EX-99.2 3 kmpr201912312019ex992s.htm EXHIBIT 99.2 - INVESTOR SUPPLEMENT Exhibit
Exhibit 99.2


kemperlogocolorwebfinala05.jpg


Investor Supplement
Fourth Quarter 2019
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 Forms 10-K, 10-Q and 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”). 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 33.
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 10, 2020, 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 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 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 2019
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
8-9
Debt Outstanding and Ratings
10
Segment Summary Results:
 
Revenues
11
Operating Profit (Loss)
12
Net Operating Income (Loss)
12
Catastrophe Frequency and Severity
13
Specialty Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information
14
Specialty Personal Automobile Insurance
15
Commercial Automobile Insurance
16
Preferred Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information
17-18
Preferred Personal Automobile Insurance
19
Homeowners and Other Personal Insurance
20
Homeowners Insurance
21
Other Personal Insurance
22
Life & Health Insurance Segment - Results of Operations and Selected Financial Information
23
Life Insurance
24
Accident and Health Insurance
24
Property Insurance
25
Insurance Expenses and Interest and Other Expenses
26
Details of Investment Performance
27
Details of Invested Assets
28-29
Investment Concentration
30
Municipal Bond Securities
31
Investments in Limited Liability Companies and Limited Partnerships
32
Definitions of Non-GAAP Financial Measures
33-34
As Adjusted for Acquisition
35
As Adjusted - Selected Consolidated Financial Information
36
As Adjusted - Specialty Property & Casualty Insurance Segment Selected Financial Information
37
As Adjusted - Specialty Personal Automobile Insurance Selected Financial Information
38
 



Kemper Corporation
Consolidated Financial Highlights
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
For Period Ended
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
1,145.8

 
1,135.2

 
1,116.6

 
$
1,074.8

 
$
1,063.6

 
$
1,052.9

 
$
658.1

 
$
609.8

 
$
4,472.4

 
$
3,384.4

Net Investment Income
 
93.9

 
91.7

 
96.0

 
82.7

 
91.3

 
92.0

 
78.4

 
79.2

 
364.3

 
340.9

Other Income
 
3.7

 
7.2

 
22.7

 
1.9

 
2.0

 
37.8

 
1.2

 
1.2

 
35.5

 
42.2

Income (Loss) from Change in Fair Value of Equity and Convertible Securities
 
39.2

 
9.8

 
25.5

 
64.4

 
(76.4
)
 
11.0

 
0.4

 
0.7

 
138.9

 
(64.3
)
Net Investment Gains (Loss)
 
1.1

 
(0.1
)
 
14.6

 
12.5

 
14.2

 
1.8

 
3.8

 
2.1

 
28.1

 
21.9

Total Revenues
 
$
1,283.7

 
$
1,243.8

 
$
1,275.4

 
$
1,236.3

 
$
1,094.7

 
$
1,195.5

 
$
741.9

 
$
693.0

 
$
5,039.2

 
$
3,725.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
124.7

 
$
129.0

 
$
122.1

 
$
155.3

 
$
6.5

 
$
92.2

 
$
37.6

 
$
53.8


$
531.1

 
$
190.1

Income from Continuing Operations
 
$
124.7

 
$
129.0

 
$
122.1

 
$
155.3

 
$
5.0

 
$
92.3

 
$
37.5

 
$
53.6

 
$
531.1

 
$
188.4

Adjusted Consolidated Net Operating Income 1
 
$
97.9

 
$
130.0

 
$
91.5

 
$
98.9

 
$
59.9

 
$
104.5

 
$
36.5

 
$
57.5

 
$
418.3

 
$
258.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Unrestricted Common Share Amounts:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
1.87

 
$
1.93

 
$
1.87

 
$
2.38

 
$
0.10

 
$
1.42

 
$
0.73

 
$
1.03

 
$
8.04

 
$
3.25

Income from Continuing Operations
 
$
1.87

 
$
1.93

 
$
1.87

 
$
2.38

 
$
0.08

 
$
1.42

 
$
0.73

 
$
1.03

 
$
8.04

 
$
3.22

Adjusted Consolidated Net Operating Income 1
 
$
1.46

 
$
1.95

 
$
1.39

 
$
1.52

 
$
0.92

 
$
1.61

 
$
0.70

 
$
1.11

 
$
6.33

 
$
4.42

Diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
1.85

 
$
1.91

 
$
1.84

 
$
2.35

 
$
0.10

 
$
1.40

 
$
0.73

 
$
1.02

 
$
7.96

 
$
3.22

Income from Continuing Operations
 
$
1.85

 
$
1.91

 
$
1.84

 
$
2.35

 
$
0.08

 
$
1.40

 
$
0.73

 
$
1.02

 
$
7.96

 
$
3.19

Adjusted Consolidated Net Operating Income 1
 
$
1.45

 
$
1.93

 
$
1.38

 
$
1.50

 
$
0.91

 
$
1.59

 
$
0.70

 
$
1.10

 
$
6.27

 
$
4.37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends Paid to Shareholders Per Share
 
$
0.28

 
$
0.25

 
$
0.25

 
$
0.25

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
1.03

 
$
0.96

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At Period End
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets
 
$
12,989.1

 
$
12,819.9

 
$
12,616.5

 
$
12,182.2

 
$
11,544.9

 
$
11,772.6

 
$
8,840.5

 
$
8,371.0

 
 
 
 
Insurance Reserves
 
$
5,471.8

 
$
5,441.3

 
$
5,426.1

 
$
5,370.4

 
$
5,366.8

 
$
5,303.4

 
$
4,536.4

 
$
4,472.6

 
 
 
 
Debt
 
$
778.4

 
$
778.7

 
$
873.3

 
$
908.5

 
$
909.0

 
$
1,123.7

 
$
951.8

 
$
592.3

 
 
 
 
Shareholders’ Equity
 
$
3,972.3

 
$
3,894.2

 
$
3,683.7

 
$
3,320.1

 
$
3,050.1

 
$
3,063.8

 
$
2,045.7

 
$
2,063.8

 
 
 
 
Shareholders’ Equity Excluding Goodwill1,2
 
$
2,858.3

 
$
2,780.2

 
$
2,569.7

 
$
2,208.6

 
$
1,937.7

 
$
1,972.6

 
$
1,722.7

 
$
1,740.8

 
 
 
 
Common Shares Issued and Outstanding (In Millions)
 
66.666

 
66.642

 
66.564

 
64.931

 
64.757

 
64.738

 
51.559

 
51.533

 
 
 
 
Book Value Per Share2
 
$
59.59

 
$
58.43

 
$
55.34

 
$
51.13

 
$
47.10

 
$
47.33

 
$
39.68

 
$
40.05

 
 
 
 
Book Value Per Share Excluding Goodwill1,2
 
$
42.87

 
$
41.72

 
$
38.60

 
$
34.01

 
$
29.92

 
$
30.47

 
$
33.41

 
$
33.78

 
 
 
 
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1,2
 
$
53.08

 
$
51.51

 
$
49.82

 
$
47.41

 
$
45.40

 
$
45.66

 
$
36.85

 
36.35

 
 
 
 
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1,2
 
$
36.36

 
$
34.80

 
$
33.08

 
$
30.29

 
$
28.22

 
$
28.81

 
$
30.59

 
30.08

 
 
 
 
Debt to Total Capitalization2
 
16.4
%
 
16.7
%
 
19.2
%
 
21.5
%
 
23.0
%
 
26.8
%
 
31.8
%
 
22.3
%
 
 
 
 
Rolling 12 Months Return on 5-point Average Shareholders Equity2,3
 
14.8
%
 
12.1
%
 
12.4
%
 
10.8
%
 
7.7
%
 
9.7
%
 
8.5
%
 
8.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Non-GAAP Financial Measure. See page 33 for definition.
 
 
 
 
2 See Capital Metrics on pages 8-9 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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
1,145.8

 
$
1,135.2

 
$
1,116.6

 
$
1,074.8

 
$
1,063.6

 
$
1,052.9

 
$
658.1

 
$
609.8

 
$
4,472.4

 
$
3,384.4

Net Investment Income
 
93.9

 
91.7

 
96.0

 
82.7

 
91.3

 
92.0

 
78.4

 
79.2

 
364.3

 
340.9

Other Income
 
3.7

 
7.2

 
22.7

 
1.9

 
2.0

 
37.8

 
1.2

 
1.2

 
35.5

 
42.2

Income (Loss) from Change in Fair Value of Equity and Convertible Securities
 
39.2

 
9.8

 
25.5

 
64.4

 
(76.4
)
 
11.0

 
0.4

 
0.7

 
138.9

 
(64.3
)
Net Realized Gains on Sales of Investments
 
2.8

 
1.7

 
21.3

 
16.1

 
16.4

 
3.6

 
3.8

 
2.6

 
41.9

 
26.4

Other-than-temporary Impairment Losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Other-than-temporary Impairment Losses
 
(1.7
)
 
(1.8
)
 
(6.7
)
 
(3.5
)
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(13.7
)
 
(4.5
)
Portion of Losses Recognized in Other Comprehensive Income
 
—

 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
—

 
(0.1
)
 
—

Net Impairment Losses Recognized in Earnings
 
(1.7
)
 
(1.8
)
 
(6.7
)
 
(3.6
)
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(13.8
)
 
(4.5
)
Total Revenues
 
1,283.7

 
1,243.8

 
1,275.4

 
1,236.3

 
1,094.7

 
1,195.5

 
741.9

 
693.0

 
5,039.2

 
3,725.1

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses
 
814.9

 
782.6

 
825.4

 
765.4

 
772.8

 
757.3

 
499.5

 
436.9

 
3,188.3

 
2,466.5

Insurance Expenses
 
265.4

 
256.0

 
263.5

 
234.8

 
273.2

 
296.0

 
171.2

 
160.1

 
1,019.7

 
900.5

Loss from Early Extinguishment of Debt
 
—

 
5.8

 
—

 
—

 
—

 
—

 
—

 
—

 
5.8

 
—

Interest and Other Expenses
 
46.5

 
37.9

 
38.0

 
41.4

 
42.6

 
61.7

 
25.7

 
29.0

 
163.8

 
159.0

Total Expenses
 
1,126.8

 
1,082.3

 
1,126.9

 
1,041.6

 
1,088.6

 
1,115.0

 
696.4

 
626.0

 
4,377.6

 
3,526.0

Income from Continuing Operations before Income Taxes
 
156.9

 
161.5

 
148.5

 
194.7

 
6.1

 
80.5

 
45.5

 
67.0

 
661.6

 
199.1

Income Tax Benefit (Expense)
 
(32.2
)
 
(32.5
)
 
(26.4
)
 
(39.4
)
 
(1.1
)
 
11.8

 
(8.0
)
 
(13.4
)
 
(130.5
)
 
(10.7
)
Income from Continuing Operations
 
124.7

 
129.0

 
122.1

 
155.3

 
5.0

 
92.3

 
37.5

 
53.6

 
531.1

 
188.4

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

 
—

 
—

 
—

 
2.1

 
(0.2
)
 
0.1

 
0.3

 
—

 
2.3

Income Tax Benefit (Expense)
 
—

 
—

 
—

 
—

 
(0.6
)
 
0.1

 
—

 
(0.1
)
 
—

 
(0.6
)
Income (Loss) from Discontinued Operations
 
—

 
—

 
—

 
—

 
1.5

 
(0.1
)
 
0.1

 
0.2

 
—

 
1.7

Net Income
 
$
124.7

 
$
129.0

 
$
122.1

 
$
155.3

 
$
6.5

 
$
92.2

 
$
37.6

 
$
53.8

 
$
531.1

 
$
190.1

Income from Continuing Operations Per Unrestricted Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
1.87

 
$
1.93

 
$
1.87

 
$
2.38

 
$
0.08

 
$
1.42

 
$
0.73

 
$
1.03

 
$
8.04

 
$
3.22

Diluted
 
$
1.85

 
$
1.91

 
$
1.84

 
$
2.35

 
$
0.08

 
$
1.40

 
$
0.73

 
$
1.02

 
$
7.96

 
$
3.19

Net Income Per Unrestricted Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
1.87

 
$
1.93

 
$
1.87

 
$
2.38

 
$
0.10

 
$
1.42

 
$
0.73

 
$
1.03

 
$
8.04

 
$
3.25

Diluted
 
$
1.85

 
$
1.91

 
$
1.84

 
$
2.35

 
$
0.10

 
$
1.40

 
$
0.73

 
$
1.02

 
$
7.96

 
$
3.22

Dividends Paid to Shareholders Per Share
 
$
0.28

 
$
0.25

 
$
0.25

 
$
0.25

 
$
0.24

 
$
0.24

 
$
0.24

 
$
0.24

 
$
1.03

 
$
0.96

Weighted Average Unrestricted Common Shares Outstanding (in Millions)
 
66.650

 
66.622

 
65.408

 
64.815

 
64.748

 
64.580

 
51.550

 
51.503

 
65.881

 
58.149

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 4

Kemper Corporation
Consolidated Balance Sheets
(Dollars in Millions)
 (Unaudited)
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Maturities at Fair Value
 
$
6,922.1

 
$
6,883.6

 
$
6,540.2

 
$
6,573.1

 
$
6,424.2

 
$
6,108.6

 
$
5,260.3

 
$
5,301.2

Equity Securities at Fair Value
 
907.3

 
928.7

 
923.3

 
916.9

 
684.4

 
815.8

 
514.9

 
568.2

Equity Securities at Modified Cost
 
41.9

 
41.2

 
38.1

 
39.2

 
41.5

 
50.9

 
54.1

 
59.3

Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings
 
220.4

 
213.4

 
219.7

 
197.8

 
187.0

 
170.0

 
170.9

 
168.8

Convertible Securities at Fair Value
 
37.3

 
35.6

 
34.3

 
33.8

 
31.5

 
—

 
—

 
—

Short-term Investments at Cost which Approximates Fair Value
 
470.9

 
424.2

 
642.5

 
350.4

 
286.1

 
688.5

 
169.0

 
188.8

Other Investments
 
444.5

 
447.4

 
442.8

 
425.6

 
414.8

 
412.8

 
411.7

 
413.0

Total Investments
 
9,044.4

 
8,974.1

 
8,840.9

 
8,536.8

 
8,069.5

 
8,246.6

 
6,580.9

 
6,699.3

Cash
 
136.8

 
133.6

 
104.4

 
107.0

 
75.1

 
92.8

 
649.9

 
115.4

Receivables from Policyholders
 
1,117.1

 
1,139.8

 
1,095.2

 
1,048.6

 
1,007.1

 
1,029.9

 
407.5

 
386.0

Other Receivables
 
219.7

 
217.1

 
248.1

 
254.6

 
245.4

 
243.1

 
189.2

 
187.9

Deferred Policy Acquisition Costs
 
537.7

 
536.5

 
521.0

 
499.2

 
470.0

 
447.4

 
388.9

 
378.0

Goodwill
 
1,114.0

 
1,114.0

 
1,114.0

 
1,111.5

 
1,112.4

 
1,091.2

 
323.0

 
323.0

Current Income Tax Assets
 
44.7

 
44.1

 
41.0

 
19.7

 
38.9

 
58.1

 
0.9

 
—

Deferred Income Tax Assets
 
—

 
—

 
—

 
—

 
—

 
—

 
10.6

 
—

Other Assets
 
774.7

 
660.7

 
651.9

 
604.8

 
526.5

 
563.5

 
289.6

 
281.4

Total Assets
 
$
12,989.1

 
$
12,819.9

 
$
12,616.5

 
$
12,182.2

 
$
11,544.9

 
$
11,772.6

 
$
8,840.5

 
$
8,371.0

Liabilities and Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life and Health
 
$
3,502.0

 
$
3,499.7

 
$
3,514.2

 
$
3,501.7

 
$
3,491.9

 
$
3,484.3

 
$
3,476.7

 
$
3,467.5

Property and Casualty
 
1,969.8

 
1,941.6

 
1,911.9

 
1,868.7

 
1,874.9

 
1,819.1

 
1,059.7

 
1,005.1

Total Insurance Reserves
 
5,471.8

 
5,441.3

 
5,426.1

 
5,370.4

 
5,366.8

 
5,303.4

 
4,536.4

 
4,472.6

Unearned Premiums
 
1,545.5

 
1,574.9

 
1,545.6

 
1,499.5

 
1,424.3

 
1,470.9

 
723.8

 
690.2

Policyholder Contract Liabilities
 
309.8

 
204.1

 
221.8

 
254.5

 
76.8

 
77.1

 
76.8

 
76.8

Current Income Tax Liabilities
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.2

