3

 
54.1

 
3.3

 
0.7

Ohio
 
6.0

 
—

 
42.9

 
48.9

 
3.0

 
0.6

Massachusetts
 
2.6

 
1.5

 
44.1

 
48.2

 
3.0

 
0.6

Florida
 
28.1

 
—

 
13.4

 
41.5

 
2.6

 
0.5

Pennsylvania
 
11.1

 
2.5

 
27.6

 
41.2

 
2.5

 
0.5

Oregon
 
36.2

 
—

 
3.4

 
39.6

 
2.4

 
0.5

Wisconsin
 
23.9

 
7.0

 
6.2

 
37.1

 
2.3

 
0.5

Indiana
 
—

 
1.5

 
34.7

 
36.2

 
2.2

 
0.4

Utah
 
0.7

 
—

 
35.1

 
35.8

 
2.2

 
0.4

Minnesota
 
—

 
0.4

 
30.8

 
31.2

 
1.9

 
0.4

Maryland
 
2.6

 
20.5

 
6.3

 
29.4

 
1.8

 
0.4

District Of Columbia
 
—

 
4.8

 
23.8

 
28.6

 
1.8

 
0.4

New Mexico
 
—

 
—

 
28.4

 
28.4

 
1.8

 
0.4

Nevada
 
20.2

 
7.9

 
—

 
28.1

 
1.7

 
0.3

North Carolina
 
0.9

 
2.5

 
23.9

 
27.3

 
1.7

 
0.3

South Carolina
 
18.1

 
2.9

 
5.3

 
26.3

 
1.6

 
0.3

New Jersey
 
—

 
—

 
24.7

 
24.7

 
1.5

 
0.3

Iowa
 
—

 
—

 
24.3

 
24.3

 
1.5

 
0.3

Arizona
 
—

 
0.8

 
22.7

 
23.5

 
1.5

 
0.3

Illinois
 
—

 
—

 
23.4

 
23.4

 
1.4

 
0.3

Connecticut
 
22.9

 
—

 
—

 
22.9

 
1.4

 
0.3

Arkansas
 
22.2

 
—

 
—

 
22.2

 
1.4

 
0.3

Missouri
 
—

 
—

 
20.3

 
20.3

 
1.3

 
0.3

Rhode Island
 
4.7

 
—

 
15.5

 
20.2

 
1.2

 
0.3

Delaware
 
10.5

 
—

 
9.7

 
20.2

 
1.2

 
0.3

Hawaii
 
20.1

 
—

 
—

 
20.1

 
1.2

 
0.2

Tennessee
 
5.0

 
7.4

 
7.1

 
19.5

 
1.2

 
0.2

Alaska
 
1.8

 
2.9

 
14.6

 
19.3

 
1.2

 
0.2

Nebraska
 
—

 
7.1

 
11.6

 
18.7

 
1.2

 
0.2

Mississippi
 
15.8

 
—

 
1.8

 
17.6

 
1.1

 
0.2

Kentucky
 
—

 
—

 
15.8

 
15.8

 
1.0

 
0.2

All Other States
 
4.3

 
2.1

 
79.0

 
85.4

 
5.3

 
1.1

Total
 
$
479.5

 
$
148.1

 
$
991.8

 
$
1,619.4

 
100.0
%
 
20.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Sum of percentages for individual lines may not equal total due to rounding.
 
 
 
 
 
 

Page 30

Kemper Corporation
Investments in Limited Liability
Companies and Limited Partnerships
(Dollars in Millions)
(Unaudited)
 
 
Unfunded
Commitment
 
Reported Value
Asset Class
 
Dec 31,
2018
 
Dec 31,
2018
 
Dec 31,
2017
Reported as Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings:
 
 
 
 
 
 
Mezzanine Debt
 
$
71.3

 
$
99.6

 
$
73.0

Senior Debt
 
22.4

 
15.4

 
4.8

Distressed Debt
 
—

 
34.5

 
47.5

Secondary Transactions
 
18.7

 
21.2

 
20.6

Leveraged Buyout
 
—

 
4.2

 
3.3

Growth Equity
 
—

 
5.4

 
5.7

Other
 
—

 
6.7

 
6.1

Total Equity Method Limited Liability Investments
 
112.4

 
187.0

 
161.0

Reported as Other Equity Interests at Fair Value:
 
