Statutory Information and Dividend Limitations

12 Months Ended

Dec. 31, 2023

Statutory Financial Information and Dividend Limitations

STATUTORY FINANCIAL INFORMATION AND DIVIDEND LIMITATIONS

Kemper’s US based insurance subsidiaries are required to file financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the NAIC, as well as state laws, regulations and general administrative rules. All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC

NOTE 18. STATUTORY FINANCIAL INFORMATION AND DIVIDEND LIMITATIONS (Continued)

Accounting practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

The estimated combined statutory net loss, excluding intercompany dividends and surplus note interest, and estimated combined capital and surplus of the Company’s US based insurance subsidiaries is as follows:


	Year Ended December 31,
DOLLARS IN MILLIONS	2023		2022		2021
Property and casualty companies	$	(150.4)	$	(226.7)	$	(206.9)
Life and health companies	(136.0)		174.4		(12.4)
Total statutory net loss	$	(286.4)	$	(52.3)	$	(219.3)


DOLLARS IN MILLIONS	2023		2022
Property and casualty companies	$	1,587.8	$	1,582.7
Life and health companies	113.7		265.2
Total statutory capital and surplus	$	1,701.5	$	1,847.9

Kemper’s offshore subsidiary, Kemper Bermuda Ltd., is required to file with its insurance regulator financial statements prepared in accordance with US GAAP and presented in conformity with the financial reporting provisions of the Insurance Act of 1978, amendments thereto and the Insurance Account Rules 2016 with respect to Condensed Consolidated General Purpose Financial Statements (the “Legislation”).

Kemper’s insurance subsidiaries are also required to hold minimum levels of statutory capital and surplus to satisfy regulatory requirements. The minimum statutory capital and surplus for US subsidiaries, or company action level risk-based capital (“RBC”), necessary to satisfy regulatory requirements for the Company’s US based life and health insurance subsidiaries collectively was estimated to be approximately $36.4 million and $50.0 million at December 31, 2023 and 2022, respectively. The estimated minimum statutory capital and surplus necessary to satisfy regulatory requirements for the Company’s property and casualty insurance subsidiaries collectively was approximately $574.3 million and $665.7 million at December 31, 2023 and 2022, respectively. Company action level RBC is the level at which a US based insurance company is required to file a corrective action plan with its regulators and is equal to 200% of the authorized control level RBC.

Capital and surplus requirements of Kemper Bermuda Ltd. are regulated by the Bermuda Monetary Authority (“BMA”) and differ from those applicable to the US subsidiaries. On July 1, 2022, Kemper entered into an indefinite agreement with its subsidiary, Kemper Bermuda Ltd., that provides financial guarantees of up to $300.0 million in contributed capital to maintain a minimum target capital ratio of 150% Enhance Capital Requirement, as described in Bermuda’s Insurance Act 1978. As of December 31, 2023 and 2022, Kemper had cumulatively contributed $40.0 million and $5.0 million under this agreement.

At December 31, 2023, all insurance subsidiaries individually are expected to exceed the minimum required statutory capital and surplus requirements.

Various insurance laws restrict the amount that an insurance subsidiary may pay in the form of dividends, loans or advances without the prior approval of regulatory authorities. Such insurance laws applicable to the Company’s US based subsidiaries generally restrict the amount of dividends paid in an annual period to the greater of statutory net income from the previous year or 10% of statutory capital and surplus. Also, that portion of a US based insurance subsidiary’s net equity which results from differences between statutory insurance accounting practices and GAAP would not be available for cash dividends, loans or advances. Kemper’s insurance subsidiaries paid dividends of $640.9 million, $311.7 million and $347.0 million to Kemper in 2023, 2022 and 2021, respectively. In 2024, Kemper’s US based insurance subsidiaries capacity to pay dividends to Kemper without prior regulatory approval is estimated to be zero as of the filing date. Kemper’s insurance subsidiaries had net assets of approximately $3.5 billion and $3.6 billion, determined in accordance with GAAP, that were restricted from payment to Kemper without prior regulatory approval at December 31, 2023 and 2022, respectively.