XML 50 R28.htm IDEA: XBRL DOCUMENT v3.22.4
Postretirement Benefits Other Than Pensions
 12 Months Ended
Dec. 31, 2022
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Postretirement Benefits Other Than Pensions PENSION BENEFITS
Kemper sponsors a qualified defined benefit pension plan (the “Pension Plan”). The Pension Plan covers approximately 3,100 participants and beneficiaries. Effective January 1, 2006, the Pension Plan was closed to new hires and, effective June 30, 2016, benefit accruals were frozen for substantially all of the participants under the Pension Plan. The Pension Plan is generally non-contributory, but participation requires or required some employees to contribute 3% of pay, as defined, per year. Benefits for participants who are or were required to contribute to the Pension Plan are based on compensation during plan participation and the number of years of participation. Benefits for the vast majority of participants who are not required to contribute to the Pension Plan are based on years of service and final average pay, as defined. The Company funds the Pension Plan in accordance with the requirements of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA”).
Changes in Fair Value of Plan Assets and Changes in Projected Benefit Obligation for the Pension Plan for the years ended December 31, 2022 and 2021 is presented below.
DOLLARS IN MILLIONS20222021
Fair Value of Plan Assets at Beginning of Year$391.7 $405.4 
Actual Return on Plan Assets(65.1)(0.7)
Benefits Paid(13.7)(13.0)
Settlement Benefits2.9 — 
Fair Value of Plan Assets at End of Year315.8 391.7 
Projected Benefit Obligation at Beginning of Year378.8 382.3 
Interest Cost8.7 7.2 
Benefits Paid(13.7)(13.0)
Settlement Benefits2.9 — 
Plan Amendments— 18.3 
Actuarial Gains(84.5)(16.0)
Projected Benefit Obligation at End of Year292.2 378.8 
Funded Status—Plan Assets in Excess of Projected Benefit Obligation$23.6 $12.9 
Unamortized Amount Reported in AOCI at End of Year$(63.1)$(77.6)
Accumulated Benefit Obligation at End of Year$289.3 $378.8 
NOTE 17. PENSION BENEFITS (Continued)
The measurement dates of the assets and liabilities at end of year presented in the preceding table under the headings, “2022” and “2021” were December 31, 2022 and December 31, 2021, respectively.
In 2021, the Plan was amended to update the actuarial equivalence used to determine both the early retirement factors and the optional form factors as of December 31, 2021. The result of this amendment was an increase to the Projected Benefit Obligation of $18.3 million, which was recognized in Prior Service Cost for the year ended December 31, 2021. No such amendments took place for the year ended December 31, 2022.
The weighted-average discount rate and rate of increase in future compensation levels used to estimate the components of the Projected Benefit Obligation for the Pension Plan at December 31, 2022 and 2021 were:
20222021
Discount Rate5.05 %2.89 %
Rate of Increase in Future Compensation Levels— — 
Asset allocations for the Pension Plan at December 31, 2022 and 2021 by asset category were:
ASSET CATEGORY20222021
Corporate Bonds and Notes27 %30 %
Bond Exchange Traded Funds35 32 
Cash and Short-term Investments37 36 
Other Assets1 2 
Total100 %100 %
The investment objective of the Pension Plan is to produce current income and long-term capital growth through a combination of equity and fixed income investments which, together with appropriate employer contributions and any required employee contributions, is adequate to provide for the payment of the benefit obligations of the Pension Plan. The assets of the Pension Plan may be invested in fixed income and equity investments or any other investment vehicle or financial instrument deemed appropriate. Fixed income investments may include cash and short-term instruments, U.S. Government securities, corporate bonds, mortgages and other fixed income investments. Equity investments may include various types of stock, such as large-cap, mid-cap and small-cap stocks, and may also include investments in investment companies, collective investment funds and Kemper common stock (subject to Section 407 and other requirements of ERISA). The Pension Plan has not invested in Kemper common stock.
The trust investment committee for the Pension Plan, along with its third party fiduciary advisor, periodically reviews the performance of the Pension Plan’s investments and asset allocation. Several external investment managers manage the equity investments of the trust for the Pension Plan. Each manager is allowed to exercise investment discretion, subject to limitations, if any, established by the trust investment committee for the Pension Plan. All other investment decisions are made by the Company, subject to general guidelines as set by the trust investment committee for the Pension Plan.
