SCHEDULE II

KEMPER CORPORATION

PARENT COMPANY BALANCE SHEETS

(Dollars in Millions)



	December 31,
	2018		2017
ASSETS
Investments in Subsidiaries	$	3,736.0	$	2,646.0
Fixed Maturities at Fair Value (Amortized Cost: 2018 – $12.6; 2017 – $0.3)	12.6		0.3
Equity Securities at Fair Value	20.4		6.7
Fair Value Option Investments	—		77.5
Short-term Investments	64.6		104.4
Cash	2.9		8.4
Other Receivables	5.7		3.8
Other Assets	14.4		5.8
Total Assets	$	3,856.6	$	2,852.9
LIABILITIES AND SHAREHOLDERS’ EQUITY
Term Loan due June 29, 2020 (Fair Value: 2018 – $35.0; 2017 – $0.0)	34.9		—
Senior Notes Payable, 4.35% due 2025 (Fair Value: 2018 – $444.2; 2017 – $458.1)	448.4		448.1
Subordinated Debentures due 2054 (Fair Value: 2018 – $151.1; 2017 – $156.5)	144.2		144.2
Current Income Tax Liability	40.5		14.0
Deferred Income Tax Liability	20.2		16.9
Liabilities for Benefit Plans	98.2		104.9
Accrued Expenses and Other Liabilities	20.1		9.2
Total Liabilities	806.5		737.3
Shareholders’ Equity:
Common Stock	6.5		5.1
Additional Paid-in Capital	1,666.3		673.1
Retained Earnings	1,355.5		1,243.0
Accumulated Other Comprehensive Income	21.8		194.4
Total Shareholders’ Equity	3,050.1		2,115.6
Total Liabilities and Shareholders’ Equity	$	3,856.6	$	2,852.9

See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF INCOME

(Dollars in Millions)



	For the Years Ended December 31,
	2018			2017			2016
Net Investment Income	$	2.5		$	3.0		$	2.0
Income from Change in Fair Value of Equity Securities	1.4			—			—
Net Realized Gains (Losses) on Sales of Investments	(0.7		)	0.6			0.1
Total Revenues	3.2			3.6			2.1
Interest Expense	37.6			36.6			45.2
Other Operating (Benefits) Expenses	26.3			(5.1		)	(6.1		)
Total Operating Expenses	63.9			31.5			39.1
Loss before Income Taxes and Equity in Net Income of Subsidiaries	(60.7		)	(27.9		)	(37.0		)
Income Tax Benefit	12.2			21.2			13.4
Loss before Equity in Net Income of Subsidiaries	(48.5		)	(6.7		)	(23.6		)
Equity in Net Income of Subsidiaries	238.6			127.6			40.4
Net Income	$	190.1		$	120.9		$	16.8

See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Millions)



