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Schedule 2 - Parent Company Financial Statements
 12 Months Ended
Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract]  
Parent Company Financial Statements
SCHEDULE II
KEMPER CORPORATION
PARENT COMPANY BALANCE SHEETS
(Dollars in Millions)
 
 
 
December 31,
 
 
2019
 
2018
ASSETS
 
 
 
 
Investments in Subsidiaries
 
$
4,383.7

 
$
3,736.0

Fixed Maturities at Fair Value (Amortized Cost: 2018 – $12.6)
 
—

 
12.6

Equity Securities at Fair Value
 
55.7

 
20.4

Short-term Investments
 
89.3

 
64.6

Cash
 
61.8

 
2.9

Other Receivables
 
21.9

 
5.7

Other Assets
 
21.9

 
14.4

Right-of-Use Assets
 
18.6

 
—

Total Assets
 
$
4,652.9

 
$
3,856.6

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
Term Loan due June 29, 2020 (Fair Value: 2018 – $35.0)
 
—

 
34.9

Term Loan due July 5, 2023 (Fair Value: 2019 – $50.0)
 
49.9

 
—

Senior Notes Payable, 4.35% due 2025 (Fair Value: 2019 – $478.6; 2018 – $444.2)
 
448.6

 
448.4

Subordinated Debentures due 2054 (Fair Value: 2018 – $151.1)
 
—

 
144.2

Current Income Tax Liability
 
55.3

 
40.5

Deferred Income Tax Liability
 
32.2

 
20.2

Liabilities for Benefit Plans
 
44.3

 
98.2

Right-of-Use Liabilities
 
31.3

 
—

Accrued Expenses and Other Liabilities
 
19.0

 
20.1

Total Liabilities
 
680.6

 
806.5

Shareholders’ Equity:
 
 
 
 
Common Stock
 
6.7

 
6.5

Additional Paid-in Capital
 
1,819.2

 
1,666.3

Retained Earnings
 
1,810.3

 
1,355.5

Accumulated Other Comprehensive Income
 
336.1

 
21.8

Total Shareholders’ Equity
 
3,972.3

 
3,050.1

Total Liabilities and Shareholders’ Equity
 
$
4,652.9

 
$
3,856.6


See Accompanying Report of Independent Registered Public Accounting Firm.
 


KEMPER CORPORATION
PARENT COMPANY STATEMENTS OF INCOME
(Dollars in Millions)
 
 
 
For the Year Ended December 31,
 
 
2019
 
2018
 
2017
Net Investment Income
 
$
2.1

 
$
2.5

 
$
3.0

Income from Change in Fair Value of Equity Securities
 
1.6

 
1.4

 
—

Net Realized Gains (Losses) on Sales of Investments
 
0.3

 
(0.7
)
 
0.6

Total Revenues
 
4.0

 
3.2

 
3.6

Interest Expense
 
28.5

 
37.6

 
36.6

Loss from Early Extinguishment of Debt
 
5.8

 
—

 
—

Other Operating (Benefits) Expenses
 
4.0

 
26.3

 
(5.1
)
Total Operating Expenses
 
38.3

 
63.9

 
31.5

Loss before Income Taxes and Equity in Net Income of Subsidiaries
 
(34.3
)
 
(60.7
)
 
(27.9
)
Income Tax Benefit
 
9.4

 
12.2

 
21.2

Loss before Equity in Net Income of Subsidiaries
 
(24.9
)
 
(48.5
)
 
(6.7
)
Equity in Net Income of Subsidiaries
 
556.0

 
238.6

 
127.6

Net Income
 
$
531.1

 
$
190.1

 
$
120.9

See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION
PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Millions)
 
 
 
For the Year Ended December 31,
 
 
2019
 
2018
 
2017
Net Income
 
$
531.1

 
$
190.1

 
$
120.9

Other Comprehensive Income (Loss):
 
 
 
 
 
 
Unrealized Holding Gains (Losses) Arising During the Year:
 
 
 
 
 
 
Securities Held by Subsidiaries
 
433.2

 
(214.1
)
 
119.5

Securities Held by Parent
 
0.2

 
(0.1
)
 
(0.4
)
Reclassification Adjustment for Amounts Included in Net Income:
 
 
 
 
 
 
Securities Held by Subsidiaries
 
(27.9
)
 