The Company determines its Expected Long Term Rate of Return on Plan Assets based primarily on the Company’s expectations of future returns, with consideration to historical returns, for the Pension Plan’s investments, based on target allocations of the Pension Plan’s investments.
NOTE 17. PENSION BENEFITS (Continued)
The fair values of pension plan assets are estimated using the same methodologies and inputs as those used to determine the fair values for the respective asset category of the Company. These methodologies and inputs are disclosed in Note 12, “Fair Value Measurements,” to the Consolidated Financial Statements. Fair value measurements for the Pension Plan’s assets at December 31, 2022 are summarized below.
DOLLARS IN MILLIONSQuoted Prices
in Active Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Measured at Net Asset ValueFair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities
$40.1 $— $— $— $40.1 
States and Political Subdivisions
— 0.1 — — 0.1 
Foreign Governments— 0.4 — — 0.4 
Corporate Bonds and Notes
— 45.4 — — 45.4 
Equity Securities:
Other Equity Interests:
Bond Exchange Traded Funds
111.1 — — — 111.1 
Limited Liability Companies and Limited Partnerships
— — — 1.8 1.8 
Short-term Investments116.1 — — — 116.1 
Receivables and Other0.8 — — — 0.8 
Total$268.1 $45.9 $— $1.8 $315.8 
Fair value measurements for the Pension Plan’s assets at December 31, 2021 are summarized below.
DOLLARS IN MILLIONSQuoted Prices
in Active Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Measured at Net Asset ValueFair Value
Fixed Maturities:
U.S. Government and Government Agencies and Authorities
$54.6 $— $— $— $54.6 
States and Political Subdivisions
— 0.1 — — 0.1 
Foreign Governments— 0.6 — — 0.6 
Corporate Bonds and Notes
— 62.3 — — 62.3 
Equity Securities:
Other Equity Interests:
Bond Exchange Traded Funds
125.0 — — — 125.0 
Limited Liability Companies and Limited Partnerships
— — — 8.4 8.4 
Short-term Investments140.2 — — — 140.2 
Receivables and Other0.5 — — — 0.5 
Total$320.3 $63.0 $— $8.4 $391.7 
NOTE 17. PENSION BENEFITS (Continued)
The components of Comprehensive Pension (Income) Expense for the Pension Plan for the years ended December 31, 2022, 2021 and 2020 were:
DOLLARS IN MILLIONS202220212020
Service Cost Earned During the Year$— $— $— 
Interest Cost on Projected Benefit Obligation8.7 7.2 16.5 
Expected Return on Plan Assets(7.4)(9.5)(27.6)
Amortization of Prior Service Cost0.7 — — 
Amortization of Actuarial Loss1.8 2.9 5.6 
Settlement Expense— — 64.1 
Pension Expense Recognized in Consolidated Statements of (Loss) Income3.8 0.6 58.6 
Unrecognized Pension Loss Arising During the Year(12.0)(6.0)(7.8)
Prior Service Cost Arising During the Year— 18.3 — 
Amortization of Prior Service Cost(0.7)— — 
Amortization of Accumulated Unrecognized Pension Loss(1.8)(2.9)(69.8)
Comprehensive Pension (Income) Expense $(10.7)$10.0 $(19.0)
The actuarial loss included in AOCI at December 31, 2022 is being amortized over approximately 26 years, the remaining average estimated life expectancy of participants. The Company estimates that Pension Expense for the Pension Plan for the year ended December 31, 2023 will include $1.4 million resulting from the amortization of the related accumulated actuarial loss included in AOCI at December 31, 2022.
Settlements
In the fourth quarter of 2020, the Company’s defined benefit pension plan purchased annuities on behalf of certain plan participants currently receiving benefits and offered to make lump-sum payments to certain inactive, vested plan participants that are not currently receiving benefit payments and elected to receive lump-sum payments. Group annuity contracts were purchased from Banner Life Insurance Company (“Banner”) for $202.5 million for a portion of plan participants for whom Banner irrevocably assumed the pension obligations. For plan participants who elected lump-sum payments during the election window, a payment of $117.1 million was distributed. These transactions resulted in a partial settlement of the defined pension plan and a $50.6 million noncash settlement charge to net income for the unamortized net unrecognized postretirement benefit costs related to the settled obligations.