Deferred Income Tax Liabilities
 
178.2

 
175.3

 
124.1

 
82.6

 
26.2

 
40.4

 
—

 
1.1

Liability for Unrecognized Tax Benefits
 
—

 
—

 
—

 
3.9

 
4.4

 
4.5

 
9.2

 
8.1

Accrued Expenses and Other Liabilities
 
733.1

 
751.4

 
741.9

 
742.7

 
687.3

 
688.8

 
496.8

 
465.9

Long-term Debt, Current and Non-current, at Amortized Cost
 
778.4

 
778.7

 
873.3

 
908.5

 
909.0

 
1,123.7

 
951.8

 
592.3

Total Liabilities
 
9,016.8

 
8,925.7

 
8,932.8

 
8,862.1

 
8,494.8

 
8,708.8

 
6,794.8

 
6,307.2

Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
6.7

 
6.7

 
6.7

 
6.5

 
6.5

 
6.5

 
5.2

 
5.1

Paid-in Capital
 
1,819.2

 
1,812.9

 
1,806.4

 
1,673.0

 
1,666.3

 
1,661.3

 
681.5

 
676.9

Retained Earnings
 
1,810.3

 
1,704.5

 
1,593.7

 
1,489.7

 
1,355.5

 
1,365.1

 
1,289.4

 
1,264.9

Accumulated Other Comprehensive Income
 
336.1

 
370.1

 
276.9

 
150.9

 
21.8

 
30.9

 
69.6

 
116.9

Total Shareholders’ Equity
 
3,972.3

 
3,894.2

 
3,683.7

 
3,320.1

 
3,050.1

 
3,063.8

 
2,045.7

 
2,063.8

Total Liabilities and Shareholders’ Equity
 
$
12,989.1

 
$
12,819.9

 
$
12,616.5

 
$
12,182.2

 
$
11,544.9

 
$
11,772.6

 
$
8,840.5

 
$
8,371.0


Page 5

Kemper Corporation
Consolidated Statements of Cash Flows
(Dollars in Millions)
 (Unaudited)
 
 
Year Ended
 
 
Dec 31,
2019
 
Dec 31,
2018
Operating Activities:
 
 
 
 
Net Income
 
$
531.1

 
$
190.1

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
 
Amortization of Intangible Assets Acquired
 
29.7

 
156.3

Equity in Earnings of Equity Method Limited Liability Investments
 
(1.0
)
 
(11.0
)
Distribution of Accumulated Earnings of Equity Method Limited Liability Investments
 
11.9

 
13.9

Contribution to Pension Plan
 
(55.3
)
 
—

Increase in Value of Equity Securities at Fair Value
 
(138.9
)
 
64.3

Amortization of Investment Securities and Depreciation of Investment Real Estate
 
0.6

 
7.7

Net Realized Gains on Sales of Investments
 
(41.9
)
 
(26.4
)
Net Impairment Losses Recognized in Earnings
 
13.8

 
4.5

Loss from Early Extinguishment of Debt
 
5.8

 
—

Depreciation of Property and Equipment
 
32.8

 
15.6

Increase in Receivables
 
(84.3
)
 
(80.7
)
Increase in Deferred Policy Acquisition Costs
 
(66.9
)
 
(104.6
)
Increase in Insurance Reserves
 
102.3

 
183.2

Increase in Unearned Premiums
 
121.2

 
54.7

Change in Income Taxes
 
58.8

 
13.1

Change in Accrued Expenses and Other Liabilities
 
13.1

 
49.9

Other, Net
 
5.3

 
8.6

Net Cash Provided by Operating Activities (Carryforward to page 7)
 
538.1

 
539.2


Page 6

Kemper Corporation
Consolidated Statements of Cash Flows
(Dollars in Millions)
 (Unaudited)
 
 
Year Ended
 
 
Dec 31,
2019
 
Dec 31,
2018
Net Cash Provided by Operating Activities (Carryforward from page 6)
 
538.1

 
539.2

Investing Activities:
 
 
 
 
Sales, Paydowns and Maturities of Fixed Maturities
 
1,299.0

 
2,643.3

Purchases of Fixed Maturities
 
(1,354.9
)
 
(2,413.2
)
Sales of Equity Securities
 
217.3

 
351.9

Purchases of Equity Securities
 
(307.0
)
 
(478.5
)
Return of Investment of Equity Method Limited Liability Investments
 
29.5

 
14.1

Acquisitions of Equity Method Limited Liability Investments
 
(73.8
)
 
(43.1
)
Decrease (Increase) in Short-term Investments
 
(176.0
)
 
52.7

Improvements of Investment Real Estate
 
(1.3
)
 
(1.5
)
Acquisition of Business, Net of Cash Acquired
 
—

 
(560.6
)
Acquisitions of Mortgage Loans
 
(44.6
)
 
—

Paydowns of Mortgage Loans
 
17.2

 
—

Increase (Decrease) in Other Investments
 
(0.1
)
 
(2.0
)
Purchase of Corporate-owned Life Insurance
 
(150.0
)
 
—

Acquisition of Software and Long-lived Assets
 
(83.9
)
 
(65.3
)
Other, Net
 
(4.8
)
 
4.6

Net Cash Provided (Used) by Investing Activities
 
(633.4
)
 
(497.6
)
Financing Activities:
 
 
 
 
Net Proceeds from Issuances of Long-term Debt
 
49.9

 
249.4

Repayments of Long-term Debt
 
(185.0
)
 
(215.0
)
Dividends and Dividend Equivalents Paid
 
(67.8
)
 
(56.4
)
Proceeds from Policyholder Contract Liabilities
 
615.7

 
11.4

Repayment of Policyholder Contract Liabilities
 
(383.6
)
 
(2.5
)
Proceeds from Issuance of Common Stock, Net of Transaction Costs
 
127.5

 
—

Proceeds from Shares Issued under Employee Stock Purchase Plan
 
(2.1
)
 
—

Cash Exercise of Stock Options
 
2.4

 
0.9

Net Cash Provided by Financing Activities
 
157.0

 
(12.2
)
Increase in Cash
 
61.7

 
29.4

Cash, Beginning of Year
 
75.1

 
45.7

Cash, End of Period
 
$
136.8

 
$
75.1


Page 7


Kemper Corporation
Capital Metrics
(Dollars and Shares in Millions, Except Per Share Amounts)
(Unaudited)
 
 
Three Months Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
Book Value Per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders’ Equity
 
$
3,972.3

 
$
3,894.2

 
$
3,683.7

 
$
3,320.1

 
$
3,050.1

 
$
3,063.8

 
$
2,045.7

 
$
2,063.8

Less: Goodwill
 
(1,114.0
)
 
(1,114.0
)
 
(1,114.0
)
 
(1,111.5
)
 
(1,112.4
)
 
(1,091.2
)
 
(323.0
)
 
(323.0
)
Shareholders’ Equity Excluding Goodwill1
 
$
2,858.3

 
$
2,780.2

 
$
2,569.7

 
$
2,208.6

 
$
1,937.7

 
$
1,972.6

 
$
1,722.7

 
$
1,740.8

Shareholders’ Equity
 
$
3,972.3

 
$
3,894.2

 
$
3,683.7

 
$
3,320.1

 
$
3,050.1

 
$
3,063.8

 
$
2,045.7

 
$
2,063.8

Less: Net Unrealized Gains on Fixed Maturities
 
(434.0
)
 
(461.3
)
 
(367.8
)
 
(241.9
)
 
(110.4
)
 
(107.6
)
 
(145.6
)
 
(190.5
)
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities1
 
$
3,538.3

 
$
3,432.9

 
$
3,315.9

 
$
3,078.2

 
$
2,939.7

 
$
2,956.2

 
$
1,900.1

 
$
1,873.3

Less: Goodwill
 
(1,114.0
)
 
(1,114.0
)
 
(1,114.0
)
 
(1,111.5
)
 
(1,112.4
)
 
(1,091.2
)
 
(323.0
)
 
(323.0
)
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1
 
$
2,424.3

 
$
2,318.9

 
$
2,201.9

 
$
1,966.7

 
$
1,827.3

 
$
1,865.0

 
$
1,577.1

 
$
1,550.3

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Shares Issued and Outstanding
 
66.666

 
66.642

 
66.564

 
64.931

 
64.757

 
64.738

 
51.559

 
51.533

Book Value Per Share
 
$
59.59

 
$
58.43

 
$
55.34

 
$
51.13

 
$
47.10

 
$
47.33

 
$
39.68

 
$
40.05

Book Value Per Share Excluding Goodwill1
 
$
42.87

 
$
41.72

 
$
38.60

 
$
34.01

 
$
29.92

 
$
30.47

 
$
33.41

 
$
33.78

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1
 
$
53.08

 
$
51.51

 
$
49.82

 
$
47.41

 
$
45.40

 
$
45.66

 
$
36.85

 
$
36.35

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1
 
$
36.36

 
$
34.80

 
$
33.08

 
$
30.29

 
$
28.22

 
$
28.81

 
$
30.59

 
$
30.08

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rolling 12 Months Net Income
 
$
531.1

 
$
412.9

 
$
376.1

 
$
291.6

 
$
190.1

 
$
220.5

 
$
176.0

 
$
175.0

Denominator (5-point Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5-point Average Shareholders’ Equity
 
$
3,584.1

 
$
3,402.4

 
$
3,032.7

 
$
2,708.7

 
$
2,467.8

 
$
2,274.3

 
$
2,068.2

 
$
2,055.8

Rolling 12 Months Return on Average Shareholders' Equity (5-point Average)
 
14.8
%
 
12.1
%
 
12.4
%
 
10.8
%
 
7.7
%
 
9.7
%
 
8.5
%
 
8.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Shareholders’ Equity Excluding Goodwill1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Denominator (5-point Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5-point Average Shareholders’ Equity Excluding Goodwill1
 
$
2,470.9

 
$
2,293.8

 
$
2,082.3

 
$
1,916.5

 
$
1,833.3

 
$
1,797.6

 
$
1,745.2

 
$
1,732.8

Rolling 12 Months Return on Average Shareholders' Equity Excluding Goodwill (5-point Average)1
 
21.5
%
 
18.0
%
 
18.1
%
 
15.2
%
 
10.4
%
 
12.3
%
 
10.1
%
 
10.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Denominator (5-point Average)
 
 
 
 
 

 

 

 

 

 

5-point Average Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities1
 
$
3,261.0

 
$
3,144.6

 
$
2,838.0

 
$
2,549.5

 
$
2,299.9

 
$
2,081.0

 
$
1,850.2

 
$
1,827.3

Rolling 12 Months Return on Average Shareholders' Equity Excluding Net Unrealized Gains on Fixed Maturities (5-point Average)1
 
16.3
%
 
13.1
%
 
13.3
%
 
11.4
%
 
8.3
%
 
10.6
%
 
9.5
%
 
9.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Denominator (5-point Average)
 
 
 
 
 

 

 

 

 

 

5-point Average Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1
 
$
2,147.8

 
$
2,036.0

 
$
1,887.6

 
$
1,757.3

 
$
1,665.4

 
$
1,604.4

 
$
1,527.2

 
$
1,504.3

Rolling 12 Months Return on Average Shareholders' Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill (5-point Average)1
 
24.7
%
 
20.3
%
 
19.9
%
 
16.6
%
 
11.4
%
 
13.7
%
 
11.5
%
 
11.6
%
1 Non-GAAP financial measure. See definitions beginning on page 33.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Page 8

Kemper Corporation
Capital Metrics
(Dollars and Shares in Millions, Except Per Share Amounts)
(Unaudited)
 
 
Three Months Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
Debt and Total Capitalization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt
 
$
778.4

 
$
778.7

 
$
873.3

 
$
908.5

 
$
909.0

 
$
1,123.7

 
$
951.8

 
$
592.3

Shareholders’ Equity
 
3,972.3

 
3,894.2

 
3,683.7

 
3,320.1

 
3,050.1

 
3,063.8

 
2,045.7

 
2,063.8

Total Capitalization
 
$
4,750.7

 
$
4,672.9

 
$
4,557.0

 
$
4,228.6

 
$
3,959.1

 
$
4,187.5

 
$
2,997.5

 
$
2,656.1

Ratio of Debt to Shareholders’ Equity
 
19.6
%
 
20.0
%
 
23.7
%
 
27.4
%
 
29.8
%
 
36.7
%
 
46.5
%
 
28.7
%
Ratio of Debt to Total Capitalization
 
16.4
%
 
16.7
%
 
19.2
%
 
21.5
%
 
23.0
%
 
26.8
%
 
31.8
%
 
22.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent Company Liquidity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Holding Company Cash and Investments
 
$
206.8

 
$
169.1

 
$
312.7

 
$
118.6

 
$
100.6

 
$
91.3

 
$
708.6

 
$
184.4

Borrowings Available Under Credit Agreement
 
400.0

 
400.0

 
400.0

 
300.0

 
300.0

 
300.0

 
300.0

 
225.0

Parent Company Liquidity
 
$
606.8

 
$
569.1

 
$
712.7

 
$
418.6

 
$
400.6

 
$
391.3

 
$
1,008.6

 
$
409.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Returned to Shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Dividends Paid
 
18.7

 
16.7

 
16.2

 
16.2

 
15.6

 
15.6

 
12.4

 
12.5

 


Page 9

Kemper Corporation
Debt Outstanding, FHLB Advances and Ratings
(Dollars in Millions)
(Unaudited)
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31, 2019
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
Kemper Corporation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Term Loan due June 29, 2020
 
$
—

 
$
—

 
$
—

 
$
34.9

 
$
34.9

 
$
249.4

 
$
249.4

 
$
—

Term Loan due July 5, 2023
 
49.9

 
49.9

 
—

 
—

 
—

 
—

 
$
—

 
$
—

Senior Notes at Amortized Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.0% Senior Notes due September 19, 2022
 
279.9

 
280.3

 
280.6

 
281.0

 
281.5

 
281.7

 
—

 
—

4.35% Senior Notes due February 15, 2025
 
448.6

 
448.5

 
448.5

 
448.4

 
448.4

 
448.4

 
448.2

 
448.1

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

 
—

 
144.2

 
144.2

 
144.2

 
144.2

 
144.2

 
144.2

Debt Outstanding
 
$
778.4

 
$
778.7

 
$
873.3

 
$
908.5

 
$
909.0

 
$
1,123.7

 
$
841.8

 
$
592.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank Advances to Insurance Subsidiaries:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported as Policyholder Account Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank of Chicago
 
$
243.4

 
$
137.6

 
$
155.0

 
$
187.7

 
$
10.0

 
$
10.0

 
$
10.0

 
$
10.0

Reported as Debt Outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank of Dallas
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
55.0

 
$
—

Federal Home Loan Bank of Chicago
 
—

 
—

 
—

 
—

 
—

 
—

 
55.0

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A.M. Best
 
Moody’s
 
S&P
 
Fitch
 
 
 
 
 
 
 
 
As of Date of Financial Supplement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Debt Ratings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.0% Senior Notes due September 19, 2022
 
bbb-
 
Baa3
 
BBB-
 
—
 
 
 
 
 
 
 
 
4.35% Senior Notes due February 15, 2025
 
bbb-
 
Baa3
 
BBB-
 
BBB
 
 
 
 
 
 
 
 
Term Loan due July 5, 2023
 
NR
 
Baa3
 
BBB-
 
BBB+
 
 
 
 
 
 
 
 
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 Insurance Company
 
A-
 
A3
 
A-
 
NR
 
 
 
 
 
 
 
 



NR - Not Rated


Page 10

Kemper Corporation
Segment Revenues
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Property & Casualty Insurance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Automobile
 
$
733.1

 
$
719.2

 
$
703.7

 
$
669.6

 
$
660.5

 
$
655.3

 
$
307.5

 
$
266.2

 
$
2,825.6

 
$
1,889.5

Commercial Automobile
 
66.6

 
64.2

 
62.3

 
59.7

 
57.3

 
55.9

 
12.5

 
12.2

 
252.8

 
137.9

Total Specialty Property & Casualty Insurance Earned Premium
 
799.7

 
783.4

 
766.0

 
729.3

 
717.8

 
711.2

 
320.0

 
278.4

 
3,078.4

 
2,027.4

Net Investment Income
 
28.3

 
28.8

 
28.9

 
21.5

 
22.6

 
20.7

 
10.2

 
9.9

 
107.5

 
63.4

Other Income
 
0.8

 
4.4

 
1.0

 
0.8

 
0.8

 
0.9

 
0.4

 
0.3

 
7.0

 
2.4

Total Specialty Property & Casualty Insurance Revenues
 
828.8

 
816.6

 
795.9

 
751.6

 
741.2

 
732.8

 
330.6

 
288.6

 
3,192.9

 
2,093.2

Preferred Property & Casualty Insurance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Automobile
 