 
 
 
 
 
Mezzanine Debt
 
93.1

 
111.7

 
102.2

Senior Debt
 
33.4

 
34.3

 
35.5

Distressed Debt
 
2.2

 
14.5

 
16.6

Secondary Transactions
 
10.3

 
6.7

 
8.9

Hedge Funds
 
—

 
14.7

 
—

Leveraged Buyout
 
2.9

 
4.2

 
6.3

Real Estate
 
—

 
—

 
—

Other
 
6.3

 
5.9

 
33.4

Total Reported as Other Equity Interests at Fair Value
 
148.2

 
192.0

 
202.9

Reported as Other Equity Interests at Modified Cost:
 
 
 
 
 
 
Mezzanine Debt
 
—

 
1.5

 
—

Other
 
0.1

 
22.1

 
—

Total Reported as Other Equity Interests at Modified Cost
 
0.1

 
23.6

 
—

Reported as Fair Value Option Investments:
 
 
 
 
 
 
Hedge Funds
 
—

 
—

 
77.5

Total Investments in Limited Liability Companies and Limited Partnerships
 
$
260.7

 
$
402.6

 
$
441.4



Page 31

Kemper Corporation
Definitions of Non-GAAP Financial Measures
The Company believes that investors’ understanding of Kemper’s performance is enhanced by the disclosure of the following non-GAAP financial measures. The methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities, is a ratio that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the after-tax impact of net unrealized gains on fixed income securities by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. The Company uses the trends in book value per share, excluding the after-tax impact of net unrealized gains on fixed income securities in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods. The Company believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are not influenced by management. The Company believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers. 
Book Value Per Share Excluding Goodwill, is a ratio that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the recorded Goodwill asset by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. Book Value Per Share Excluding Goodwill, also referred to as Tangible Book Value Per Share, is a common measure used by analysts and investors to compare similar companies.
Adjusted Consolidated Net Operating Income (Loss) is an after-tax, non-GAAP financial measure and is computed by excluding from Income (Loss) from Continuing Operations the after-tax impact of:
1) Net Realized Gains on Sales of Investments;
2) Net Impairment Losses Recognized in Earnings related to investments;
3) Income (Loss) from Change in Fair Value of Equity and Convertible Securities;
4) Acquisition Related Transaction, Integration and Other Costs;
5) Loss from Early Extinguishment of Debt; and
6) Significant non-recurring or infrequent items that may not be indicative of ongoing operations.
Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years and (b) there has been no similar charge or gain within the prior two years. The most directly comparable GAAP financial measure is Income (Loss) from Continuing Operations.
The Company believes that Adjusted Consolidated Net Operating Income (Loss) provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Net Realized Gains on Sales of Investments, Net Impairment Losses Recognized in Earnings related to investments, and Income (Loss) from Change in Fair Value of Equity and Convertible Securities included in the Company’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the insurance underwriting process. Acquisition Related Transaction, Integration and Other Costs may vary significantly between periods and are generally driven by the timing of acquisitions and business decisions which are unrelated to the insurance underwriting process. Loss from Early Extinguishment of Debt is driven by the Company’s financing and refinancing decisions and capital needs, as well as, external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.

Page 32

Kemper Corporation
Definitions of Non-GAAP Financial Measures (continued)
A reconciliation of Income (Loss) from Continuing Operations to Adjusted Consolidated Net Operating Income is presented below:
 
 
Three Months Ended
 
Year Ended
Dollars in Millions (Unaudited)
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Income (Loss) from Continuing Operations
 
$
5.0

 
$
92.3

 
$
37.5

 
$
53.6

 
$
35.9

 
$
47.8

 
$
36.6

 
$
(0.4
)
 
$
188.4

 
$
119.9

Less Net Income (Loss) From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
(60.4
)
 
8.7

 
0.3

 
0.6

 
—

 
—

 
—

 
—

 
(50.8
)
 
—

Net Realized Gains on Sales of Investments
 
13.0

 
2.8

 
3.0

 
2.1

 
7.4

 
5.3

 
17.2

 
6.8

 
20.9

 
36.7

Net Impairment Losses Recognized in Earnings
 
(1.8
)
 
(1.4
)
 
—

 
(0.4
)
 