The weighted-average discount rate, service cost discount rate, interest cost discount rate, rate of increase in future compensation levels and expected long-term rate of return on plan assets used to develop the components of Pension Expense for the Pension Plan for the years ended December 31, 2022, 2021 and 2020 were:
202220212020
Weighted-average Discount Rate2.89 %2.56 %2.56 %
Service Cost Discount RateN/A2.41 2.42 
Interest Cost Discount Rate2.35 1.90 1.89 
Rate of Increase in Future Compensation Levels3.40 3.40 3.40 
Expected Long Term Rate of Return on Plan Assets2.08 2.70 4.90 
The Company did not contribute to the Pension Plan in 2020, 2021 or 2022. The Company does not expect that it will be required to contribute to the Pension Plan in 2023, but could make a voluntary contribution pursuant to the maximum funding limits under ERISA.
NOTE 17. PENSION BENEFITS (Continued)
The following benefit payments (net of participant contributions), which consider expected future service of certain participants that remain eligible for a benefit accrual, as appropriate, are expected to be paid from the Pension Plan:
DOLLARS IN MILLIONSYears Ending December 31,
202320242025202620272028-2032
Estimated Pension Benefit Payments$18.0 $17.2 $18.0 $18.7 $19.2 $99.1 
The Company also sponsors a non-qualified supplemental defined benefit pension plan (the “Supplemental Plan”). Benefit accruals for all participants in the Supplemental Plan were frozen effective June 30, 2016. The unfunded liability related to the Supplemental Plan was $22.0 million and $28.0 million at December 31, 2022 and 2021, respectively. Pension expense for the Supplemental Plan was $0.8 million, $0.7 million, and $0.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. An actuarial gain of $4.8 million before taxes, an actuarial gain of $1.3 million before taxes and an actuarial loss of $2.7 million before taxes are included in Other Comprehensive (Loss) Income for the years ended December 31, 2022, 2021 and 2020, respectively.
The Company also sponsors several defined contribution benefit plans covering most of its employees. The Company made contributions to those plans of $30.6 million, $28.9 million and $26.1 million in 2022, 2021 and 2020, respectively.
Other Postretirement Benefit Plan, Defined Benefit  
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Postretirement Benefits Other Than Pensions POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Kemper and Infinity Property and Casualty Corporation (“Infinity”) sponsor other than pension postretirement employee benefit plans (“OPEB”) that together provide medical, dental and/or life insurance benefits to approximately 400 retired and 500 active employees.
Kemper has historically self-insured the benefits under the Kemper OPEB Plan. The Kemper medical plan generally provides for a limited number of years of medical insurance benefits at retirement based on the participant’s attained age at retirement and number of years of service until specified dates and generally has required participant contributions, with most contributions adjusted annually. On December 30, 2016, Kemper amended the Kemper OPEB Plan and, effective December 31, 2016, no longer offers coverage to post-65 Medicare-eligible retirees and Medicare-eligible spouses under the self-insured portion of its coverage. Rather, beginning on January 1, 2017, the Kemper OPEB Plan offers access to a private, third-party Medicare exchange and provides varying levels of a Company-determined subsidy via health reimbursement accounts to certain Medicare-eligible retirees and spouses in order to help fund a portion of the participants’ cost. Further, the amendment eliminates the requirement for such participants to contribute to the Kemper OPEB Plan.
In conjunction with the amendment, the Company recorded a pre-tax reduction to its Accumulated Postretirement Benefit Obligation of $11.0 million through Other Comprehensive (Loss) Income. This prior service credit is being amortized into income over the remaining average life of the Kemper OPEB Plan’s participants.