117.2

 
119.7

 
117.9

 
115.4

 
115.2

 
111.4

 
108.7

 
104.9

 
470.2

 
440.2

Homeowners
 
58.7

 
61.5

 
60.8

 
60.3

 
63.6

 
62.5

 
62.2

 
61.8

 
241.3

 
250.1

Other Personal
 
9.3

 
9.8

 
9.8

 
9.9

 
10.0

 
10.1

 
10.2

 
10.1

 
38.8

 
40.4

Total Preferred Property & Casualty Insurance Earned Premium
 
185.2

 
191.0

 
188.5

 
185.6

 
188.8

 
184.0

 
181.1

 
176.8

 
750.3

 
730.7

Net Investment Income
 
11.5

 
12.0

 
12.3

 
8.3

 
14.0

 
20.1

 
14.0

 
13.7

 
44.1

 
61.8

Total Preferred Property & Casualty Insurance Revenues
 
196.7

 
203.0

 
200.8

 
193.9

 
202.8

 
204.1

 
195.1

 
190.5

 
794.4

 
792.5

Life & Health Insurance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life
 
95.6

 
96.2

 
97.0

 
95.8

 
94.1

 
95.2

 
95.4

 
93.7

 
384.6

 
378.4

Accident and Health
 
48.5

 
47.6

 
47.9

 
46.9

 
45.5

 
44.9

 
43.8

 
43.3

 
190.9

 
177.5

Property
 
16.8

 
17.0

 
17.2

 
17.2

 
17.4

 
17.6

 
17.8

 
17.6

 
68.2

 
70.4

Total Life & Health Insurance Earned Premiums
 
160.9

 
160.8

 
162.1

 
159.9

 
157.0

 
157.7

 
157.0

 
154.6

 
643.7

 
626.3

Net Investment Income
 
52.0

 
49.7

 
53.0

 
51.7

 
51.7

 
51.0

 
54.5

 
53.7

 
206.4

 
210.9

Other Income
 
2.9

 
2.9

 
1.6

 
1.1

 
1.1

 
1.2

 
0.9

 
0.8

 
8.5

 
4.0

Total Life & Health Insurance Revenues
 
215.8

 
213.4

 
216.7

 
212.7

 
209.8

 
209.9

 
212.4

 
209.1

 
858.6

 
841.2

Total Segment Revenues
 
1,241.3

 
1,233.0

 
1,213.4

 
1,158.2

 
1,153.8

 
1,146.8

 
738.1

 
688.2

 
4,845.9

 
3,726.9

Income (Loss) from Change in Fair Value of Equity and Convertible Securities
 
39.2

 
9.8

 
25.5

 
64.4

 
(76.4
)
 
11.0

 
0.4

 
0.7

 
138.9

 
(64.3
)
Net Realized Gains on Sales of Investments
 
2.8

 
1.7

 
21.3

 
16.1

 
16.4

 
3.6

 
3.8

 
2.6

 
41.9

 
26.4

Net Impairment Losses Recognized in Earnings
 
(1.7
)
 
(1.8
)
 
(6.7
)
 
(3.6
)
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(13.8
)
 
(4.5
)
Other
 
2.1

 
1.1

 
21.9

 
1.2

 
3.1

 
35.9

 
(0.4
)
 
2.0

 
26.3

 
40.6

Total Revenues
 
$
1,283.7

 
$
1,243.8

 
$
1,275.4

 
$
1,236.3

 
$
1,094.7

 
$
1,195.5

 
$
741.9

 
$
693.0

 
$
5,039.2

 
$
3,725.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 11

Kemper Corporation
Segment Operating Results
(Dollars in Millions)
 (Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Segment Operating Profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Property & Casualty Insurance
 
$
78.5

 
$
98.6

 
$
79.4

 
$
99.4

 
$
61.5

 
$
26.9

 
$
28.2

 
$
29.0

 
$
355.9

 
$
145.6

Preferred Property & Casualty Insurance
 
16.1

 
26.5

 
6.4

 
3.3

 
6.6

 
14.1

 
(8.7
)
 
16.6

 
52.3

 
28.6

Life & Health Insurance
 
35.5

 
41.0

 
16.1

 
29.3

 
18.3

 
33.5

 
33.8

 
30.3

 
121.9

 
115.9

Total Segment Operating Profit
 
130.1

 
166.1

 
101.9

 
132.0

 
86.4

 
74.5

 
53.3

 
75.9

 
530.1

 
290.1

Partial Satisfaction of Judgment
 
—

 
—

 
20.1

 
—

 
—

 
35.7

 
—

 
—

 
20.1

 
35.7

Other
 
(7.3
)
 
(3.1
)
 
(12.4
)
 
(8.6
)
 
(11.4
)
 
(14.3
)
 
(8.4
)
 
(5.5
)
 
(31.4
)
 
(39.6
)
Corporate and Other Operating Income(Loss)
 
(7.3
)
 
(3.1
)
 
7.7

 
(8.6
)
 
(11.4
)
 
21.4

 
(8.4
)
 
(5.5
)
 
(11.3
)
 
(3.9
)
Total Operating Profit
 
122.8

 
163.0

 
109.6

 
123.4

 
75.0

 
95.9

 
44.9

 
70.4

 
518.8

 
286.2

Income (Loss) From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
39.2

 
9.8

 
25.5

 
64.4

 
(76.4
)
 
11.0

 
0.4

 
0.7

 
138.9

 
(64.3
)
Net Realized Gains on Sales of Investments
 
2.8

 
1.7

 
21.3

 
16.1

 
16.4

 
3.6

 
3.8

 
2.6

 
41.9

 
26.4

Net Impairment Losses Recognized in Earnings
 
(1.7
)
 
(1.8
)
 
(6.7
)
 
(3.6
)
 
(2.2
)
 
(1.8
)
 
—

 
(0.5
)
 
(13.8
)
 
(4.5
)
Acquisition Related Transaction Integration and Other Costs
 
(6.2
)
 
(5.4
)
 
(1.2
)
 
(5.6
)
 
(6.7
)
 
(28.2
)
 
(3.6
)
 
(6.2
)
 
(18.4
)
 
(44.7
)
Loss from Early Extinguishment of Debt
 
—

 
(5.8
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(5.8
)
 
—

Income from Continuing Operations before Income Taxes
 
$
156.9

 
$
161.5

 
$
148.5

 
$
194.7

 
$
6.1

 
$
80.5

 
$
45.5

 
$
67.0

 
$
661.6

 
$
199.1

Segment Net Operating Income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Property & Casualty Insurance
 
$
62.3

 
$
78.5

 
$
62.7

 
$
79.6

 
$
48.5

 
$
21.5

 
$
22.4

 
$
23.4

 
$
283.1

 
$
115.8

Preferred Property & Casualty Insurance
 
12.8

 
21.1

 
5.2

 
2.8

 
6.0

 
12.2

 
(6.0
)
 
13.5

 
41.9

 
25.7

Life & Health Insurance
 
28.9

 
33.4

 
13.3

 
23.1

 
13.6

 
27.1

 
26.7

 
24.1

 
98.7

 
91.5

Total Segment Net Operating Income
 
104.0

 
133.0

 
81.2

 
105.5

 
68.1

 
60.8

 
43.1

 
61.0

 
423.7

 
233.0

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

 
—

 
—

 
—

 
0.4

 
26.0

 
—

 
—

 
—

 
26.4

Partial Satisfaction of Legal Judgment
 
—

 
—

 
15.9

 
—

 
—

 
28.2

 
—

 
—

 
15.9

 
28.2

Other
 
(6.1
)
 
(3.0
)
 
(5.6
)
 
(6.6
)
 
(8.6
)
 
(10.5
)
 
(6.6
)
 
(3.5
)
 
(21.3
)
 
(29.2
)
Corporate and Other Net Operating Income (Loss)
 
(6.1
)
 
(3.0
)
 
10.3

 
(6.6
)
 
(8.2
)
 
43.7

 
(6.6
)
 
(3.5
)
 
(5.4
)
 
25.4

Adjusted Consolidated Net Operating Income
 
97.9

 
130.0

 
91.5

 
98.9

 
59.9

 
104.5

 
36.5

 
57.5

 
418.3

 
258.4

Net Income (Loss) From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
30.9

 
7.8

 
20.1

 
50.9

 
(60.4
)
 
8.7

 
0.3

 
0.6

 
109.7

 
(50.8
)
Net Realized Gains on Sales of Investments
 
2.2

 
1.4

 
16.8

 
12.7

 
13.0

 
2.8

 
3.0

 
2.1

 
33.1

 
20.9

Net Impairment Losses Recognized in Earnings
 
(1.3
)
 
(1.5
)
 
(5.3
)
 
(2.8
)
 
(1.8
)
 
(1.4
)
 
—

 
(0.4
)
 
(10.9
)
 
(3.6
)
Acquisition Related Transaction, Integration and Other Costs
 
(5.0
)
 
(4.1
)
 
(1.0
)
 
(4.4
)
 
(5.7
)
 
(22.3
)
 
(2.3
)
 
(6.2
)
 
(14.5
)
 
(36.5
)
Loss from Early Extinguishment of Debt
 
—

 
(4.6
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(4.6
)
 
—

Income from Continuing Operations
 
$
124.7


$
129.0


$
122.1


$
155.3


$
5.0

 
$
92.3

 
$
37.5

 
$
53.6

 
$
531.1


$
188.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Page 12

Kemper Corporation
Catastrophe Frequency and Severity
(Dollars in Millions)
(Unaudited)
 
 
Year Ended Dec 31, 2019
 
 
Specialty Property & Casualty Insurance Segment
 
Preferred 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
 
41

 
$
11.1

 
53

 
30.9

 
29

 
$
3.1

 
56

 
$
42.4

$5 - $10
 
—

 
—

 
3

 
19.0

 
—

 
—

 
3

 
20.8

$10 - $15
 
—

 
—

 
1

 
13.1

 
—

 
—

 
1

 
14.0

$15 - $20
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

$20 - $25
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Greater Than $25
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total
 
41

 
$
11.1

 
57

 
$
63.0

 
29

 
$
3.1

 
60

 
$
77.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended Dec 31, 2018
 
 
Specialty Property & Casualty Insurance Segment
 
Preferred 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
 
$
35

 
$
4.7

 
45

 
32.9

 
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
 
35

 
$
4.7

 
49

 
$
87.3

 
24

 
$
4.0

 
50

 
$
96.0


Page 13

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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
782.5

 
$
815.0

 
$
804.7

 
$
809.1

 
$
674.7

 
$
735.4

 
$
338.9

 
$
318.4

 
$
3,211.3

 
$
2,067.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
799.7

 
$
783.4

 
$
766.0

 
$
729.3

 
$
717.8

 
$
711.2

 
$
320.0

 
$
278.4

 
$
3,078.4

 
$
2,027.4

Net Investment Income
 
28.3

 
28.8

 
28.9

 
21.5

 
22.6

 
20.7

 
10.2

 
9.9

 
107.5

 
63.4

Other Income
 
0.8

 
4.4

 
1.0

 
0.8

 
0.8

 
0.9

 
0.4

 
0.3

 
7.0

 
2.4

Total Revenues
 
828.8

 
816.6

 
795.9

 
751.6

 
741.2

 
732.8

 
330.6

 
288.6

 
3,192.9

 
2,093.2

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
599.5

 
579.4

 
579.2

 
544.3

 
530.3

 
527.6

 
247.2

 
212.3

 
2,302.4

 
1,517.4

Catastrophe Losses and LAE
 
3.8

 
2.3

 
4.4

 
0.6

 
1.0

 
1.4

 
2.1

 
0.2

 
11.1

 
4.7

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(4.1
)
 
(4.1
)
 
(8.6
)
 
(18.3
)
 
—

 
(1.6
)
 
4.1

 
(0.5
)
 
(35.1
)
 
2.0

Catastrophe Losses and LAE
 
0.2

 
0.2

 
(0.1
)
 
0.2

 
—

 
—

 
—

 
(0.3
)
 
0.5

 
(0.3
)
Total Incurred Losses and LAE
 
599.4

 
577.8

 
574.9

 
526.8

 
531.3

 
527.4

 
253.4

 
211.7

 
2,278.9

 
1,523.8

Insurance Expenses
 
150.7

 
139.2

 
140.9

 
124.8

 
148.0

 
176.8

 
49.0

 
47.9

 
555.6

 
421.7

Other Expenses
 
0.2

 
1.0

 
0.7

 
0.6

 
0.4

 
1.7

 
—

 
—

 
2.5

 
2.1

Operating Profit
 
78.5

 
98.6

 
79.4

 
99.4

 
61.5

 
26.9

 
28.2

 
29.0

 
355.9

 
145.6

Income Tax Expense
 
(16.2
)
 
(20.1
)
 
(16.7
)
 
(19.8
)
 
(13.0
)
 
(5.4
)
 
(5.8
)
 
(5.6
)
 
(72.8
)
 
(29.8
)
Segment Net Operating Income
 
$
62.3

 
$
78.5

 
$
62.7

 
$
79.6

 
$
48.5

 
$
21.5

 
$
22.4

 
$
23.4

 
$
283.1

 
$
115.8

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
75.0
 %
 
74.0
 %
 
75.6
 %
 
74.6
 %
 
73.9
%
 
74.2
 %
 
77.2
%
 
76.2
 %
 
74.7
 %
 
74.9
%
Current Year Catastrophe Losses and LAE Ratio
 
0.5

 
0.3

 
0.6

 
0.1

 
0.1

 
0.2

 
0.7

 
0.1

 
0.4

 
0.2

Prior Years Non-catastrophe Losses and LAE Ratio
 
(0.5
)
 
(0.5
)
 
(1.1
)
 
(2.5
)
 
—

 
(0.2
)
 
1.3

 
(0.2
)
 
(1.1
)
 
0.1

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
—

Total Incurred Loss and LAE Ratio
 
75.0

 
73.8

 
75.1

 
72.2

 
74.0

 
74.2

 
79.2

 
76.0

 
74.0

 
75.2

Insurance Expense Ratio
 
18.8

 
17.8

 
18.4


17.1

 
20.6

 
24.9

 
15.3

 
17.2

 
18.0

 
20.8

Combined Ratio
 
93.8
 %
 
91.6
 %
 
93.5
 %
 
89.3
 %
 
94.6
%
 
99.1
 %
 
94.5
%
 
93.2
 %
 
92.0
 %
 
96.0
%
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
75.0
 %
 
74.0
 %
 
75.6
 %
 
74.6
 %
 
73.9
%
 
74.2
 %
 
77.2
%
 
76.2
 %
 
74.7
 %
 
74.9
%
Insurance Expense Ratio
 
18.8

 
17.8

 
18.4

 
17.1

 
20.6

 
24.9

 
15.3

 
17.2

 
18.0

 
20.8

Underlying Combined Ratio
 
93.8
 %
 
91.8
 %
 
94.0
 %
 
91.7
 %
 
94.5
%
 
99.1
 %
 
92.5
%
 
93.4
 %
 
92.7
 %
 
95.7
%
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio as Reported
 
93.8
 %
 
91.6
 %
 
93.5
 %
 
89.3
 %
 
94.6
%
 
99.1
 %
 
94.5
%
 
93.2
 %
 
92.0
 %
 
96.0
%
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
0.5

 
0.3

 
0.6

 
0.1

 
0.1

 
0.2

 
0.7

 
0.1

 
0.4

 
0.2

Prior Years Non-catastrophe Losses and LAE Ratio
 
(0.5
)
 
(0.5
)
 
(1.1
)
 
(2.5
)
 
—

 
(0.2
)
 
1.3

 
(0.2
)
 
(1.1
)
 
0.1

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
—

Underlying Combined Ratio
 
93.8
 %
 
91.8
 %
 
94.0
 %
 
91.7
 %
 
94.5
%
 
99.1
 %
 
92.5
%
 
93.4
 %
 
92.7
 %
 
95.7
%
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 14

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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
714.9

 
$
749.5

 
$
734.5

 
$
742.2

 
$
618.5

 
$
679.1

 
$
325.4

 
$
304.9

 
$
2,941.1

 
$
1,927.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
733.1

 
$
719.2

 
$
703.7

 
$
669.6

 
$
660.5

 
$
655.3

 
$
307.5

 
$
266.2

 
$
2,825.6

 
$
1,889.5

Net Investment Income
 
24.5

 
24.9

 
24.6

 
18.4

 
19.1

 
17.2

 
8.8

 
8.4

 
92.4

 
53.5

Other Income
 
0.8

 
4.3

 
0.9

 
0.8

 
0.7

 
0.9

 
0.3

 
0.3

 
6.8

 
2.2

Total Revenues
 
758.4

 
748.4

 
729.2

 
688.8

 
680.3

 
673.4

 
316.6

 
274.9

 
2,924.8

 
1,945.2

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
557.5

 
538.2

 
537.0

 
498.8

 
492.0

 
485.6

 
237.8

 
202.8

 
2,131.5

 
1,418.2

Catastrophe Losses and LAE
 
3.3

 
2.0

 
4.1

 
0.5

 
0.7

 
1.3

 
1.7

 
0.2

 
9.9

 
3.9

Prior Years:
 

 

 

 

 

 

 

 

 

 

Non-catastrophe Losses and LAE
 
(4.4
)
 
(1.8
)
 
(3.7
)
 
(14.4
)
 
2.4

 
(1.1
)
 
4.2

 
0.2

 
(24.3
)
 
5.7

Catastrophe Losses and LAE
 
0.2

 
0.2

 
—

 
0.1

 
—

 
—

 
—

 
(0.2
)
 
0.5

 
(0.2
)
Total Incurred Losses and LAE
 
556.6

 
538.6

 
537.4

 
485.0

 
495.1

 
485.8

 
243.7

 
203.0

 
2,117.6

 
1,427.6

Insurance Expenses
 
138.1

 
128.4

 
128.9

 
114.7

 
132.5

 
160.8

 
46.7

 
45.2

 
510.1

 
385.2

Other Expenses
 
0.2

 
1.0

 
0.7

 
0.6

 
0.4

 
1.6

 
—

 
—

 
2.5

 
2.0

Operating Profit
 
63.5

 
80.4

 
62.2

 
88.5

 
52.3

 
25.2

 
26.2

 
26.7

 
294.6

 
130.4

Income Tax Expense
 
(10.5
)
 
(18.4
)
 
(13.0
)
 
(17.8
)
 
(10.9
)
 
(4.8
)
 
(5.4
)
 
(5.2
)
 
(59.7
)
 