(21.9
)
 
(35.3
)
Securities Held by Parent
 
(0.2
)
 
—

 
—

Unrealized Holding Gains (Losses)
 
405.3

 
(236.1
)
 
83.8

Unrecognized Postretirement Benefit Costs Arising During the Year:
 
 
 
 
 
 
Securities Held by Subsidiaries
 
(0.6
)
 
—

 
—

Securities Held by Parent
 
(4.2
)
 
(8.0
)
 
3.9

Reclassification Adjustments for Amounts Included in Net Income:
 
 
 
 
 
 
Amortization of Unrecognized Postretirement Benefits (Costs)
 
(3.0
)
 
1.1

 
(0.6
)
Total Reclassification Adjustments for Amounts Included in Net Income
 
(3.0
)
 
1.1

 
(0.6
)
Net Unrecognized Postretirement Benefit Costs
 
(7.8
)

(6.9
)

3.3

Foreign Currency Translation Adjustments on Investments Held by Subsidiaries
 
—

 
0.3

 
1.7

Gains (Losses) on Cash Flow Hedge
 
0.4

 
1.2

 
(6.7
)
Other Comprehensive Income (Loss) before Income Taxes
 
397.9

 
(241.5
)
 
82.1

Income Tax Benefit (Expense):
 
 
 
 
 
 
Unrealized Holding Gains and Losses Arising During the Year:
 
 
 
 
 
 
Securities Held by Subsidiaries
 
(91.0
)
 
45.0

 
(38.3
)
Securities Held by Parent
 
—

 
—

 
0.1

Reclassification Adjustment for Amounts Included in Net Income:
 
 
 
 
 
 
Securities Held by Subsidiaries
 
5.8

 
4.6

 
12.3

Unrealized Holding Gains and Losses
 
(85.2
)
 
49.6

 
(25.9
)
Unrecognized Postretirement Benefit Costs Arising During the Year
 
1.0

 
1.7

 
(0.8
)
Reclassification Adjustments for Amounts Included in Net Income:
 
 
 
 
 
 
Amortization of Unrecognized Postretirement Benefit Costs
 
0.7

 
(0.2
)
 
0.2

Total Reclassification Adjustments for Amounts Included in Net Income
 
0.7

 
(0.2
)
 
0.2

Net Unrecognized Postretirement Benefit Costs
 
1.7

 
1.5

 
(0.6
)
Foreign Currency Translation Adjustments on Investments Held by Subsidiaries
 
—

 
(0.1
)
 
(0.6
)
Gains (Losses) on Cash Flow Hedge
 
(0.1
)
 
(0.3
)
 
2.4

Income Tax Benefit (Expense)
 
(83.6
)
 
50.7

 
(24.7
)
Other Comprehensive Income (Loss)
 
314.3

 
(190.8
)
 
57.4

Total Comprehensive Income (Loss)
 
$
845.4

 
$
(0.7
)
 
$
178.3


See Accompanying Report of Independent Registered Public Accounting Firm.
 
KEMPER CORPORATION
PARENT COMPANY STATEMENTS OF CASH FLOWS
(Dollars in Millions)
 
 
 
For the Year Ended December 31,
 
 
2019
 
2018
 
2017
Operating Activities:
 
 
 
 
 
 
Net Income
 
$
531.1

 
$
190.1

 
$
120.9

Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
 
 
 
 
 
 
Equity in Net Income of Subsidiaries
 
(556.0
)
 
(238.6
)
 
(127.6
)
Cash Dividends from Subsidiaries
 
239.0

 
130.4

 
108.1

Cash Contribution to Defined Benefit Plan
 
(55.3
)
 
(5.0
)
 
—

Increase in Value of Equity Securities at Fair Value
 
(1.6
)
 
(1.4
)
 
—

Net Realized (Gains) Losses on Sales of Investments
 
(0.3
)
 
0.7

 
(0.6
)
Loss from Early Extinguishment of Debt
 
5.8

 
—

 
—

Other, Net
 
9.8

 
29.6

 
0.7

Net Cash Provided by Operating Activities
 
172.5

 
105.8

 
101.5

Investing Activities:
 
 
 
 
 
 
Capital Contributed to Subsidiaries
 
(83.0
)
 
(20.0
)
 