(2.5
)
 
(1.9
)
 
(1.6
)
 
(3.3
)
 
(3.6
)
 
(9.3
)
Acquisition Related Transaction and Integration Costs
 
(5.7
)
 
(22.3
)
 
(2.3
)
 
(6.2
)
 
—

 
—

 
—

 
—

 
(36.5
)
 
—

Adjusted Consolidated Net Operating Income (Loss)
 
$
59.9

 
$
104.5

 
$
36.5

 
$
57.5

 
$
31.0

 
$
44.4

 
$
21.0

 
$
(3.9
)
 
$
258.4

 
$
92.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Consolidated Net Operating Income (Loss) Per Unrestricted Share is a non-GAAP financial measure. It is computed by dividing Adjusted Consolidated Net Operating Income (Loss) by the weighted average unrestricted shares outstanding. The most directly comparable GAAP financial measure is Income (Loss) from Continuing Operations Per Unrestricted Share‐basic. A reconciliation of Income (Loss) from Continuing Operations Per Unrestricted Share-basic to Adjusted Consolidated Net Operating Income (Loss) Per Unrestricted Share-basic is presented below:
 
 
Three Months Ended
 
Year Ended
(Unaudited)
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
Income (Loss) from Continuing Operations Per Unrestricted Share
 
$
0.08

 
$
1.42

 
$
0.73

 
$
1.03

 
$
0.69

 
$
0.92

 
$
0.71

 
$
(0.01
)
 
$
3.22

 
$
2.32

Less Net Income (Loss) Per Unrestricted Share From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
(0.93
)
 
0.13

 
0.01

 
0.01

 
—

 
—

 
—

 
—

 
(0.87
)
 
—

Net Realized Gains on Sales of Investments
 
0.20

 
0.04

 
0.06

 
0.04

 
0.14

 
0.10

 
0.33

 
0.13

 
0.36

 
0.71

Net Impairment Losses Recognized in Earnings
 
(0.02
)
 
(0.02
)
 
—

 
(0.01
)
 
(0.05
)
 
(0.03
)
 
(0.03
)
 
(0.06
)
 
(0.06
)
 
(0.18
)
Acquisition Related Transaction and Integration Costs
 
(0.09
)
 
(0.34
)
 
(0.04
)
 
(0.12
)
 
—

 
—

 
—

 
—

 
(0.63
)
 
—

Adjusted Consolidated Net Operating Income (Loss) Per Unrestricted Share
 
$
0.92

 
$
1.61

 
$
0.70

 
$
1.11

 
$
0.60

 
$
0.85

 
$
0.41

 
$
(0.08
)
 
$
4.42

 
$
1.79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Underlying Combined Ratio is a non-GAAP financial measure. It is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio. The most directly comparable GAAP financial measure is the Combined Ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses and loss and LAE reserve development from prior years, with the Insurance Expense Ratio. The Company believes the underlying combined ratio is useful to investors and is used by management to reveal the trends in the Company’s property and casualty insurance businesses that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses cause loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior-year reserve developments are caused by unexpected loss development on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing on the performance of our insurance products in the current period. The Company believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing the Company’s underwriting performance. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business. 

Page 33

Kemper Corporation
As Adjusted for Acquisition Non-GAAP Financial Measure



As Adjusted for Acquisition amounts are non-GAAP financial measures. For the three months ended December 31, 2018, as adjusted amounts are computed by subtracting the impact of purchase accounting adjustments from the comparable consolidated GAAP financial measure reported by Kemper. For the year ended ended December 31, 2018, as adjusted amounts are computed by adding the historical results of Infinity, the acquired company, for the six months ended June 30, 2018 and subtracting the impact of purchase accounting adjustments from the comparable consolidated GAAP financial measure reported by Kemper. For the three months and year ended December 31, 2017, as adjusted amounts are computed by adding the historical results of Infinity reported on a GAAP basis to the comparable consolidated GAAP financial measure reported by Kemper. The Company believes computing and presenting results on an adjusted basis are useful to investors and are used by management to provide meaningful and comparable year-over-year comparisons.