(26.3
)
Total Product Line Net Operating Income
 
$
53.0

 
$
62.0

 
$
49.2

 
$
70.7

 
$
41.4

 
$
20.4

 
$
20.8

 
$
21.5

 
$
234.9

 
$
104.1

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
76.0
 %
 
74.9
 %
 
76.3
 %
 
74.5
 %
 
74.5
%
 
74.1
 %
 
77.3
%
 
76.2
 %
 
75.4
 %
 
75.1
%
Current Year Catastrophe Losses and LAE Ratio
 
0.5

 
0.3

 
0.6

 
0.1

 
0.1

 
0.2

 
0.6

 
0.1

 
0.4

 
0.2

Prior Years Non-catastrophe Losses and LAE Ratio
 
(0.6
)
 
(0.3
)
 
(0.5
)
 
(2.2
)
 
0.4

 
(0.2
)
 
1.4

 
0.1

 
(0.9
)
 
0.3

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
—

Total Incurred Loss and LAE Ratio
 
75.9

 
74.9

 
76.4

 
72.4

 
75.0

 
74.1

 
79.3

 
76.3

 
74.9

 
75.6

Insurance Expense Ratio
 
18.8

 
17.9

 
18.3

 
17.1

 
20.1

 
24.5

 
15.2

 
17.0

 
18.1

 
20.4

Combined Ratio
 
94.7
 %
 
92.8
 %
 
94.7
 %
 
89.5
 %
 
95.1
%
 
98.6
 %
 
94.5
%
 
93.3
 %
 
93.0
 %
 
96.0
%
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
76.0
 %
 
74.9
 %
 
76.3
 %
 
74.5
 %
 
74.5
%
 
74.1
 %
 
77.3
%
 
76.2
 %
 
75.4
 %
 
75.1
%
Insurance Expense Ratio
 
18.8

 
17.9

 
18.3

 
17.1

 
20.1

 
24.5

 
15.2

 
17.0

 
18.1

 
20.4

Underlying Combined Ratio
 
94.8
 %
 
92.8
 %
 
94.6
 %
 
91.6
 %
 
94.6
%
 
98.6
 %
 
92.5
%
 
93.2
 %
 
93.5
 %
 
95.5
%
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
94.7
 %
 
92.8
 %
 
94.7
 %
 
89.5
 %
 
95.1
%
 
98.6
 %
 
94.5
%
 
93.3
 %
 
93.0
 %
 
96.0
%
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
0.5

 
0.3

 
0.6

 
0.1

 
0.1

 
0.2

 
0.6

 
0.1

 
0.4

 
0.2

Prior Years Non-catastrophe Losses and LAE Ratio
 
(0.6
)
 
(0.3
)
 
(0.5
)
 
(2.2
)
 
0.4

 
(0.2
)
 
1.4

 
0.1

 
(0.9
)
 
0.3

Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
—

Underlying Combined Ratio
 
94.8
 %
 
92.8
 %
 
94.6
 %
 
91.6
 %
 
94.6
%
 
98.6
 %
 
92.5
%
 
93.2
 %
 
93.5
 %
 
95.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
67.6

 
$
65.5

 
$
70.2

 
$
66.9

 
$
56.2

 
$
56.3

 
$
13.5

 
$
13.5

 
$
270.2

 
$
139.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
66.6

 
$
64.2

 
$
62.3

 
$
59.7

 
$
57.3

 
$
55.9

 
$
12.5

 
$
12.2

 
$
252.8

 
$
137.9

Net Investment Income
 
3.8

 
3.9

 
4.3

 
3.1

 
3.5

 
3.5

 
1.4

 
1.5

 
15.1

 
9.9

Other Income
 
—

 
0.1

 
0.1

 
—

 
0.1

 
—

 
0.1

 
—

 
0.2

 
0.2

Total Revenues
 
70.4

 
68.2

 
66.7

 
62.8

 
60.9

 
59.4

 
14.0

 
13.7

 
268.1

 
148.0

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
42.0

 
41.2

 
42.2

 
45.5

 
38.3

 
42.0

 
9.4

 
9.5

 
170.9

 
99.2

Catastrophe Losses and LAE
 
0.5

 
0.3

 
0.3

 
0.1

 
0.3

 
0.1

 
0.4

 
—

 
1.2

 
0.8

Prior Years:
 
 
 

 
 
 

 

 

 

 

 

 

Non-catastrophe Losses and LAE
 
0.3

 
(2.3
)
 
(4.9
)
 
(3.9
)
 
(2.4
)
 
(0.5
)
 
(0.1
)
 
(0.7
)
 
(10.8
)
 
(3.7
)
Catastrophe Losses and LAE
 
—

 
—

 
(0.1
)
 
0.1

 
—

 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
Total Incurred Losses and LAE
 
42.8

 
39.2

 
37.5

 
41.8

 
36.2

 
41.6

 
9.7

 
8.7

 
161.3

 
96.2

Insurance Expenses
 
12.6

 
10.8

 
12.0

 
10.1

 
15.5

 
16.0

 
2.3

 
2.7

 
45.5

 
36.5

Other Expenses
 
—

 
—

 
—

 
—

 
—

 
0.1

 
—

 
—

 
—

 
0.1

Operating Profit
 
15.0

 
18.2

 
17.2

 
10.9

 
9.2

 
1.7

 
2.0

 
2.3

 
61.3

 
15.2

Income Tax Expense
 
(5.7
)
 
(1.7
)
 
(3.7
)
 
(2.0
)
 
(2.1
)
 
(0.6
)
 
(0.4
)
 
(0.4
)
 
(13.1
)
 
(3.5
)
Total Product Line Net Operating Income
 
$
9.3

 
$
16.5

 
$
13.5

 
$
8.9

 
$
7.1

 
$
1.1

 
$
1.6

 
$
1.9

 
$
48.2

 
$
11.7

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
63.0
%
 
64.2
 %
 
67.7
 %
 
76.1
 %
 
66.9
 %
 
75.1
 %
 
75.2
 %
 
77.8
 %
 
67.6
 %
 
72.0
 %
Current Year Catastrophe Losses and LAE Ratio
 
0.8

 
0.5

 
0.5

 
0.2

 
0.5

 
0.2

 
3.2

 
—

 
0.5

 
0.6

Prior Years Non-catastrophe Losses and LAE Ratio
 
0.5

 
(3.6
)
 
(7.9
)
 
(6.5
)
 
(4.2
)
 
(0.9
)
 
(0.8
)
 
(5.7
)
 
(4.3
)
 
(2.7
)
Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
(0.1
)
 
0.2

 
—

 
—

 
—

 
(0.8
)
 
—

 
(0.1
)
Total Incurred Loss and LAE Ratio
 
64.3

 
61.1

 
60.2

 
70.0

 
63.2

 
74.4

 
77.6

 
71.3

 
63.8

 
69.8

Insurance Expense Ratio
 
18.9

 
16.8

 
19.3

 
16.9

 
27.1

 
28.6

 
18.4

 
22.1

 
18.0

 
26.5

Combined Ratio
 
83.2
%
 
77.9
 %
 
79.5
 %
 
86.9
 %
 
90.3
 %
 
103.0
 %
 
96.0
 %
 
93.4
 %
 
81.8
 %
 
96.3
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
63.0
%
 
64.2
 %
 
67.7
 %
 
76.1
 %
 
66.9
 %
 
75.1
 %
 
75.2
 %
 
77.8
 %
 
67.6
 %
 
72.0
 %
Insurance Expense Ratio
 
18.9

 
16.8

 
19.3

 
16.9

 
27.1

 
28.6

 
18.4

 
22.1

 
18.0

 
26.5

Underlying Combined Ratio
 
81.9
%
 
81.0
 %
 
87.0
 %
 
93.0
 %
 
94.0
 %
 
103.7
 %
 
93.6
 %
 
99.9
 %
 
85.6
 %
 
98.5
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
83.2
%
 
77.9
 %
 
79.5
 %
 
86.9
 %
 
90.3
 %
 
103.0
 %
 
96.0
 %
 
93.4
 %
 
81.8
 %
 
96.3
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
0.8

 
0.5

 
0.5

 
0.2

 
0.5

 
0.2

 
3.2

 
—

 
0.5

 
0.6

Prior Years Non-catastrophe Losses and LAE Ratio
 
0.5

 
(3.6
)
 
(7.9
)
 
(6.5
)
 
(4.2
)
 
(0.9
)
 
(0.8
)
 
(5.7
)
 
(4.3
)
 
(2.7
)
Prior Years Catastrophe Losses and LAE Ratio
 
—

 
—

 
(0.1
)
 
0.2

 
—

 
—

 
—

 
(0.8
)
 
—

 
(0.1
)
Underlying Combined Ratio
 
81.9
%
 
81.0
 %
 
87.0
 %
 
93.0
 %
 
94.0
 %
 
103.7
 %
 
93.6
 %
 
99.9
 %
 
85.6
 %
 
98.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
172.6

 
$
189.6

 
$
197.5

 
$
179.6

 
$
184.7

 
$
195.6

 
$
198.0

 
$
170.5

 
$
739.3

 
$
748.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
185.2

 
$
191.0

 
$
188.5

 
$
185.6

 
$
188.8

 
$
184.0

 
$
181.1

 
$
176.8

 
$
750.3

 
$
730.7

Net Investment Income
 
11.5

 
12.0

 
12.3

 
8.3

 
14.0

 
20.1

 
14.0

 
13.7

 
44.1

 
61.8

Total Revenues
 
196.7

 
203.0

 
200.8

 
193.9

 
202.8

 
204.1

 
195.1

 
190.5

 
794.4

 
792.5

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
120.2

 
121.7

 
119.1

 
120.8

 
120.8

 
116.6

 
107.8

 
114.2

 
481.8

 
459.4

Catastrophe Losses and LAE
 
11.9

 
11.9

 
22.6

 
16.6

 
21.4

 
18.3

 
40.3

 
7.3

 
63.0

 
87.3

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(7.1
)
 
(1.1
)
 
(4.3
)
 
(5.1
)
 
(3.0
)
 
(1.9
)
 
0.6

 
4.2

 
(17.6
)
 
(0.1
)
Catastrophe Losses and LAE
 
(3.1
)
 
(15.4
)
 
(0.9
)
 
1.0

 
(0.8
)
 
(0.2
)
 
(1.8
)
 
(5.4
)
 
(18.4
)
 
(8.2
)
Total Incurred Losses and LAE
 
121.9

 
117.1

 
136.5

 
133.3

 
138.4

 
132.8

 
146.9

 
120.3

 
508.8

 
538.4

Insurance Expenses
 
58.7

 
59.4

 
57.9

 
57.3

 
57.8

 
57.2

 
56.9

 
53.6

 
233.3

 
225.5

Operating Profit (Loss)
 
16.1

 
26.5

 
6.4

 
3.3

 
6.6

 
14.1

 
(8.7
)
 
16.6

 
52.3

 
28.6

Income Tax Benefit (Expense)
 
(3.3
)
 
(5.4
)
 
(1.2
)
 
(0.5
)
 
(0.6
)
 
(1.9
)
 
2.7

 
(3.1
)
 
(10.4
)
 
(2.9
)
Segment Net Operating Income (Loss)
 
$
12.8

 
$
21.1

 
$
5.2

 
$
2.8

 
$
6.0

 
$
12.2

 
$
(6.0
)
 
$
13.5

 
$
41.9

 
$
25.7

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
64.9
 %
 
63.8
 %
 
63.2
 %
 
65.1
 %
 
64.0
 %
 
63.4
 %
 
59.5
 %
 
64.6
 %
 
64.2
 %
 
62.9
 %
Current Year Catastrophe Losses and LAE Ratio
 
6.4

 
6.2

 
12.0

 
8.9

 
11.3

 
9.9

 
22.3

 
4.1

 
8.4

 
11.9

Prior Years Non-catastrophe Losses and LAE Ratio
 
(3.8
)
 
(0.6
)
 
(2.3
)
 
(2.7
)
 
(1.6
)
 
(1.0
)
 
0.3

 
2.4

 
(2.3
)
 
—

Prior Years Catastrophe Losses and LAE Ratio
 
(1.7
)
 
(8.1
)
 
(0.5
)
 
0.5

 
(0.4
)
 
(0.1
)
 
(1.0
)
 
(3.1
)
 
(2.5
)
 
(1.1
)
Total Incurred Loss and LAE Ratio
 
65.8

 
61.3

 
72.4

 
71.8

 
73.3

 
72.2

 
81.1

 
68.0

 
67.8

 
73.7

Insurance Expense Ratio
 
31.7

 
31.1

 
30.7

 
30.9

 
30.6

 
31.1

 
31.4

 
30.3

 
31.1

 
30.9

Combined Ratio
 
97.5
 %
 
92.4
 %
 
103.1
 %
 
102.7
 %
 
103.9
 %
 
103.3
 %
 
112.5
 %
 
98.3
 %
 
98.9
 %
 
104.6
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
64.9
 %
 
63.8
 %
 
63.2
 %
 
65.1
 %
 
64.0
 %
 
63.4
 %
 
59.5
 %
 
64.6
 %
 
64.2
 %
 
62.9
 %
Insurance Expense Ratio
 
31.7

 
31.1

 
30.7

 
30.9

 
30.6

 
31.1

 
31.4

 
30.3

 
31.1

 
30.9

Underlying Combined Ratio
 
96.6
 %
 
94.9
 %
 
93.9
 %
 
96.0
 %
 
94.6
 %
 
94.5
 %
 
90.9
 %
 
94.9
 %
 
95.3
 %
 
93.8
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio as Reported
 
97.5
 %
 
92.4
 %
 
103.1
 %
 
102.7
 %
 
103.9
 %
 
103.3
 %
 
112.5
 %
 
98.3
 %
 
98.9
 %
 
104.6
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
6.4

 
6.2

 
12.0

 
8.9

 
11.3

 
9.9

 
22.3

 
4.1

 
8.4

 
11.9

Prior Years Non-catastrophe Losses and LAE Ratio
 
(3.8
)
 
(0.6
)
 
(2.3
)
 
(2.7
)
 
(1.6
)
 
(1.0
)
 
0.3

 
2.4

 
(2.3
)
 
—

Prior Years Catastrophe Losses and LAE Ratio
 
(1.7
)
 
(8.1
)
 
(0.5
)
 
0.5

 
(0.4
)
 
(0.1
)
 
(1.0
)
 
(3.1
)
 
(2.5
)
 
(1.1
)
Underlying Combined Ratio
 
96.6
 %
 
94.9
 %
 
93.9
 %
 
96.0
 %
 
94.6
 %
 
94.5
 %
 
90.9
 %
 
94.9
 %
 
95.3
 %
 
93.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
Results of Operations and Selected Financial Information (continued)
(Dollars in Millions)
(Unaudited)
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31, 2019
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Automobile
 
$
262.3

 
$
267.3

 
$
264.5

 
$
268.0

 
$
270.0

 
$
272.3

 
$
276.3

 
$
278.8

Homeowners
 
95.3

 
108.8

 
131.6

 
133.5

 
147.9

 
139.4

 
137.2

 
124.6

Other Personal
 
30.9

 
32.2

 
34.0

 
34.3

 
35.0

 
32.6

 
34.8

 
35.3

Insurance Reserves
 
$
388.5

 
$
408.3

 
$
430.1

 
$
435.8

 
$
452.9

 
$
444.3

 
$
448.3

 
$
438.7

Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and Allocated LAE Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Case and Allocated LAE
 
$
264.1

 
$
277.8

 
$
278.5

 
$
290.2

 
$
312.5

 
$
304.4

 
$
307.7

 
$
313.6

Incurred but Not Reported
 
96.0

 
100.4

 
120.2

 
113.0

 
110.0

 
109.0

 
109.6

 
95.5

Total Loss Reserves
 
360.1

 
378.2

 
398.7

 
403.2

 
422.5

 
413.4

 
417.3

 
409.1

Unallocated LAE Reserves
 
28.4

 
30.1

 
31.4

 
32.6

 
30.4

 
30.9

 
31.0

 
29.6

Insurance Reserves
 
$
388.5

 
$
408.3

 
$
430.1

 
$
435.8

 
$
452.9

 
$
444.3

 
$
448.3

 
$
438.7



Page 18

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
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
111.5

 
$
117.5

 
$
123.4

 
$
116.5

 
$
115.7

 
$
119.3

 
$
120.9

 
$
106.2

 
$
468.9

 
$
462.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
117.2

 
$
119.7

 
$
117.9

 
$
115.4

 
$
115.2

 
$
111.4

 
$
108.7

 
$
104.9

 
$
470.2

 
$
440.2

Net Investment Income
 
5.4

 
5.6

 
5.8

 
3.9

 
6.5

 
9.3

 
6.5

 
6.3

 
20.7

 
28.6

Total Revenues
 
122.6

 
125.3

 
123.7

 
119.3

 
121.7

 
120.7

 
115.2

 
111.2

 
490.9

 
468.8

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
86.2

 
83.2

 
82.9

 
80.2

 
85.6

 
74.9

 
74.7

 
73.6

 
332.5

 
308.8

Catastrophe Losses and LAE
 
1.5

 
2.1

 
1.7

 
2.5

 
0.4

 
2.3

 
3.9

 
0.6

 
7.8

 
7.2

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(2.8
)
 
(0.5
)
 
(3.7
)
 
(1.2
)
 
(2.2
)
 
(2.6
)
 
(1.4
)
 