—

Capital Distribution from Subsidiary
 
85.0

 
176.0

 
—

Sales, Paydowns and Maturities of Fixed Maturities
 
12.7

 
(0.2
)
 
45.7

Purchases of Equity Securities
 
(48.9
)
 
(2.3
)
 
—

Sales of Equity Securities
 
15.3

 
67.5

 
—

Sales of Fair Value Option Investments
 
—

 
—

 
42.2

Purchases of Fair Value Option Investments
 
—

 
—

 
(7.0
)
Acquisition of Business
 
—

 
(564.6
)
 
—

Change in Short-term Investments
 
(23.3
)
 
253.4

 
15.6

Net Cash Provided (Used) by Investing Activities
 
(42.2
)
 
(90.2
)
 
96.5

Financing Activities:
 
 
 
 
 
 
Notes Payable Proceeds:
 
 
 
 
 
 
Net Proceeds from Issuance of Debt
 
49.9

 
249.4

 
200.2

Repayments of Debt
 
(185.0
)
 
(215.0
)
 
(360.0
)
Proceeds from Issuance of Common Stock, Net of Transaction Costs
 
127.5

 
—

 
—

Cash Dividends Paid
 
(67.8
)
 
(56.4
)
 
(49.5
)
Proceeds from Shares Issued under Employee Stock Purchase Plan
 
1.6

 
—

 
—

Cash Exercise of Stock Options
 
2.4

 
0.9

 
4.0

Net Cash Used by Financing Activities
 
(71.4
)
 
(21.1
)
 
(205.3
)
Increase (Decrease) in Cash
 
58.9

 
(5.5
)
 
(7.3
)
Cash, Beginning of Year
 
2.9

 
8.4

 
15.7

Cash, End of Year
 
$
61.8

 
$
2.9

 
$
8.4


See Accompanying Report of Independent Registered Public Accounting Firm.

KEMPER CORPORATION
Schedule II (Continued) - Financial Information of Kemper Corporation
Notes to Financial Information
(Dollars in Millions)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial information of Kemper Corporation (“Kemper” or the “Parent Company”) should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Form 10-K. Kemper’s subsidiaries are accounted for using the equity method of accounting. Equity in net income of these subsidiaries is presented on the Statements of Operations as Equity in Net Income of Subsidiaries.
NOTE 2. GUARANTEES
On November 30, 2018 Kemper executed a guarantee to fully and unconditionally guarantee the payment and performance obligations of the 5.0% Senior Notes due September 19, 2022 of Infinity Property and Casualty Corporation, a wholly owned subsidiary of Kemper.
NOTE 3. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Kemper did not receive any non-cash dividends from subsidiaries nor make any non-cash capital contributions in 2019.
Kemper received non-cash dividends from subsidiaries, in the form of invested assets, of $574 million in 2018. Kemper made non-cash capital contributions, in the form of invested assets, of $350 million in 2018.
NOTE 4. LEASES
Kemper leases certain office space for its current and former corporate headquarters under non-cancelable operating leases.
The following table presents operating lease ROU assets and lease liabilities at December 31, 2019.
DOLLARS IN MILLIONS
 
2019
Operating Lease Right-of-Use Assets
 
$
18.6

Operating Lease Liabilities
 
31.3


Supplemental cash flow information related to Kemper’s operating leases for the year-ended December 31, 2019 follows.
DOLLARS IN MILLIONS
 
2019
Operating Cash Flows from Operating Leases (Fixed Payments)
 
$
1.2

Operating Cash Flows from Operating Leases (Liability Reduction)
 
1.0

Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities
 
7.9


Significant judgments and assumptions for determining lease asset and liability as December 31, 2019 are presented below.
Weighted-average Remaining Lease Term - Operating Leases
 
13.0 years

Weighted-average Discount Rate - Operating Leases
 
4.0
%


NOTE 4. LEASES (Continued)
Kemper’s leases do not provide an implicit rate. Accordingly, Kemper uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of its lease payments.
Future minimum operating lease payments at December 31, 2019 were:
DOLLARS IN MILLIONS
 
Operating
Leases
2020
 
$
2.1

2021
 
3.5

2022
 
3.7

2023
 
3.5

2024
 
2.5

2025 and Thereafter
 
25.6

Total Future Payments
 
$
40.9

Less Discount
 
9.6

Present Value of Minimum Lease Payments
 
$
31.3