Page 34

Kemper Corporation
As Adjusted for Acquisition - Consolidated Selected Financial Information
(Dollars in Millions)
(Unaudited)

 
Three Months Ended
 
Year Ended
 
Dec 31,
2018
 
Dec 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
 
As Reported
 
Less Purchase Accounting Adjustments
 
As Adjusted for Acquisition1
 
As Adjusted for Acquisition1
 
As Reported
 
Legacy Infinity2
 
Less Purchase Accounting Adjustments
 
As Adjusted for Acquisition1
 
As Adjusted for Acquisition1
Earned Premiums
$
1,063.6

 
$
—

 
$
1,063.6

 
$
951.7

 
$
3,384.4

 
$
728.2

 
$
—

 
$
4,112.6

 
$
3,721.3

Net Investment Income
$
91.3

 
$
—

 
$
91.3

 
$
92.4

 
$
340.9

 
$
21.6

 
$
—

 
$
362.5

 
$
364.5

Total Revenues
$
1,094.7

 
$
—

 
$
1,094.7

 
$
1,053.5

 
$
3,725.1

 
$
746.6

 
$
—

 
$
4,471.7

 
$
4,135.6

Income (Loss) from Continuing Operations
$
5.0

 
$
(20.5
)
 
$
25.5

 
$
50.6

 
$
188.4

 
$
47.9

 
$
(60.0
)
 
$
296.3

 
$
165.3

Net Income (Loss)
$
6.5

 
$
(20.5
)
 
$
27.0

 
$
51.6

 
$
190.1

 
$
47.9

 
$
(60.0
)
 
$
298.0

 
$
166.3

Adjusted Consolidated Net Operating Income (Loss)
$
59.9

 
$
(20.5
)
 
$
80.4

 
$
45.6

 
$
258.4

 
$
57.2

 
$
(60.0
)
 
$
375.6

 
$
136.5

Income from Continuing Operations Per Unrestricted Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.08

 
 
 
$
0.39

 
$
0.78

 
$
3.22

 
 
 
 
 
$
4.56

 
$
2.55

Diluted
$
0.08

 
 
 
$
0.39

 
$
0.77

 
$
3.19

 
 
 
 
 
$
4.52

 
$
2.54

Net Income Per Unrestricted Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.10

 
 
 
$
0.42

 
$
0.80

 
$
3.25

 
 
 
 
 
$
4.59

 
$
2.56

Diluted
$
0.10

 
 
 
$
0.41

 
$
0.79

 
$
3.22

 
 
 
 
 
$
4.55

 
$
2.56

Adjusted Consolidated Net Operating Income (Loss) Per Unrestricted Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.92

 
 
 
$
1.24

 
$
0.70

 
$
4.42

 
 
 
 
 
$
5.79

 
$
2.10

Diluted
$
0.91

 
 
 
$
1.23

 
$
0.70

 
$
4.37

 
 
 
 
 
$
5.73

 
$
2.10

Weighted Average Unrestricted Common Shares Outstanding (in Millions)
64.748

 
 
 
64.748

 
64.640

 
58.149

 
 
 
 
 
64.742

 
64.530

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 As Adjusted is a non-GAAP measure, which is computed by excluding the impact of purchase accounting and including the historical results of Legacy Kemper and Legacy Infinity in periods prior to the acquisition date of July 2, 2018. See page 35.
2 Legacy Infinity represents results for the period January 1, 2018 through June 30, 2018, when Infinity was not consolidated by Kemper.


Page 35

Kemper Corporation
Selected Financial Information
As Adjusted for Acquisition - Specialty Property & Casualty Insurance Segment
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Dec 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
 
 
As Reported
 
Less Purchase Accounting Adjustments
 
As Adjusted for Acquisition1
 
As Adjusted for Acquisition1
 
As Reported
 
Legacy Infinity2
 
Less Purchase Accounting Adjustments
 
As Adjusted for Acquisition1
 
As Adjusted for Acquisition1
Net Premiums Written
 
$
674.7

 
$
—

 
$
674.7

 
$
596.4

 
$
2,067.4

 
$
817.1

 
$
—

 
$
2,884.5

 
$
2,430.4

Earned Premiums
 
$
717.8

 
$
—

 
$
717.8

 
$
616.5

 
$
2,027.4

 
$
728.2

 
$
—

 
$
2,755.6

 
$
2,377.0

Net Investment Income
 
$
22.6

 
$
—

 
$
22.6

 
$
17.3

 
$
63.4

 
$
17.5

 
$
—

 
$
80.9

 
$
68.7

Total Revenues
 
$
741.2

 
$
—

 
$
741.2

 
$
634.4

 
$
2,093.2

 
$
746.6

 
$
—

 
$
2,839.8

 
$
2,448.2

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE
 
$
530.3

 
$
1.9

 
$
528.4

 
$
463.0

 
$
1,517.4

 
$
550.7

 
$
4.4

 
$
2,063.7

 
$
1,846.1

Current Year Catastrophe Losses and LAE
 
1.0

 
—

 
1.0

 
(1.7
)
 