0.5

 
(8.2
)
 
(5.7
)
Catastrophe Losses and LAE
 
0.2

 
(0.1
)
 
—

 
(0.1
)
 
—

 
—

 
(0.1
)
 
—

 
—

 
(0.1
)
Total Incurred Losses and LAE
 
85.1

 
84.7

 
80.9

 
81.4

 
83.8

 
74.6

 
77.1

 
74.7

 
332.1

 
310.2

Insurance Expenses
 
36.3

 
36.8

 
35.5

 
35.0

 
34.9

 
34.0

 
32.1

 
31.7

 
143.6

 
132.7

Operating Profit
 
1.2

 
3.8

 
7.3

 
2.9

 
3.0

 
12.1

 
6.0

 
4.8

 
15.2

 
25.9

Income Tax Expense
 
(0.2
)
 
(0.7
)
 
(1.5
)
 
(0.5
)
 
(0.3
)
 
(2.0
)
 
(1.0
)
 
(0.8
)
 
(2.9
)
 
(4.1
)
Total Product Line Net Operating Income (Loss)
 
$
1.0

 
$
3.1

 
$
5.8

 
$
2.4

 
$
2.7

 
$
10.1

 
$
5.0

 
$
4.0

 
$
12.3

 
$
21.8

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
73.5
 %
 
69.5
 %
 
70.3
 %
 
69.4
 %
 
74.3
 %
 
67.2
 %
 
68.7
 %
 
70.1
%
 
70.6
 %
 
70.2
 %
Current Year Catastrophe Losses and LAE Ratio
 
1.3

 
1.8

 
1.4

 
2.2

 
0.3

 
2.1

 
3.6

 
0.6

 
1.7

 
1.6

Prior Years Non-catastrophe Losses and LAE Ratio
 
(2.4
)
 
(0.4
)
 
(3.1
)
 
(1.0
)
 
(1.9
)
 
(2.3
)
 
(1.3
)
 
0.5

 
(1.7
)
 
(1.3
)
Prior Years Catastrophe Losses and LAE Ratio
 
0.2

 
(0.1
)
 
—

 
(0.1
)
 
—

 
—

 
(0.1
)
 
—

 
—

 
—

Total Incurred Loss and LAE Ratio
 
72.6

 
70.8

 
68.6

 
70.5

 
72.7

 
67.0

 
70.9

 
71.2

 
70.6

 
70.5

Insurance Expense Ratio
 
31.0

 
30.7

 
30.1

 
30.3

 
30.3

 
30.5

 
29.5

 
30.2

 
30.5

 
30.1

Combined Ratio
 
103.6
 %
 
101.5
 %
 
98.7
 %
 
100.8
 %
 
103.0
 %
 
97.5
 %
 
100.4
 %
 
101.4
%
 
101.1
 %
 
100.6
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
73.5
 %
 
69.5
 %
 
70.3
 %
 
69.4
 %
 
74.3
 %
 
67.2
 %
 
68.7
 %
 
70.1
%
 
70.6
 %
 
70.2
 %
Insurance Expense Ratio
 
31.0

 
30.7

 
30.1

 
30.3

 
30.3

 
30.5

 
29.5

 
30.2

 
30.5

 
30.1

Underlying Combined Ratio
 
104.5
 %
 
100.2
 %
 
100.4
 %
 
99.7
 %
 
104.6
 %
 
97.7
 %
 
98.2
 %
 
100.3
%
 
101.1
 %
 
100.3
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
103.6
 %
 
101.5
 %
 
98.7
 %
 
100.8
 %
 
103.0
 %
 
97.5
 %
 
100.4
 %
 
101.4
%
 
101.1
 %
 
100.6
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
1.3

 
1.8

 
1.4

 
2.2

 
0.3

 
2.1

 
3.6

 
0.6

 
1.7

 
1.6

Prior Years Non-catastrophe Losses and LAE Ratio
 
(2.4
)
 
(0.4
)
 
(3.1
)
 
(1.0
)
 
(1.9
)
 
(2.3
)
 
(1.3
)
 
0.5

 
(1.7
)
 
(1.3
)
Prior Years Catastrophe Losses and LAE Ratio
 
0.2

 
(0.1
)
 
—

 
(0.1
)
 
—

 
—

 
(0.1
)
 
—

 
—

 
—

Underlying Combined Ratio
 
104.5
 %
 
100.2
 %
 
100.4
 %
 
99.7
 %
 
104.6
 %
 
97.7
 %
 
98.2
 %
 
100.3
%
 
101.1
 %
 
100.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 19

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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
61.1

 
$
72.1

 
$
74.1

 
$
63.1

 
$
69.0

 
$
76.3

 
$
77.1

 
$
64.3

 
$
270.4

 
$
286.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
68.0

 
$
71.3

 
$
70.6

 
$
70.2

 
$
73.6

 
$
72.6

 
$
72.4

 
$
71.9

 
$
280.1

 
$
290.5

Net Investment Income
 
6.1

 
6.4

 
6.5

 
4.4

 
7.5

 
10.8

 
7.5

 
7.4

 
23.4

 
33.2

Total Revenues
 
74.1

 
77.7

 
77.1

 
74.6

 
81.1

 
83.4

 
79.9

 
79.3

 
303.5

 
323.7

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
34.0

 
38.5

 
36.2

 
40.6

 
35.2

 
41.7

 
33.1

 
40.6

 
149.3

 
150.6

Catastrophe Losses and LAE
 
10.4

 
9.8

 
20.9

 
14.1

 
21.0

 
16.0

 
36.4

 
6.7

 
55.2

 
80.1

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(4.3
)
 
(0.6
)
 
(0.6
)
 
(3.9
)
 
(0.8
)
 
0.7

 
2.0

 
3.7

 
(9.4
)
 
5.6

Catastrophe Losses and LAE
 
(3.3
)
 
(15.3
)
 
(0.9
)
 
1.1

 
(0.8
)
 
(0.2
)
 
(1.7
)
 
(5.4
)
 
(18.4
)
 
(8.1
)
Total Incurred Losses and LAE
 
36.8

 
32.4

 
55.6

 
51.9

 
54.6

 
58.2

 
69.8

 
45.6

 
176.7

 
228.2

Insurance Expenses
 
22.4

 
22.6


22.4

 
22.3

 
22.9

 
23.2

 
24.8

 
21.9

 
89.7

 
92.8

Operating Profit (Loss)
 
14.9

 
22.7

 
(0.9
)
 
0.4

 
3.6

 
2.0

 
(14.7
)
 
11.8

 
37.1

 
2.7

Income Tax Benefit (Expense)
 
(3.1
)
 
(4.7
)
 
0.3

 
—

 
(0.3
)
 
0.1

 
3.7

 
(2.3
)
 
(7.5
)
 
1.2

Total Product Line Net Operating Income (Loss)
 
$
11.8

 
$
18.0

 
$
(0.6
)
 
$
0.4

 
$
3.3

 
$
2.1

 
$
(11.0
)
 
$
9.5

 
$
29.6

 
$
3.9

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
50.0
 %
 
54.0
 %
 
51.3
 %
 
57.8
 %
 
47.9
 %
 
57.5
 %
 
45.6
 %
 
56.5
 %
 
53.4
 %
 
51.9
 %
Current Year Catastrophe Losses and LAE Ratio
 
15.3

 
13.7

 
29.6

 
20.1

 
28.5

 
22.0

 
50.3

 
9.3

 
19.7

 
27.6

Prior Years Non-catastrophe Losses and LAE Ratio
 
(6.3
)
 
(0.8
)
 
(0.8
)
 
(5.6
)
 
(1.1
)
 
1.0

 
2.8

 
5.1

 
(3.4
)
 
1.9

Prior Years Catastrophe Losses and LAE Ratio
 
(4.9
)
 
(21.5
)
 
(1.3
)
 
1.6

 
(1.1
)
 
(0.3
)
 
(2.3
)
 
(7.5
)
 
(6.6
)
 
(2.8
)
Total Incurred Loss and LAE Ratio
 
54.1

 
45.4

 
78.8

 
73.9

 
74.2

 
80.2

 
96.4

 
63.4

 
63.1

 
78.6

Insurance Expense Ratio
 
32.9

 
31.7

 
31.7

 
31.8

 
31.1

 
32.0

 
34.3

 
30.5

 
32.0

 
31.9

Combined Ratio
 
87.0
 %
 
77.1
 %
 
110.5
 %
 
105.7
 %
 
105.3
 %
 
112.2
 %
 
130.7
 %
 
93.9
 %
 
95.1
 %
 
110.5
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
50.0
 %
 
54.0
 %
 
51.3
 %
 
57.8
 %
 
47.9
 %
 
57.5
 %
 
45.6
 %
 
56.5
 %
 
53.4
 %
 
51.9
 %
Insurance Expense Ratio
 
32.9

 
31.7

 
31.7

 
31.8

 
31.1

 
32.0

 
34.3

 
30.5

 
32.0

 
31.9

Underlying Combined Ratio
 
82.9
 %
 
85.7
 %
 
83.0
 %
 
89.6
 %
 
79.0
 %
 
89.5
 %
 
79.9
 %
 
87.0
 %
 
85.4
 %
 
83.8
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
87.0
 %
 
77.1
 %
 
110.5
 %
 
105.7
 %
 
105.3
 %
 
112.2
 %
 
130.7
 %
 
93.9
 %
 
95.1
 %
 
110.5
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
15.3

 
13.7

 
29.6

 
20.1

 
28.5

 
22.0

 
50.3

 
9.3

 
19.7

 
27.6

Prior Years Non-catastrophe Losses and LAE Ratio
 
(6.3
)
 
(0.8
)
 
(0.8
)
 
(5.6
)
 
(1.1
)
 
1.0

 
2.8

 
5.1

 
(3.4
)
 
1.9

Prior Years Catastrophe Losses and LAE Ratio
 
(4.9
)
 
(21.5
)
 
(1.3
)
 
1.6

 
(1.1
)
 
(0.3
)
 
(2.3
)
 
(7.5
)
 
(6.6
)
 
(2.8
)
Underlying Combined Ratio
 
82.9
 %
 
85.7
 %
 
83.0
 %
 
89.6
 %
 
79.0
 %
 
89.5
 %
 
79.9
 %
 
87.0
 %
 
85.4
 %
 
83.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Underlying 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
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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
52.5

 
$
62.3

 
$
64.2

 
$
54.1

 
$
59.6

 
$
66.0

 
$
66.6

 
$
55.1

 
$
233.1

 
$
247.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
58.7

 
$
61.5

 
$
60.8

 
$
60.3

 
$
63.6

 
$
62.5

 
$
62.2

 
$
61.8

 
$
241.3

 
$
250.1

Net Investment Income
 
5.2

 
5.5

 
5.6

 
3.8

 
6.7

 
9.3

 
6.5

 
6.3

 
20.1

 
28.8

Total Revenues
 
63.9

 
67.0

 
66.4

 
64.1

 
70.3

 
71.8

 
68.7

 
68.1

 
261.4

 
278.9

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
30.0

 
34.2

 
31.6

 
35.8

 
30.7

 
36.8

 
28.8

 
35.2

 
131.6

 
131.5

Catastrophe Losses and LAE
 
10.3

 
9.3

 
20.6

 
13.8

 
16.8

 
16.0

 
35.9

 
6.5

 
54.0

 
75.2

Prior Years:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Non-catastrophe Losses and LAE
 
(2.7
)
 
0.2

 
0.9

 
(1.1
)
 
0.3

 
1.8

 
2.7

 
5.6

 
(2.7
)
 
10.4

Catastrophe Losses and LAE
 
(3.4
)
 
(13.6
)
 
(1.0
)
 
1.0

 
(0.7
)
 
(0.1
)
 
(1.3
)
 
(5.1
)
 
(17.0
)
 
(7.2
)
Total Incurred Losses and LAE
 
34.2

 
30.1

 
52.1

 
49.5

 
47.1

 
54.5

 
66.1

 
42.2

 
165.9

 
209.9

Insurance Expenses
 
19.6

 
19.8

 
19.7

 
19.6

 
20.0

 
20.5

 
21.9

 
19.2

 
78.7

 
81.6

Operating Profit (Loss)
 
10.1

 
17.1

 
(5.4
)
 
(5.0
)
 
3.2

 
(3.2
)
 
(19.3
)
 
6.7

 
16.8

 
(12.6
)
Income Tax Benefit (Expense)
 
(2.1
)
 
(3.5
)
 
1.2

 
1.1

 
(0.3
)
 
1.4

 
4.4

 
(1.3
)
 
(3.3
)
 
4.2

Total Product Line Net Operating Income (Loss)
 
$
8.0

 
$
13.6

 
$
(4.2
)
 
$
(3.9
)
 
$
2.9

 
$
(1.8
)
 
$
(14.9
)
 
$
5.4

 
$
13.5

 
$
(8.4
)
Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
51.2
 %
 
55.6
 %
 
51.9
 %
 
59.3
 %
 
48.3
 %
 
58.9
 %
 
46.4
 %
 
57.0
 %
 
54.5
 %
 
52.5
 %
Current Year Catastrophe Losses and LAE Ratio
 
17.5

 
15.1

 
33.9

 
22.9

 
26.4

 
25.6

 
57.7

 
10.5

 
22.4

 
30.1

Prior Years Non-catastrophe Losses and LAE Ratio
 
(4.6
)
 
0.3

 
1.5

 
(1.8
)
 
0.5

 
2.9

 
4.3

 
9.1

 
(1.1
)
 
4.2

Prior Years Catastrophe Losses and LAE Ratio
 
(5.8
)
 
(22.1
)
 
(1.6
)
 
1.7

 
(1.1
)
 
(0.2
)
 
(2.1
)
 
(8.3
)
 
(7.0
)
 
(2.9
)
Total Incurred Loss and LAE Ratio
 
58.3

 
48.9

 
85.7

 
82.1

 
74.1

 
87.2

 
106.3

 
68.3

 
68.8

 
83.9

Insurance Expense Ratio
 
33.4

 
32.2

 
32.4

 
32.5

 
31.4

 
32.8

 
35.2

 
31.1

 
32.6

 
32.6

Combined Ratio
 
91.7
 %
 
81.1
 %
 
118.1
 %
 
114.6
 %
 
105.5
 %
 
120.0
 %
 
141.5
 %
 
99.4
 %
 
101.4
 %
 
116.5
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
51.2
 %
 
55.6
 %
 
51.9
 %
 
59.3
 %
 
48.3
 %
 
58.9
 %
 
46.4
 %
 
57.0
 %
 
54.5
 %
 
52.5
 %
Insurance Expense Ratio
 
33.4

 
32.2

 
32.4

 
32.5

 
31.4

 
32.8

 
35.2

 
31.1

 
32.6

 
32.6

Underlying Combined Ratio
 
84.6
 %
 
87.8
 %
 
84.3
 %
 
91.8
 %
 
79.7
 %
 
91.7
 %
 
81.6
 %
 
88.1
 %
 
87.1
 %
 
85.1
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
91.7
 %
 
81.1
 %
 
118.1
 %
 
114.6
 %
 
105.5
 %
 
120.0
 %
 
141.5
 %
 
99.4
 %
 
101.4
 %
 
116.5
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
17.5

 
15.1

 
33.9

 
22.9

 
26.4

 
25.6

 
57.7

 
10.5

 
22.4

 
30.1

Prior Years Non-catastrophe Losses and LAE Ratio
 
(4.6
)
 
0.3

 
1.5

 
(1.8
)
 
0.5

 
2.9

 
4.3

 
9.1

 
(1.1
)
 
4.2

Prior Years Catastrophe Losses and LAE Ratio
 
(5.8
)
 
(22.1
)
 
(1.6
)
 
1.7

 
(1.1
)
 
(0.2
)
 
(2.1
)
 
(8.3
)
 
(7.0
)
 
(2.9
)
Underlying Combined Ratio
 
84.6
 %
 
87.8
 %
 
84.3
 %
 
91.8
 %
 
79.7
 %
 
91.7
 %
 
81.6
 %
 
88.1
 %
 
87.1
 %
 
85.1
 %
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 21

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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Premiums Written
 
$
8.6

 
$
9.8

 
$
9.9

 
$
9.0

 
$
9.4

 
$
10.3

 
$
10.5

 
$
9.2

 
$
37.3

 
$
39.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
9.3

 
$
9.8

 
$
9.8

 
$
9.9

 
$
10.0

 
$
10.1

 
$
10.2

 
$
10.1

 
$
38.8

 
$
40.4

Net Investment Income
 
0.9

 
0.9

 
0.9

 
0.6

 
0.8

 
1.5

 
1.0

 
1.1

 
3.3

 
4.4

Total Revenues
 
10.2

 
10.7

 
10.7

 
10.5

 
10.8

 
11.6

 
11.2

 
11.2

 
42.1

 
44.8

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
4.0

 
4.3

 
4.6

 
4.8

 
4.5

 
4.9

 
4.3

 
5.4

 
17.7

 
19.1

Catastrophe Losses and LAE
 
0.1

 
0.5

 
0.3

 
0.3

 
4.2

 
—

 
0.5

 
0.2

 
1.2

 
4.9

Prior Years:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(1.6
)
 
(0.8
)
 
(1.5
)
 
(2.8
)
 
(1.1
)
 
(1.1
)
 
(0.7
)
 