	For the Years Ended December 31,
	2018			2017			2016
Net Income	$	190.1		$	120.9		$	16.8
Other Comprehensive Income (Loss):
Unrealized Holding Gains (Losses) Arising During the Year:
Securities Held by Subsidiaries	(214.1		)	119.5			(2.6		)
Securities Held by Parent	(0.1		)	(0.4		)	0.2
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	(21.9		)	(35.3		)	0.2
Securities Held by Parent	—			—			—
Unrealized Holding Gains (Losses)	(236.1		)	83.8			(2.2		)
Unrecognized Postretirement Benefit Costs Arising During the Year	(8.0		)	3.9			14.2
Reclassification Adjustments for Amounts Included in Net Income:
Curtailment Cost Recognized	—			—			1.0
Amortization of Unrecognized Postretirement Benefit Costs	1.1			(0.6		)	5.3
Total Reclassification Adjustments for Amounts Included in Net Income	1.1			(0.6		)	6.3
Net Unrecognized Postretirement Benefit Costs	(6.9		)	3.3			20.5
Foreign Currency Translation Adjustments on Investments Held by Subsidiaries	0.3			1.7			(0.3		)
Gain on Cash Flow Hedge	1.2			(6.7		)	1.6
Other Comprehensive Income (Loss) before Income Taxes	(241.5		)	82.1			19.6
Income Tax Benefit (Expense):
Unrealized Holding Gains and Losses Arising During the Year:
Securities Held by Subsidiaries	45.0			(38.3		)	1.1
Securities Held by Parent	—			0.1			(0.1		)
Reclassification Adjustment for Amounts Included in Net Income:
Securities Held by Subsidiaries	4.6			12.3			(0.1		)
Unrealized Holding Gains and Losses	49.6			(25.9		)	0.9
Unrecognized Postretirement Benefit Costs Arising During the Year	1.7			(0.8		)	(5.0		)
Reclassification Adjustments for Amounts Included in Net Income:
Curtailment Cost Recognized	—			—			(0.4		)
Amortization of Unrecognized Postretirement Benefit Costs	(0.2		)	0.2			(1.9		)
Total Reclassification Adjustments for Amounts Included in Net Income	(0.2		)	0.2			(2.3		)
Net Unrecognized Postretirement Benefit Costs	1.5			(0.6		)	(7.3		)
Foreign Currency Translation Adjustments on Investments Held by Subsidiaries	(0.1		)	(0.6		)	0.1
Gain on Cash Flow Hedge	(0.3		)	2.4			(0.6		)
Income Tax Benefit (Expense)	50.7			(24.7		)	(6.9		)
Other Comprehensive Income (Loss)	(190.8		)	57.4			12.7
Total Comprehensive Income (Loss)	$	(0.7	)	$	178.3		$	29.5

See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION

PARENT COMPANY STATEMENTS OF CASH FLOWS

(Dollars in Millions)



	For the Years Ended December 31,
	2018			2017			2016
Operating Activities:
Net Income	$	190.1		$	120.9		$	16.8
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
Equity in Net Income of Subsidiaries	(238.6		)	(127.6		)	(40.4		)
Cash Dividends from Subsidiaries	130.4			108.1			77.7
Cash Received for Benefit Plan from Subsidiary	—			—			1.4
Cash Contribution to Defined Benefit Plan	(5.0		)	—			(9.0		)
Increase in Value of Equity Securities at Fair Value	(1.4		)	—			—
Net Realized (Gains) Losses on Sales of Investments	0.7			(0.6		)	(0.1		)
Other, Net	29.6			0.7			(9.3		)
Net Cash Provided by Operating Activities	105.8			101.5			37.1
Investing Activities:
Capital Contributed to Subsidiaries	(20.0		)	—			(52.9		)
Capital Distribution from Subsidiary	176.0			—			—
Sales, Paydowns and Maturities of Fixed Maturities	(0.2		)	45.7			73.5
Purchases of Fixed Maturities	—			—			(77.9		)
Purchases of Equity Securities	(2.3		)	—			—
Sales of Equity Securities	67.5			—			3.5
Sales of Fair Value Option Investments	—			42.2			72.2
Purchases of Fair Value Option Investments	—			(7.0		)	(21.0		)
Acquisition of Business	(564.6		)	—			—
Change in Short-term Investments	253.4			15.6			14.8
Net Cash Provided (Used) by Investing Activities	(90.2		)	96.5			12.2
Financing Activities:
Net Proceeds from Issuance of Debt	249.4			200.2			—
Repayments of Debt	(215.0		)	(360.0		)	—
Cash Dividends Paid	(56.4		)	(49.5		)	(49.2		)
Common Stock Repurchases	—			—			(3.8		)
Cash Exercise of Stock Options	0.9			4.0			3.5
Net Cash Used by Financing Activities	(21.1		)	(205.3		)	(49.5		)
Decrease in Cash	(5.5		)	(7.3		)	(0.2		)
Cash, Beginning of Year	8.4			15.7			15.9
Cash, End of Year	$	2.9		$	8.4		$	15.7

See Accompanying Report of Independent Registered Public Accounting Firm.