4.7

 
1.5

 
—

 
6.2

 
22.8

Prior Year Loss and LAE Reserve Development
 
—

 
—

 
—

 
0.4

 
1.7

 
(12.5
)
 
—

 
(10.8
)
 
(14.7
)
Total Incurred Losses and LAE
 
$
531.3

 
$
1.9

 
$
529.4

 
$
461.7

 
$
1,523.8

 
$
539.7

 
$
4.4

 
$
2,059.1

 
$
1,854.2

Insurance Expenses
 
$
148.0

 
$
24.4

 
$
123.6

 
$
111.8

 
$
421.7

 
$
133.6

 
$
72.3

 
$
483.0

 
$
423.7

Segment Net Operating Income (Loss)
 
$
48.5

 
$
(20.8
)
 
$
69.3

 
$
26.4

 
$
115.8

 
$
56.8

 
$
(60.6
)
 
$
233.2

 
$
102.4

Ratios Based On Earned Premiums
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
73.9
%
 
—
%
 
73.7
%
 
75.1
 %
 
74.9
%
 
75.6
 %
 
—
%
 
74.9
 %
 
77.6
 %
Current Year Catastrophe Losses and LAE Ratio
 
0.1

 
—

 
0.1

 
(0.3
)
 
0.2

 
0.2

 
—

 
0.2

 
1.0

Prior Year Loss and LAE Reserve Development Ratio
 
—

 
—

 
—

 
0.1

 
0.1

 
(1.7
)
 
—

 
(0.4
)
 
(0.6
)
Total Incurred Loss and LAE Ratio
 
74.0

 
—

 
73.8

 
74.9

 
75.2

 
74.1

 
—

 
74.7

 
78.0

Insurance Expense Ratio
 
20.6

 
—

 
17.2

 
18.1

 
20.8

 
18.3

 
—

 
17.5

 
17.8

Combined Ratio
 
94.6
%
 
—
%
 
91.0
%
 
93.0
 %
 
96.0
%
 
92.4
 %
 
—
%
 
92.2
 %
 
95.8
 %
Underlying Combined Ratio
 
 
 
 
 

 
 
 
 
 

 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
73.9
%
 
—
%
 
73.7
%
 
75.1
 %
 
74.9
%
 
75.6
 %
 
—
%
 
74.9
 %
 
77.6
 %
Insurance Expense Ratio
 
20.6

 
—

 
17.2

 
18.1

 
20.8

 
18.3

 
—

 
17.5

 
17.8

Underlying Combined Ratio
 
94.5
%
 
—
%
 
90.9
%
 
93.2
 %
 
95.7
%
 
93.9
 %
 
—
%
 
92.4
 %
 
95.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 As Adjusted is a non-GAAP measure, which is computed by excluding the impact of purchase accounting in 2018 and including the historical results of Legacy Kemper and Legacy Infinity in periods prior to the acquisition date of July 2, 2018. See page 35.

2 Legacy Infinity represents results for the period January 1, 2018 through June 30, 2018, when Infinity was not consolidated by Kemper.