(1.9
)
 
(6.7
)
 
(4.8
)
Catastrophe Losses and LAE
 
0.1

 
(1.7
)
 
0.1

 
0.1

 
(0.1
)
 
(0.1
)
 
(0.4
)
 
(0.3
)
 
(1.4
)
 
(0.9
)
Total Incurred Losses and LAE
 
2.6

 
2.3

 
3.5

 
2.4

 
7.5

 
3.7

 
3.7

 
3.4

 
10.8

 
18.3

Insurance Expenses
 
2.8

 
2.8

 
2.7

 
2.7

 
2.9

 
2.7

 
2.9

 
2.7

 
11.0

 
11.2

Operating Profit
 
4.8

 
5.6

 
4.5

 
5.4

 
0.4

 
5.2

 
4.6

 
5.1

 
20.3

 
15.3

Income Tax Expense
 
(1.0
)
 
(1.2
)
 
(0.9
)
 
(1.1
)
 
—

 
(1.3
)
 
(0.7
)
 
(1.0
)
 
(4.2
)
 
(3.0
)
Total Product Line Net Operating Income
 
$
3.8

 
$
4.4

 
$
3.6

 
$
4.3

 
$
0.4

 
$
3.9

 
$
3.9

 
$
4.1

 
$
16.1

 
$
12.3

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
43.0
 %
 
43.9
 %
 
46.9
 %
 
48.5
 %
 
45.0
 %
 
48.5
 %
 
42.2
 %
 
53.5
 %
 
45.6
 %
 
47.3
 %
Current Year Catastrophe Losses and LAE Ratio
 
1.1

 
5.1

 
3.1

 
3.0

 
42.0

 
—

 
4.9

 
2.0

 
3.1

 
12.1

Prior Years Non-catastrophe Losses and LAE Ratio
 
(17.2
)
 
(8.2
)
 
(15.3
)
 
(28.3
)
 
(11.0
)
 
(10.9
)
 
(6.9
)
 
(18.8
)
 
(17.3
)
 
(11.9
)
Prior Years Catastrophe Losses and LAE Ratio
 
1.1

 
(17.3
)
 
1.0

 
1.0

 
(1.0
)
 
(1.0
)
 
(3.9
)
 
(3.0
)
 
(3.6
)
 
(2.2
)
Total Incurred Loss and LAE Ratio
 
28.0

 
23.5

 
35.7

 
24.2

 
75.0

 
36.6

 
36.3

 
33.7

 
27.8

 
45.3

Insurance Expense Ratio
 
30.1

 
28.6

 
27.6

 
27.3

 
29.0

 
26.7

 
28.4

 
26.7

 
28.4

 
27.7

Combined Ratio
 
58.1
 %
 
52.1
 %
 
63.3
 %
 
51.5
 %
 
104.0
 %
 
63.3
 %
 
64.7
 %
 
60.4
 %
 
56.2
 %
 
73.0
 %
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
43.0
 %
 
43.9
 %
 
46.9
 %
 
48.5
 %
 
45.0
 %
 
48.5
 %
 
42.2
 %
 
53.5
 %
 
45.6
 %
 
47.3
 %
Insurance Expense Ratio
 
30.1

 
28.6

 
27.6

 
27.3

 
29.0

 
26.7

 
28.4

 
26.7

 
28.4

 
27.7

Underlying Combined Ratio
 
73.1
 %
 
72.5
 %
 
74.5
 %
 
75.8
 %
 
74.0
 %
 
75.2
 %
 
70.6
 %
 
80.2
 %
 
74.0
 %
 
75.0
 %
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
58.1
 %
 
52.1
 %
 
63.3
 %
 
51.5
 %
 
104.0
 %
 
63.3
 %
 
64.7
 %
 
60.4
 %
 
56.2
 %
 
73.0
 %
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
1.1

 
5.1

 
3.1

 
3.0

 
42.0

 
—

 
4.9

 
2.0

 
3.1

 
12.1

Prior Years Non-catastrophe Losses and LAE Ratio
 
(17.2
)
 
(8.2
)
 
(15.3
)
 
(28.3
)
 
(11.0
)
 
(10.9
)
 
(6.9
)
 
(18.8
)
 
(17.3
)
 
(11.9
)
Prior Years Catastrophe Losses and LAE Ratio
 
1.1

 
(17.3
)
 
1.0

 
1.0

 
(1.0
)
 
(1.0
)
 
(3.9
)
 
(3.0
)
 
(3.6
)
 
(2.2
)
Underlying Combined Ratio
 
73.1
 %
 
72.5
 %
 
74.5
 %
 
75.8
 %
 
74.0
 %
 
75.2
 %
 
70.6
 %
 
80.2
 %
 
74.0
 %
 
75.0
 %
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 22

Kemper Corporation
Life & Health Insurance Segment
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
160.9

 
$
160.8

 
$
162.1

 
$
159.9

 
$
157.0

 
$
157.7

 
$
157.0

 
$
154.6

 
$
643.7

 
$
626.3

Net Investment Income
 
52.0

 
49.7

 
53.0

 
51.7

 
51.7

 
51.0

 
54.5

 
53.7

 
206.4

 
210.9

Other Income
 
2.9

 
2.9

 
1.6

 
1.1

 
1.1

 
1.2

 
0.9

 
0.8

 
8.5

 
4.0

Total Revenues
 
215.8

 
213.4

 
216.7

 
212.7

 
209.8

 
209.9

 
212.4

 
209.1

 
858.6

 
841.2

Policyholders’ Benefits and Incurred Losses and LAE
 
95.0

 
88.8

 
113.5

 
105.4

 
103.1

 
97.0

 
99.2

 
104.9

 
402.7

 
404.2

Insurance Expenses
 
85.3

 
83.6

 
87.1

 
78.0

 
88.4

 
79.4

 
79.4

 
73.9

 
334.0

 
321.1

Operating Profit
 
35.5

 
41.0

 
16.1

 
29.3

 
18.3

 
33.5

 
33.8

 
30.3

 
121.9

 
115.9

Income Tax Expense
 
(6.6
)
 
(7.6
)
 
(2.8
)
 
(6.2
)
 
(4.7
)
 
(6.4
)
 
(7.1
)
 
(6.2
)
 
(23.2
)
 
(24.4
)
Segment Net Operating Income
 
$
28.9

 
$
33.4

 
$
13.3

 
$
23.1

 
$
13.6

 
$
27.1

 
$
26.7

 
$
24.1

 
$
98.7

 
$
91.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Dec 31, 2019
 
Sep 30, 2019
 
Jun 30, 2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
Insurance Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future Policyholder Benefits
 
$
3,385.3

 
$
3,374.6

 
$
3,362.6

 
$
3,346.1

 
$
3,333.6

 
$
3,322.3

 
$
3,313.0

 
$
3,299.9

Incurred Losses and LAE Reserves:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life
 
89.2

 
97.0

 
121.4

 
127.0

 
130.5

 
134.3

 
137.7

 
142.4

Accident and Health
 
27.5

 
28.1

 
30.2

 
28.6

 
27.8

 
27.7

 
26.0

 
25.2

Property
 
3.3

 
3.5

 
4.2

 
3.6

 
4.4

 
4.5

 
3.8

 
4.1

Total Incurred Losses and LAE Reserves
 
120.0

 
128.6

 
155.8

 
159.2

 
162.7

 
166.5

 
167.5

 
171.7

Insurance Reserves
 
$
3,505.3

 
$
3,503.2

 
$
3,518.4

 
$
3,505.3

 
$
3,496.3

 
$
3,488.8

 
$
3,480.5

 
$
3,471.6


 


Page 23

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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
95.6

 
$
96.2

 
$
97.0

 
$
95.8

 
$
94.1

 
$
95.2

 
$
95.4

 
$
93.7

 
$
384.6

 
$
378.4

Net Investment Income
 
50.1

 
47.8

 
51.0

 
49.9

 
49.6

 
48.9

 
52.4

 
51.7

 
198.8

 
202.6

Other Income
 
2.7

 
2.8

 
1.6

 
1.0

 
1.0

 
0.9

 
0.9

 
0.7

 
8.1

 
3.5

Total Revenues
 
148.4

 
146.8

 
149.6

 
146.7

 
144.7

 
145.0

 
148.7

 
146.1

 
591.5

 
584.5

Policyholders’ Benefits and Incurred Losses and LAE
 
65.4

 
56.0

 
75.9

 
72.8

 
69.9

 
66.7

 
69.4

 
73.4

 
270.1

 
279.4

Insurance Expenses
 
55.4

 
53.3

 
56.7

 
49.9

 
57.3

 
51.8

 
51.2

 
47.4

 
215.3

 
207.7

Operating Profit
 
27.6

 
37.5

 
17.0

 
24.0

 
17.5

 
26.5

 
28.1

 
25.3

 
106.1

 
97.4

Income Tax Expense
 
(4.9
)
 
(7.0
)
 
(3.0
)
 
(5.1
)
 
(5.1
)
 
(4.5
)
 
(6.0
)
 
(5.1
)
 
(20.0
)
 
(20.7
)
Total Product Line Operating Income
 
$
22.7

 
$
30.5

 
$
14.0

 
$
18.9

 
$
12.4

 
$
22.0

 
$
22.1

 
$
20.2

 
$
86.1

 
$
76.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
48.5

 
$
47.6

 
$
47.9

 
$
46.9

 
$
45.5

 
$
44.9

 
$
43.8

 
$
43.3

 
$
190.9

 
$
177.5

Net Investment Income
 
1.5

 
1.5

 
1.5

 
1.5

 
1.5

 
1.5

 
1.6

 
1.5

 
6.0

 
6.1

Other Income
 
0.2

 
0.1

 
—

 
0.1

 
0.1

 
0.3

 
—

 
0.1

 
0.4

 
0.5

Total Revenues
 
50.2

 
49.2

 
49.4

 
48.5

 
47.1

 
46.7

 
45.4

 
44.9

 
197.3

 
184.1

Policyholders’ Benefits and Incurred Losses and LAE
 
25.3

 
27.6

 
30.6

 
26.3

 
26.1

 
23.5

 
24.1

 
25.2

 
109.8

 
98.9

Insurance Expenses
 
22.8

 
22.7

 
22.4

 
20.8

 
23.3

 
19.7

 
19.7

 
19.5

 
88.7

 
82.2

Operating Profit (Loss)
 
2.1

 
(1.1
)
 
(3.6
)
 
1.4

 
(2.3
)
 
3.5

 
1.6

 
0.2

 
(1.2
)
 
3.0

Income Tax Benefit (Expense)
 
(0.5
)
 
0.3

 
0.8

 
(0.3
)
 
0.8

 
(1.0
)
 
(0.3
)
 
(0.1
)
 
0.3

 
(0.6
)
Total Product Line Net Operating Income (Loss)
 
$
1.6

 
$
(0.8
)
 
$
(2.8
)
 
$
1.1

 
$
(1.5
)
 
$
2.5

 
$
1.3

 
$
0.1

 
$
(0.9
)
 
$
2.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Page 24

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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earned Premiums
 
$
16.8

 
$
17.0

 
$
17.2

 
$
17.2

 
$
17.4

 
$
17.6

 
$
17.8

 
$
17.6

 
$
68.2

 
$
70.4

Net Investment Income
 
0.4

 
0.4

 
0.5

 
0.3

 
0.6

 
0.6

 
0.5

 
0.5

 
1.6

 
2.2

Total Revenues
 
17.2

 
17.4

 
17.7

 
17.5

 
18.0

 
18.2

 
18.3

 
18.1

 
69.8

 
72.6

Incurred Losses and LAE related to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
3.8

 
4.5

 
4.7

 
5.1

 
5.0

 
5.9

 
4.5

 
5.1

 
18.1

 
20.5

Catastrophe Losses and LAE
 
0.5

 
0.5

 
1.8

 
0.3

 
2.3

 
0.4

 
1.1

 
0.2

 
3.1

 
4.0

Prior Years:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-catastrophe Losses and LAE
 
(0.1
)
 
0.1

 
0.2

 
0.6

 
(0.3
)
 
0.6

 
0.1

 
0.9

 
0.8

 
1.3

Catastrophe Losses and LAE
 
0.1

 
0.1

 
0.3

 
0.3

 
0.1

 
(0.1
)
 
—

 
0.1

 
0.8

 
0.1

Total Incurred Losses and LAE
 
4.3

 
5.2

 
7.0

 
6.3

 
7.1

 
6.8

 
5.7

 
6.3

 
22.8

 
25.9

Insurance Expenses
 
7.1

 
7.6

 
8.0

 
7.3

 
7.8

 
7.9

 
8.5

 
7.0

 
30.0

 
31.2

Operating Profit
 
5.8

 
4.6

 
2.7

 
3.9

 
3.1

 
3.5

 
4.1

 
4.8

 
17.0

 
15.5

Income Tax Expense
 
(1.2
)
 
(0.9
)
 
(0.6
)
 
(0.8
)
 
(0.4
)
 
(0.9
)
 
(0.8
)
 
(1.0
)
 
(3.5
)
 
(3.1
)
Total Product Line Net Operating Income
 
$
4.6

 
$
3.7

 
$
2.1

 
$
3.1

 
$
2.7

 
$
2.6

 
$
3.3

 
$
3.8

 
$
13.5

 
$
12.4

Ratios Based On Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
22.6
 %
 
26.5
%
 
27.3
%
 
29.7
%
 
28.7
 %
 
33.5
 %
 
25.2
%
 
29.0
%
 
26.5
%
 
29.2
%
Current Year Catastrophe Losses and LAE Ratio
 
3.0

 
2.9

 
10.5

 
1.7

 
13.2

 
2.3

 
6.2

 
1.1

 
4.5

 
5.7

Prior Years Non-catastrophe Losses and LAE Ratio
 
(0.6
)
 
0.6

 
1.2

 
3.5

 
(1.7
)
 
3.4

 
0.6

 
5.1

 
1.2

 
1.8

Prior Years Catastrophe Losses and LAE Ratio
 
0.6

 
0.6

 
1.7

 
1.7

 
0.6

 
(0.6
)
 
—

 
0.6

 
1.2

 
0.1

Total Incurred Loss and LAE Ratio
 
25.6

 
30.6

 
40.7

 
36.6

 
40.8

 
38.6

 
32.0

 
35.8

 
33.4

 
36.8

Insurance Expense Ratio
 
42.3

 
44.7

 
46.5

 
42.4

 
44.8

 
44.9

 
47.8

 
39.8

 
44.0

 
44.3

Combined Ratio
 
67.9
 %
 
75.3
%
 
87.2
%
 
79.0
%
 
85.6
 %
 
83.5
 %
 
79.8
%
 
75.6
%
 
77.4
%
 
81.1
%
Underlying Combined Ratio 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-catastrophe Losses and LAE Ratio
 
22.6
 %
 
26.5
%
 
27.3
%
 
29.7
%
 
28.7
 %
 
33.5
 %
 
25.2
%
 
29.0
%
 
26.5
%
 
29.2
%
Insurance Expense Ratio
 
42.3

 
44.7

 
46.5

 
42.4

 
44.8

 
44.9

 
47.8

 
39.8

 
44.0

 
44.3

Underlying Combined Ratio
 
64.9
 %
 
71.2
%
 
73.8
%
 
72.1
%
 
73.5
 %
 
78.4
 %
 
73.0
%
 
68.8
%
 
70.5
%
 
73.5
%
Non-GAAP Measure Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Ratio
 
67.9
 %
 
75.3
%
 
87.2
%
 
79.0
%
 
85.6
 %
 
83.5
 %
 
79.8
%
 
75.6
%
 
77.4
%
 
81.1
%
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Catastrophe Losses and LAE Ratio
 
3.0

 
2.9

 
10.5

 
1.7

 
13.2

 
2.3

 
6.2

 
1.1

 
4.5

 
5.7

Prior Years Non-catastrophe Losses and LAE Ratio
 
(0.6
)
 
0.6

 
1.2

 
3.5

 
(1.7
)
 
3.4

 
0.6

 
5.1

 
1.2

 
1.8

Prior Years Catastrophe Losses and LAE Ratio
 
0.6

 
0.6

 
1.7

 
1.7

 
0.6

 
(0.6
)
 
—

 
0.6

 
1.2

 
0.1

Underlying Combined Ratio
 
64.9
 %
 
71.2
%
 
73.8
%
 
72.1
%
 
73.5
 %
 
78.4
 %
 
73.0
%
 
68.8
%
 
70.5
%
 
73.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 25

Kemper Corporation
Insurance Expenses and Interest and Other Expenses
(Dollars in Millions)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Insurance Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
 
$
172.7

 
$
178.3

 
$
183.8

 
$
174.0

 
$
158.7

 
$
166.6

 
$
123.1

 
$
110.3

 
$
708.8

 
$
558.7

General Expenses
 
70.4

 
68.9

 
75.8

 
62.9

 
74.9

 
67.0

 
43.9

 
46.1

 
278.0

 
231.9

Premium Taxes
 
22.0

 
22.7

 
24.1

 
24.7

 
19.3

 
22.5

 
15.1

 
14.1

 
93.5

 
71.0

Total Costs Incurred
 
265.1

 
269.9

 
283.7

 
261.6

 
252.9

 
256.1

 
182.1

 
170.5

 
1,080.3

 
861.6

Policy Acquisition Costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred
 
(105.6
)
 