NOTE 18. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)
Changes in Fair Value of Plans’ Assets and Changes in Accumulated Postretirement Benefit Obligation for the years ended December 31, 2022 and 2021 were:
DOLLARS IN MILLIONS
20222021
Fair Value of Plans’ Assets at Beginning of Year$— $— 
Employer Contributions1.0 1.1 
Plan Participants’ Contributions0.3 0.1 
Benefits Paid(1.3)(1.2)
Fair Value of Plan Assets at End of Year— — 
Accumulated Postretirement Benefit Obligation at Beginning of Year11.2 13.7 
Service Cost0.2 0.3 
Interest Cost0.2 0.1 
Plan Participants’ Contributions0.3 0.1 
Benefits Paid(1.3)(1.2)
Actuarial Gain(2.5)(1.8)
Accumulated Postretirement Benefit Obligation at End of Year8.1 11.2 
Funded Status—Accumulated Postretirement Benefit Obligation in Excess of Plans’ Assets$(8.1)$(11.2)
Unamortized Actuarial Gain Reported in AOCI at End of Year$16.9 $17.5 
The measurement dates of the assets and liabilities at end of year in the preceding table under the headings “2022” and “2021” were December 31, 2022 and December 31, 2021, respectively.
The weighted-average discount rate and rate of increase in future compensation levels used to develop the components of the Accumulated Postretirement Benefit Obligation at December 31, 2022 and 2021 were:
20222021
Discount Rate5.08 %2.56 %
Rate of Increase in Future Compensation Levels2.20 2.20 
The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at December 31, 2022 was 6.04% for 2023, gradually declining to 4.8% in the year 2029 and remaining at that level thereafter for medical benefits and 6.66% for 2023, gradually declining to 4.8% in the year 2030 and remaining at that level thereafter for prescription drug benefits. The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at December 31, 2021 was 6.29% for 2022, gradually declining to 4.8% in the year 2028 and remaining at that level thereafter for medical benefits and 7.04% for 2022, gradually declining to 4.8% in the year 2029 and remaining at that level thereafter for prescription drug benefits.
The components of Comprehensive OPEB (Income) Expense for the years ended December 31, 2022, 2021 and 2020 were:
DOLLARS IN MILLIONS202220212020
Service Cost Earned During the Year$0.2 $0.3 $0.2 
Interest Cost on Accumulated Postretirement Benefit Obligation0.2 0.1 0.3 
Amortization of Prior Service Credit(1.3)(1.3)(1.3)
Amortization of Accumulated Unrecognized OPEB Gain(1.8)(1.7)(1.9)
OPEB Income Recognized in Consolidated Statements of (Loss) Income(2.7)(2.6)(2.7)
Unrecognized OPEB (Gain) Loss Arising During the Year(2.5)(1.8)1.9 
Amortization of Prior Service Credit1.3 1.3 1.3 
Amortization of Accumulated Unrecognized OPEB Gain1.8 1.7 1.9 
Comprehensive OPEB (Income) Expense$(2.1)$(1.4)$2.4 
NOTE 18. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)
The Company estimates that OPEB Expense for the year ended December 31, 2023 will include income of $3.1 million resulting from the amortization of the related accumulated actuarial gain and prior service credit included in AOCI at December 31, 2022.
The weighted-average discount rate and rate of increase in future compensation levels used to develop OPEB Expense for the years ended December 31, 2022, 2021 and 2020 were:
202220212020
Weighted-average Discount Rate2.56 %1.99 %2.96 %
Service Cost Discount Rate2.79 2.06 2.94 
Interest Cost Discount Rate1.97 1.19 2.47 
Effective Rate for Interest on Service Cost2.54 — — 
Rate of Increase in Future Compensation Levels2.20 2.20 2.20 
The Company expects to contribute $1.0 million, net of the expected Medicare Part D subsidy, to its OPEB Plan to fund benefit payments in 2023.
The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are expected to be paid:
DOLLARS IN MILLIONSYears Ending December 31,
202320242025202620272028-2032
Estimated Benefit Payments:
Excluding Medicare Part D Subsidy$1.0 $1.1 $1.0 $0.9 $0.8 $3.2 
Expected Medicare Part D Subsidy— — — — — — 
Net Estimated Benefit Payments$1.0 $1.1 $1.0 $0.9 $0.8 $3.2