Page 36

Kemper Corporation
Selected Financial Information
As Adjusted for Acquisition - Specialty Personal Automobile Insurance
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2018
 
Dec 31,
2017
 
Dec 31,
2018
 
Dec 31,
2017
 
 
As Reported
 
Less Purchase Accounting Adjustments
 
As Adjusted for Acquisition1
 
As Adjusted for Acquisition1
 
As Reported
 
Legacy Infinity2
 
Less Purchase Accounting Adjustments
 
As Adjusted for Acquisition1
 
As Adjusted for Acquisition1
Net Premiums Written
 
$
618.5

 
$
—

 
$
618.5

 
$
547.0

 
$
1,927.9

 
$
724.5

 
$
—

 
$
2,652.4

 
$
2,218.7

Earned Premiums
 
$
660.5

 
$
—

 
$
660.5

 
$
565.0

 
$
1,889.5

 
$
646.8

 
$
—

 
$
2,536.3

 
$
2,177.3

Net Investment Income
 
$
19.1

 
$
—

 
$
19.1

 
$
14.2

 
$
53.5

 
$
13.9

 
$
—

 
$
67.4

 
$
56.5

Total Revenues
 
$
680.3

 
$
—

 
$
680.3

 
$
579.4

 
$
1,945.2

 
$
660.7

 
$
—

 
$
2,605.9

 
$
2,234.8

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE
 
$
492.0

 
$
1.5

 
$
490.5

 
$
423.6

 
$
1,418.2

 
$
486.8

 
$
3.5

 
$
1,901.5

 
$
1,690.3

Current Year Catastrophe Losses and LAE
 
0.7

 
—

 
0.7

 
(1.4
)
 
3.9

 
1.4

 
—

 
5.3

 
21.1

Prior Year Loss and LAE Reserve Development
 
2.4

 
—

 
2.4

 
—

 
5.5

 
(14.6
)
 
—

 
(9.1
)
 
(21.1
)
Total Incurred Losses and LAE
 
$
495.1

 
$
1.5

 
$
493.6

 
$
422.2

 
$
1,427.6

 
$
473.6

 
$
3.5

 
$
1,897.7

 
$
1,690.3

Insurance Expenses
 
$
132.5

 
$
21.8

 
$
110.7

 
$
101.7

 
$
385.2

 
$
119.1

 
$
66.9

 
$
437.4

 
$
384.6

Segment Net Operating Income (Loss)
 
$
41.4

 
$
(18.4
)
 
$
59.8

 
$
22.9

 
$
104.1

 
$
53.3

 
$
(55.6
)
 
$
213.0

 
$
95.6

Ratios Based On Earned Premiums
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
74.5
%
 
—
%
 
74.2
%
 
74.9
 %
 
75.1
%
 
75.2
 %
 
—
%
 
74.9
 %
 
77.6
 %
Current Year Catastrophe Losses and LAE Ratio
 
0.1

 
—

 
0.1

 
(0.2
)
 
0.2

 
0.2

 
—

 
0.2

 
1.0

Prior Years Non-catastrophe Losses and LAE Ratio
 
0.4

 
—

 
0.4

 
—

 
0.3

 
(2.2
)
 
—

 
(0.3
)
 
(1.0
)
Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Prior Year Loss and LAE Reserve Development Ratio
 
0.4

 
—

 
0.4

 
—

 
0.3

 
(2.2
)
 
—

 
(0.3
)
 
(1.0
)
Total Incurred Loss and LAE Ratio
 
75.0

 
—

 
74.7

 
74.7

 
75.6

 
73.2

 
—

 
74.8

 
77.6

Insurance Expense Ratio
 
20.1

 
—

 
16.8

 
18.0

 
20.4

 
18.4

 
—

 
17.2

 
17.7

Combined Ratio
 
95.1
%
 
—
%
 
91.5
%
 
92.7
 %
 
96.0
%
 
91.6
 %
 
—
%
 
92.0
 %
 
95.3
 %
Underlying Combined Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
74.5
%
 
—
%
 
74.2
%
 
74.9
 %
 
75.1
%
 
75.2
 %
 
—
%
 
74.9
 %
 
77.6
 %
Insurance Expense Ratio
 
20.1

 
—

 
16.8

 
18.0

 
20.4

 
18.4

 
—

 
17.2

 
17.7

Underlying Combined Ratio
 
94.6
%
 
—
%
 
91.0
%
 
92.9
 %
 
95.5
%
 
93.6
 %
 
—
%
 
92.1
 %
 
95.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 As Adjusted is a non-GAAP measure, which is computed by excluding the impact of purchase accounting in 2018 and including the historical results of Legacy Kemper and Legacy Infinity in periods prior to the acquisition date of July 2, 2018. See page 35.

2 Legacy Infinity represents results for the period January 1, 2018 through June 30, 2018, when Infinity was not consolidated by Kemper.


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