(119.9
)
 
(120.9
)
 
(128.8
)
 
(122.8
)
 
(156.1
)
 
(106.1
)
 
(96.5
)
 
(475.2
)
 
(481.5
)
Amortized
 
104.6

 
104.7

 
99.2

 
99.8

 
99.4

 
98.2

 
93.7

 
85.8

 
408.3

 
377.1

Net Policy Acquisition Costs Deferred
 
(1.0
)
 
(15.2
)
 
(21.7
)
 
(29.0
)
 
(23.4
)
 
(57.9
)
 
(12.4
)
 
(10.7
)
 
(66.9
)
 
(104.4
)
Amortization of Valuation of Business Acquired ("VOBA")
 
1.3

 
1.3

 
1.5

 
2.2

 
43.7

 
97.8

 
1.5

 
0.3

 
6.3

 
143.3

Insurance Expenses
 
265.4

 
256.0

 
263.5

 
234.8

 
273.2

 
296.0

 
171.2

 
160.1

 
1,019.7

 
900.5

Interest and Other Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from Early Extinguishment of Debt
 
—

 
5.8

 
—

 
—

 
—

 
—

 
—

 
—

 
5.8

 
—

Interest Expense
 
10.0

 
9.2

 
11.8

 
11.5

 
14.1

 
13.4

 
8.0

 
7.9

 
42.5

 
43.4

Other Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss (Gain) on Cash Flow Hedge
 
—

 
—

 
—

 
—

 
—

 
(0.2
)
 
—

 
0.2

 
—

 
—

Acquisition Related Transaction, Integration and Other Costs
 
6.2

 
5.4

 
1.2

 
5.6

 
6.7

 
28.2

 
3.6

 
6.2

 
18.4

 
44.7

Other
 
30.3

 
23.3

 
25.0

 
24.3

 
21.8

 
20.3

 
14.1

 
14.7

 
102.9

 
70.9

Other Expenses
 
36.5

 
28.7

 
26.2

 
29.9

 
28.5

 
48.3

 
17.7

 
21.1

 
121.3

 
115.6

Interest and Other Expenses
 
46.5

 
43.7

 
38.0

 
41.4

 
42.6

 
61.7

 
25.7

 
29.0

 
169.6

 
159.0

Total Expenses
 
$
311.9

 
$
299.7

 
$
301.5

 
$
276.2

 
$
315.8

 
$
357.7

 
$
196.9

 
$
189.1

 
$
1,189.3

 
$
1,059.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 26

Kemper Corporation
Details of Investment Performance
(Dollars in Millions)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Net Investment Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest on Fixed Income Securities
 
$
73.9

 
$
73.5

 
$
75.6

 
$
76.4

 
$
71.5

 
$
70.6

 
$
64.4

 
$
62.4

 
$
299.4

 
$
268.9

Dividends on Equity Securities Excluding Alternative Investments
 
8.3

 
5.2

 
6.9

 
2.5

 
6.6

 
2.5

 
2.6

 
1.9

 
22.9

 
13.6

Alternative Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Method Limited Liability Investments
 
0.4

 
1.6

 
2.6

 
(3.6
)
 
2.9

 
(0.4
)
 
1.4

 
7.1

 
1.0

 
11.0

Limited Liability Investments Included in Equity Securities
 
5.1

 
5.2

 
5.1

 
2.6

 
3.6

 
13.7

 
5.2

 
3.9

 
18.0

 
26.4

Total Alternative Investments
 
5.5

 
6.8

 
7.7

 
(1.0
)
 
6.5

 
13.3

 
6.6

 
11.0

 
19.0

 
37.4

Short-term Investments
 
1.3

 
2.5

 
2.6

 
1.8

 
2.7

 
2.3

 
1.2

 
0.8

 
8.2

 
7.0

Real Estate
 
2.7

 
2.4

 
2.2

 
2.5

 
2.4

 
2.4

 
2.4

 
2.4

 
9.8

 
9.6

Loans to Policyholders
 
5.7

 
5.9

 
5.7

 
5.3

 
6.0

 
5.5

 
5.5

 
5.5

 
22.6

 
22.5

Other
 
0.6

 
0.6

 
0.3

 
—

 
0.3

 
0.2

 
0.4

 
—

 
1.5

 
0.9

Total Investment Income
 
98.0

 
96.9

 
101.0

 
87.5

 
96.0

 
96.8

 
83.1

 
84.0

 
383.4

 
359.9

Investment Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
2.4

 
2.5

 
2.3

 
2.4

 
2.2

 
2.6

 
2.6

 
2.3

 
9.6

 
9.7

Other Investment Expenses
 
1.7

 
2.7

 
2.7

 
2.4

 
2.5

 
2.2

 
2.1

 
2.5

 
9.5

 
9.3

Total Investment Expenses
 
4.1

 
5.2

 
5.0

 
4.8

 
4.7

 
4.8

 
4.7

 
4.8

 
19.1

 
19.0

Net Investment Income
 
$
93.9

 
$
91.7

 
$
96.0

 
$
82.7

 
$
91.3

 
$
92.0

 
$
78.4

 
$
79.2

 
$
364.3

 
$
340.9

Net Realized Gains (Losses) on Sales of Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains on Sales
 
$
1.4

 
$
1.9

 
$
22.7

 
$
15.1

 
$
14.1

 
$
5.9

 
$
1.2

 
$
4.1

 
$
41.1

 
$
25.3

Losses on Sales
 
—

 
(0.3
)
 
(1.9
)
 
(2.6
)
 
(4.6
)
 
(2.5
)
 
(1.9
)
 
(2.1
)
 
(4.8
)
 
(11.1
)
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains on Sales
 
1.3

 
0.2

 
0.7

 
3.6

 
6.9

 
0.2

 
4.6

 
0.6

 
5.8

 
12.3

Losses on Sales
 
0.1

 
(0.1
)
 
(0.2
)
 
—

 
—

 
—

 
—

 
—

 
(0.2
)
 
—

Other Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Losses on Sales
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
—

 
(0.1
)
Net Realized Gains on Sales of Investments
 
$
2.8

 
$
1.7

 
$
21.3

 
$
16.1

 
$
16.4

 
$
3.6

 
$
3.8

 
$
2.6

 
$
41.9

 
$
26.4

Net Impairment Losses Recognized in Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Maturities
 
$
(1.7
)
 
$
(1.7
)
 
$
(6.3
)
 
$
(3.6
)
 
$
(1.5
)
 
$
(0.2
)
 
$
—

 
$
(0.3
)
 
$
(13.3
)
 
$
(2.0
)
Equity Securities
 
—

 
(0.1
)
 
(0.4
)
 
—

 
(0.7
)
 
(1.6
)
 
—

 
(0.2
)
 
(0.5
)
 
(2.5
)
Net Impairment Losses Recognized in Earnings
 
$
(1.7
)
 
$
(1.8
)
 
$
(6.7
)
 
$
(3.6
)
 
$
(2.2
)
 
$
(1.8
)
 
$
—

 
$
(0.5
)
 
$
(13.8
)
 
$
(4.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Page 27

Kemper Corporation
Details of Invested Assets
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2019
 
Dec 31, 2018
 
Dec 31, 2017
 
 
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
 
$
815.9

 
9.0
%
 
$
865.7

 
10.7
%
 
$
556.1

 
8.2
%
States and Political Subdivisions
 
1,515.8

 
16.8

 
1,619.1

 
20.1

 
1,701.8

 
25.0

Foreign Governments
 
16.8

 
0.2

 
5.9

 
0.1

 
3.2

 
—

Corporate Securities:
 
 
 

 
 
 

 
 
 

Bonds and Notes
 
3,859.7

 
42.7

 
3,393.8

 
42.1

 
2,980.6

 
43.8

Redeemable Preferred Stocks
 
6.7

 
0.1

 
—

 
—

 
0.1

 
—

Collaterized Loan Obligations
 
618.2

 
6.8

 
524.0

 
6.5

 
139.8

 
2.1

Other Mortgage- and Asset-backed
 
89.0

 
1.0

 
15.7

 
0.2

 
1.1

 
—

Total Fixed Maturities Reported at Fair Value
 
6,922.1

 
76.5

 
6,424.2

 
79.6

 
5,382.7

 
79.1

Equity Securities Reported at Fair Value:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stocks
 
59.2

 
0.7

 
54.2

 
0.7

 
78.8

 
1.2

Common Stocks
 
13.2

 
0.1

 
10.9

 
0.1

 
24.8

 
0.4

Other Equity Interests:
 
 
 
 
 
 
 
 
 
 
 
 
Exchange Traded Funds
 
586.8

 
6.5

 
427.3

 
5.3

 
219.5

 
3.2

Limited Liability Companies and Limited Partnerships
 
248.1

 
2.7

 
192.0

 
2.4

 
202.9

 
3.0

Total Equity Securities Reported at Fair Value
 
907.3

 
10.0

 
684.4

 
8.5

 
526.0

 
7.7

Equity Securities Reported at Modified Cost:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stocks
 
9.1

 
0.1

 
9.2

 
0.1

 
—

 
—

Common Stocks
 
12.3

 
0.1

 
8.8

 
0.1

 
—

 
—

Limited Liability Companies and Limited Partnerships
 
20.5

 
0.2

 
23.5

 
0.3

 
—

 
—

Total Equity Securities Reported at Modified Cost
 
41.9

 
0.4

 
41.5

 
0.5

 
—

 
—

Convertible Securities at Fair Value
 
37.3

 
0.4

 
31.5

 
0.4

 
—

 
—

Equity Method Limited Liability Investments
 
220.4

 
2.4

 
187.0

 
2.3

 
161.0

 
2.4

Fair Value Option Investments
 
—

 
—

 
—

 
—

 
77.5

 
1.1

Short-term Investments at Cost which Approximates Fair Value
 
470.9

 
5.2

 
286.1

 
3.5

 
235.5

 
3.5

Other Investments:
 
 
 
 
 
 
 
 
 
 
 
 
Loans to Policyholders at Unpaid Principal
 
305.6

 
3.4

 
300.6

 
3.7

 
298.6

 
4.4

Real Estate at Depreciated Cost
 
111.4

 
1.2

 
114.2

 
1.4

 
116.8

 
1.7

Mortgage Loans
 
27.5

 
0.3

 
—

 
—

 
—

 
—

Trading Securities at Fair Value
 
—

 
—

 
—

 
—

 
6.7

 
0.1

Other
 
—

 
—

 
—

 
—

 
0.1

 
—

Total Other Investments
 
444.5

 
4.9

 
414.8

 
5.1

 
422.2

 
6.2

Total Investments
 
$
9,044.4

 
100.0
%
 
$
8,069.5

 
100.0
%
 
$
6,804.9

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

Page 28

Kemper Corporation
Details of Invested Assets (continued)
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2019
 
Dec 31, 2018
 
Dec 31, 2017
 
 
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
 
$
4,387.1

 
63.4
%
 
$
4,156.6

 
64.7
%
 
$
3,481.8

 
64.7
%
BBB
 
2,044.1

 
29.5

 
1,752.6

 
27.3

 
1,335.2

 
24.8

BB, B
 
319.2

 
4.6

 
333.7

 
5.2

 
357.2

 
6.6

CCC or Lower
 
171.7

 
2.5

 
181.3

 
2.8

 
208.5

 
3.9

Total Investments in Fixed Maturities
 
$
6,922.1

 
100.0
%
 
$
6,424.2

 
100.0
%
 
$
5,382.7

 
100.0
%
Duration (in Years)
 
 
 
 
 
 
 
 
 
 
 
 
Total Investments in Fixed Maturities
 
7.1

 
 
 
6.2

 
 
 
6.2

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


Page 29

Kemper Corporation
Investment Concentration
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2019
 
Dec 31, 2018
 
Dec 31, 2017
Fair Value of Non-governmental Fixed Maturities by Industry
 
Amount
 
Percent
of Total
Investments
 
Amount
 
Percent
of Total
Investments
 
Amount
 
Percent
of Total
Investments
Finance, Insurance and Real Estate
 
$
1,522.8

 
16.8
%
 
$
1,269.3

 
15.7
%
 
$
780.2

 
11.5
%
Manufacturing
 
1,356.4

 
15.0

 
1,270.0

 
15.7

 
1,168.8

 
17.2

Transportation, Communication and Utilities
 
650.2

 
7.2

 
449.0

 
5.6

 
353.7

 
5.2

Services
 
604.4

 
6.7

 
516.4

 
6.4

 
453.3

 
6.7

Retail Trade
 
183.3

 
2.0

 
164.8

 
2.0

 
102.6

 
1.5

Mining
 
154.5

 
1.7

 
158.6

 
2.0

 
163.5

 
2.4

Wholesale Trade
 
72.9

 
0.8

 
78.4

 
1.0

 
81.3

 
1.2

Agriculture, Forestry and Fishing
 
12.4

 
0.1

 
13.7

 
0.2

 
14.5

 
0.2

Other
 
16.6

 
0.2

 
13.3

 
0.2

 
3.7

 
0.1

Total Fair Value of Non-governmental Fixed Maturities
 
$
4,573.5

 
50.5
%
 
$
3,933.5

 
48.8
%
 
$
3,121.6

 
46.0
%
 
 
 
 
 
Dec 31, 2019
Ten Largest Investment Exposures 1
 
Fair
Value
 
Percent
of Total
Investments
Fixed Maturities:
 
 
 
 
States including their Political Subdivisions:
 
 
 
 
Texas
 
$
118.6

 
1.3
%
Georgia
 
101.8

 
1.1

Colorado
 
86.0

 
1.0

Louisiana
 
70.9

 
0.8

Michigan
 
69.6

 
0.8

California
 
67.8

 
0.7

New York
 
60.4

 
0.7

Ohio
 
55.1

 
0.6

Equity Securities at Fair Value—Other Equity Interests:
 
 
 
 
Vanguard Long-Term Corp Bond ETF
 
106.1

 
1.2

iShares Long-Term Corporate Bond ETF
 
69.7

 
0.8

Total
 
$
806.0

 
9.0
%
 
1 
Excluding Investments in U.S. Government and Government Agencies and Authorities at December 31, 2019.

 


Page 30

Kemper Corporation
Municipal Bond Securities
(Dollars in Millions)
(Unaudited)
 
 
Dec 31, 2019
 
 
State
General
Obligation
 
Political
Subdivision
General
Obligation
 
Revenue
 
Total Fair
Value
 
Percent
of Total
Muni Bond1
 
Percent
of Total
Investments1
Texas
 
$
32.5

 
$
14.0

 
$
72.1

 
$
118.6

 
7.8
%
 
1.3
%
Georgia
 
60.7

 
5.2

 
35.9

 
101.8

 
6.7

 
1.1

Colorado
 
—

 
11.2

 
74.8

 
86.0

 
5.7

 
1.0

Louisiana
 
47.4

 
5.9

 
17.7

 
71.0

 
4.7

 
0.8

Michigan
 
39.5

 
—

 
30.1

 
69.6

 
4.6

 
0.8

California
 
13.6

 
5.1

 
49.1

 
67.8

 
4.5

 
0.7

New York
 
6.3

 
2.7

 
51.5

 
60.5

 
4.0

 
0.7

Ohio
 
6.3

 
—

 
48.8

 
55.1

 
3.6

 
0.6

Washington
 
15.1

 
0.3

 
38.4

 
53.8

 
3.5

 
0.6

Pennsylvania
 
11.1

 
2.6

 
31.0

 
44.7

 
2.9

 
0.5

Virginia
 
8.0

 
19.5

 
14.8

 
42.3

 
2.8

 
0.5

Utah
 
5.8

 
—

 
34.3

 
40.1

 
2.6

 
0.4

Florida
 
12.7

 
—

 
27.2

 
39.9

 
2.6

 
0.4

Minnesota
 
—

 
—

 
37.1

 
37.1

 
2.4

 
0.4

Indiana
 
—

 
1.6

 
35.4

 
37.0

 
2.4

 
0.4

Oregon
 
32.4

 
—

 
3.5

 
35.9

 
2.4

 
0.4

Massachusetts
 
2.7

 
1.5

 
29.9

 
34.1

 
2.2

 
0.4

New Mexico
 
—

 
—

 
33.8

 
33.8

 
2.2

 
0.4

District Of Columbia
 
—

 
4.9

 
26.7

 
31.6

 
2.1

 
0.3

South Carolina
 
22.6

 
1.8

 
5.6

 
30.0

 
2.0

 
0.3

Maryland
 
2.1

 
20.4

 
6.7

 
29.2

 
1.9

 
0.3

Wisconsin
 
15.2

 
7.3

 
6.6

 
29.1

 
1.9

 
0.3

Connecticut
 
25.8

 
—

 
—

 
25.8

 
1.7

 
0.3

Illinois
 
—

 
—

 
24.2

 
24.2

 
1.6

 
0.3

Nebraska
 
—

 
7.7

 
15.6

 
23.3

 
1.5

 
0.3

Tennessee
 
3.6

 
8.0

 
10.6

 
22.2

 
1.5

 
0.2

Missouri
 
—

 
—

 
21.9

 
21.9

 
1.4

 
0.2

Hawaii
 
20.1

 
—

 
—

 
20.1

 
1.3

 
0.2

New Jersey
 
—

 
—

 
19.4

 
19.4

 
1.3

 
0.2

Arkansas
 
19.2

 
—

 
—

 
19.2

 
1.3

 
0.2

Kentucky
 
—

 
—

 
17.1

 
17.1

 
1.1

 
0.2

Rhode Island
 
4.5

 
—

 
11.3

 
15.8

 
1.0

 
0.2

Mississippi
 
12.9

 
—

 
2.5

 
15.4

 
1.0

 
0.2

Alabama
 
—

 
—

 
15.0

 
15.0

 
1.0

 
0.2

Alaska
 
1.9

 
2.9

 
10.1

 
14.9

 
1.0

 
0.2

Iowa
 
—

 
—

 
13.9

 
13.9

 
0.9

 
0.2

Arizona
 
—

 
0.8

 
12.8

 
13.6

 
0.9

 
0.2

Idaho
 
—

 
—

 
12.5

 
12.5

 
0.8

 
0.1

Oklahoma
 
—

 
—

 
11.2

 
11.2

 
0.7

 
0.1

All Other States
 
5.5

 
6.3

 
49.5

 
61.3

 
4.0

 
0.7

Total
 
$
427.5

 
$
129.7

 
$
958.6

 
$
1,515.8

 
100.0
%
 
16.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Sum of percentages for individual lines may not equal total due to rounding.
 
 
 
 
 
 

Page 31

Kemper Corporation
Investments in Limited Liability
Companies and Limited Partnerships
(Dollars in Millions)
(Unaudited)
 
 
Unfunded
Commitment
 
Reported Value
Asset Class
 
Dec 31,
2019
 
Dec 31,
2019
 
Dec 31,
2018
Reported as Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings:
 
 
 
 
 
 
Mezzanine Debt
 
$
59.9

 
$
129.3

 
$
99.6

Senior Debt
 
21.7

 
16.0

 
15.4

Distressed Debt
 
—

 
22.7

 
34.5

Secondary Transactions
 
15.6

 
11.5

 
21.2

Leveraged Buyout
 
—

 
0.1

 
4.2

Growth Equity
 
—

 
5.3

 
5.4

Real Estate
 
—

 
29.9

 
—

Other
 
—

 
5.6

 
6.7

Total Equity Method Limited Liability Investments
 
97.2

 
220.4

 
187.0

Reported as Other Equity Interests at Fair Value:
 
 
 
 
 
 
Mezzanine Debt
 
94.7

 
126.1

 
111.7

Senior Debt
 
23.2

 
39.5

 
34.3

Distressed Debt
 
18.7

 
16.8

 
14.5

Secondary Transactions
 
6.8

 
4.9

 
6.7

Hedge Funds
 
—

 
48.2

 
14.7

Leveraged Buyout
 
2.2

 
4.4

 
4.2

Other
 
8.0

 
8.2

 
5.9

Total Reported as Other Equity Interests at Fair Value
 
153.6

 
248.1

 
192.0

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

 
1.6

 
1.5

Other
 
0.1

 
18.9

 
22.1

Total Reported as Other Equity Interests at Modified Cost
 
0.1

 
20.5

 
23.6

Total Investments in Limited Liability Companies and Limited Partnerships
 
$
250.9

 
$
489.0

 
$
402.6



Page 32

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 Goodwill is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity excluding goodwill 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 is a common measure used by analysts and investors to compare similar companies.
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities is a calculation 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 Net Unrealized Gains on Fixed Maturities and Goodwill is a calculation 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 and goodwill 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 and goodwill in conjunction with book value per share to identify and analyze the change in net worth excluding goodwill 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.
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 33

Kemper Corporation
Definitions of Non-GAAP Financial Measures (continued)
A reconciliation of Income from Continuing Operations to Adjusted Consolidated Net Operating Income is presented below:
 
 
Three Months Ended
 
Year Ended
Dollars in Millions (Unaudited)
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Income from Continuing Operations
 
$
124.7

 
$
129.0

 
$
122.1

 
$
155.3

 
$
5.0

 
$
92.3

 
$
37.5

 
$
53.6

 
$
531.1

 
$
188.4

Less Net Income (Loss) From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
30.9

 
7.8

 
20.1

 
50.9

 
(60.4
)
 
8.7

 
0.3

 
0.6

 
109.7

 
(50.8
)
Net Realized Gains on Sales of Investments
 
2.2

 
1.4

 
16.8

 
12.7

 
13.0

 
2.8

 
3.0

 
2.1

 
33.1

 
20.9

Net Impairment Losses Recognized in Earnings
 
(1.3
)
 
(1.5
)
 
(5.3
)
 
(2.8
)
 
(1.8
)
 
(1.4
)
 
—

 
(0.4
)
 
(10.9
)
 
(3.6
)
Acquisition Related Transaction and Integration Costs
 
(5.0
)
 
(4.1
)
 
(1.0
)
 
(4.4
)
 
(5.7
)
 
(22.3
)
 
(2.3
)
 
(6.2
)
 
(14.5
)
 
(36.5
)
Loss from Early Extinguishment of Debt
 
—

 
(4.6
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(4.6
)
 
—

Adjusted Consolidated Net Operating Income
 
$
97.9

 
$
130.0

 
$
91.5

 
$
98.9

 
$
59.9

 
$
104.5

 
$
36.5

 
$
57.5

 
$
418.3

 
$
258.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Consolidated Net Operating Income Per Unrestricted Share is a non-GAAP financial measure. It is computed by dividing Adjusted Consolidated Net Operating Income by the weighted average unrestricted shares outstanding. The most directly comparable GAAP financial measure is Income from Continuing Operations Per Unrestricted Share‐basic. A reconciliation of Income from Continuing Operations Per Unrestricted Share-basic to Adjusted Consolidated Net Operating Income Per Unrestricted Share-basic is presented below:
 
 
Three Months Ended
 
Year Ended
(Unaudited)
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Income from Continuing Operations Per Unrestricted Share
 
$
1.87

 
$
1.93

 
$
1.87

 
$
2.38

 
$
0.08

 
$
1.42

 
$
0.73

 
$
1.03

 
$
8.04

 
$
3.22

Less Net Income (Loss) Per Unrestricted Share From:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Fair Value of Equity and Convertible Securities
 
0.46

 
0.11

 
0.31

 
0.78

 
(0.93
)
 
0.13

 
0.01

 
0.01

 
1.66

 
(0.87
)
Net Realized Gains on Sales of Investments
 
0.03

 
0.02

 
0.26

 
0.19

 
0.20

 
0.04

 
0.06

 
0.04

 
0.50

 
0.36

Net Impairment Losses Recognized in Earnings
 
(0.02
)
 
(0.02
)
 
(0.08
)
 
(0.04
)
 
(0.02
)
 
(0.02
)
 
—

 
(0.01
)
 
(0.16
)
 
(0.06
)
Acquisition Related Transaction and Integration Costs
 
(0.06
)
 
(0.06
)
 
(0.01
)
 
(0.07
)
 
(0.09
)
 
(0.34
)
 
(0.04
)
 
(0.12
)
 
(0.22
)
 
(0.63
)
Loss from Early Extinguishment of Debt
 
—

 
(0.07
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.07
)
 
—

Adjusted Consolidated Net Operating Income Per Unrestricted Share
 
$
1.46

 
$
1.95

 
$
1.39

 
$
1.52

 
$
0.92

 
$
1.61

 
$
0.70

 
$
1.11

 
$
6.33

 
$
4.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 34

Kemper Corporation
As Adjusted for Acquisition Non-GAAP Financial Measure



As Adjusted for Acquisition amounts are non-GAAP financial measures. For the periods subsequent to acquisition, the three months ended December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, the 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 periods prior to the acquisition, the three months ended June 30, 2018 and March 31, 2018, as adjusted amounts are computed by adding the historical results of Infinity 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 35

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

 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019

Sep 30,
2019

Jun 30,
2019
 
Mar 31,
2019

Dec 31,
2018

Sep 30,
2018

Jun 30,
2018

Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper - GAAP As Reported
 
$
1,145.8

 
$
1,135.2

 
$
1,116.6

 
$
1,074.8

 
$
1,063.6

 
$
1,052.9

 
$
658.1

 
$
609.8

 
$
4,472.4

 
$
3,384.4

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
374.3

 
354.0

 
—

 
728.3

As Adjusted1
 
$
1,145.8

 
$
1,135.2

 
$
1,116.6

 
$
1,074.8

 
$
1,063.6

 
$
1,052.9

 
$
1,032.4

 
$
963.8

 
$
4,472.4

 
$
4,112.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Consolidated Net Operating Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper
 
$
97.9

 
$
130.0

 
$
91.5

 
$
98.9

 
$
59.9

 
$
104.5

 
$
36.5

 
$
57.5

 
$
418.3

 
$
258.4

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
29.5

 
23.8

 
—

 
53.3

Less: Impact of Purchase Accounting
 
(4.4
)
 
(6.1
)
 
(4.2
)
 
2.1

 
(20.5
)
 
(39.5
)
 
—

 
—

 
(12.6
)
 
(60.0
)
As Adjusted1
 
$
102.3

 
$
136.1

 
$
95.7

 
$
96.8

 
$
80.4

 
$
144.0

 
$
66.0

 
$
81.3

 
$
430.9

 
$
371.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 As Adjusted is a non-GAAP financial 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.


Page 36

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,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019

Dec 31,
2018

Sep 30,
2018

Jun 30,
2018

Mar 31,
2018
 
Dec 31,
2019

Dec 31,
2018
Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Specialty P&C - GAAP As Reported
 
$
799.7

 
$
783.4

 
$
766.0

 
$
729.3

 
$
717.8

 
$
711.2

 
$
320.0

 
$
278.4

 
$
3,078.4

 
$
2,027.4

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
374.3

 
354.0

 
—

 
728.3

As Adjusted1
 
$
799.7

 
$
783.4

 
$
766.0

 
$
729.3

 
$
717.8

 
$
711.2

 
$
694.3

 
$
632.4

 
$
3,078.4

 
$
2,755.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-CAT Losses and LAE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Specialty P&C - GAAP As Reported
 
$
599.5

 
$
579.4

 
$
579.2

 
$
544.3

 
$
530.3

 
$
527.6

 
$
247.2

 
$
212.3

 
$
2,302.4

 
$
1,517.4

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
277.4

 
273.3

 
—

 
550.7

Less: Impact of Purchase Accounting
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of Fair Value Adjustment to Infinity's Unpaid Loss and LAE
 
0.8

 
0.8

 
1.2

 
1.5

 
1.9

 
2.5

 
—

 
—

 
4.3

 
4.4

As Adjusted1
 
$
598.7

 
$
578.6

 
$
578.0

 
$
542.8

 
$
528.4

 
$
525.1

 
$
524.6

 
$
485.6

 
$
2,298.1

 
$
2,063.7

 
 
 
 
 
 
 
 

 


 
 
 
 
 


 

 

Insurance Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Specialty P&C - GAAP As Reported
 
$
150.7

 
$
139.2

 
$
140.9

 
$
124.8

 
$
148.0

 
$
176.8

 
$
49.0

 
$
47.9

 
$
555.6

 
$
421.7

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
68.1

 
65.4

 
—

 
133.5

Less: Impact of Purchase Accounting
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of VOBA
 
0.6

 
0.6

 
0.8

 
1.5

 
42.0

 
97.3

 
—

 
—

 
3.5

 
139.3

Amortization of Estimated Legacy Infinity Deferred Policy Acquisition Costs ("DPAC")
 
—

 
—

 
(3.1
)
 
(12.1
)
 
(24.2
)
 
(56.2
)
 
—

 
—

 
(15.2
)
 
(80.4
)
Amortization of VOBA, Net of Legacy Infinity DPAC
 
0.6

 
0.6

 
(2.3
)
 
(10.6
)
 
17.8

 
41.1

 
—

 
—

 
(11.7
)
 
58.9

Amortization of Finite Life Intangible Assets Acquired
 
1.2

 
3.3

 
3.3

 
3.3

 
3.3

 
3.3

 
—

 
—

 
11.1

 
6.6

Other
 
3.4

 
3.4

 
3.4

 
3.4

 
3.4

 
3.4

 
—

 
—

 
13.6

 
6.8

Total Purchase Accounting Adjustments
 
5.2

 
7.3

 
4.4

 
(3.9
)
 
24.5

 
47.8

 
—

 
—

 
13.0

 
72.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As Adjusted1
 
$
145.5

 
$
131.9

 
$
136.5

 
$
128.7

 
$
123.5

 
$
129.0

 
$
117.1

 
$
113.3

 
$
542.6

 
$
482.9

 
 
 
 
 
 

 
 
 
 
 
 
 

 
 
 

 

Underlying Combined Ratio1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
Kemper Specialty P&C Segment
 
93.8
%
 
91.8
%
 
94.0
%
 
91.7
%
 
94.5
%
 
99.1
%
 
92.5
%
 
93.4
%
 
92.7
%
 
95.7
%
As Adjusted1
 
93.1
%
 
90.7
%
 
93.3
%
 
92.1
%
 
90.8
%
 
92.0
%
 
92.4
%
 
94.7
%
 
92.3
%
 
92.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 As Adjusted is a non-GAAP financial 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 33.



Page 37

Kemper Corporation
Selected Financial Information
As Adjusted for Acquisition - Specialty Personal Automobile Insurance
(Dollars in Millions)
(Unaudited)
 
 
Three Months Ended
 
Year Ended
 
 
Dec 31,
2019
 
Sep 30, 2019
 
Jun 30, 2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2019
 
Dec 31,
2018
Earned Premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Specialty Personal Automobile Insurance - GAAP As Reported
 
$
733.1

 
$
719.2

 
$
703.7

 
$
669.6

 
$
660.5

 
$
655.3

 
$
307.5

 
$
266.2

 
$
2,825.6

 
$
1,889.5

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
332.6

 
314.2

 
—

 
646.8

As Adjusted1
 
$
733.1

 
$
719.2

 
$
703.7

 
$
669.6

 
$
660.5

 
$
655.3

 
$
640.1

 
$
580.4

 
$
2,825.6

 
$
2,536.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Year Non-CAT Losses and LAE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Specialty Personal Automobile Insurance
 
$
557.5

 
$
538.2

 
$
537.0

 
$
498.8

 
492.0

 
$
485.6

 
$
237.8

 
$
202.8

 
$
2,131.5

 
$
1,418.2

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
244.5

 
242.3

 
—

 
486.8

Less: Impact of Purchase Accounting
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of Fair Value Adjustment to Infinity's Unpaid Loss and LAE
 
0.6

 
0.6

 
0.9

 
1.3

 
1.5

 
2.0

 
—

 
—

 
3.4

 
3.5

As Adjusted1
 
$
556.9

 
$
537.6

 
$
536.1

 
$
497.5

 
$
490.5

 
$
483.6

 
$
482.3

 
$
445.1

 
$
2,128.1

 
$
1,901.5

 
 
 
 
 
 
 
 

 


 
 
 
 
 


 

 

Insurance Expenses
 
 
 
 
 
 
 


 


 
 
 
 
 


 


 


Kemper Specialty Personal Automobile Insurance - GAAP As Reported
 
$
138.1

 
$
128.4

 
$
128.9

 
$
114.7

 
$
132.5

 
$
160.8

 
$
46.7

 
$
45.2

 
$
510.1

 
$
385.2

Infinity - Prior to Acquisition
 
—

 
—

 
—

 
—

 
—

 
—

 
60.8

 
58.5

 
—

 
119.3

Less: Impact of Purchase Accounting
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of VOBA
 
0.4

 
0.4

 
0.7

 
1.3

 
37.7

 
87.8

 
—

 
—

 
2.8

 
125.5

Amortization of Estimated Legacy Infinity Deferred Policy Acquisition Costs ("DPAC")
 
—

 
—

 
(2.8
)
 
(9.8
)
 
(21.9
)
 
(48.7
)
 
—

 
—

 
(12.6
)
 
(70.6
)
Amortization of VOBA, Net of Legacy Infinity DPAC
 
0.4

 
0.4

 
(2.1
)
 
(8.5
)
 
15.8

 
39.1

 
—

 
—

 
(9.8
)
 
54.9

Amortization of Finite Life Intangible Assets Acquired
 
1.1

 
3.0

 
3.0

 
3.0

 
3.0

 
3.0

 
—

 
—

 
10.1

 
6.0

Other
 
3.0

 
3.0

 
3.0

 
3.0

 
3.0

 
3.0

 
—

 
—

 
12.0

 
6.0

Total Purchase Accounting Adjustments
 
4.5

 
6.4

 
3.9

 
(2.5
)
 
21.8

 
45.1

 
—

 
—

 
12.3

 
66.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As Adjusted1
 
$
133.6

 
$
122.0

 
$
125.0

 
$
117.2

 
$
110.7

 
$
115.7

 
$
107.5

 
$
103.7

 
$
497.8

 
$
437.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Underlying Combined Ratio1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kemper Specialty Personal Automobile Insurance
 
94.8
%
 
92.8
%
 
94.6
%
 
91.6
%
 
94.6
%
 
98.6
%
 
92.5
%
 
93.2
%
 
93.5
%
 
95.5
%
As Adjusted1
 
94.2
%
 
91.7
%
 
93.9
%
 
91.8
%
 
91.0
%
 
91.5
%
 
92.1
%
 
94.6
%
 
92.9
%
 
92.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 As Adjusted is a non-GAAP financial 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 33.



Page 38