Business Segments

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company is engaged, through its subsidiaries, in the property and casualty insurance and life and health insurance businesses. The Company conducts its operations through two operating segments: Specialty Property & Casualty Insurance, and Life Insurance.

The Specialty Property & Casualty Insurance segment’s principal products are specialty automobile and commercial automobile insurance. These products are distributed primarily through independent agents and brokers. The Life Insurance segment’s principal products are individual life, accident, supplemental health and property insurance. Career agents employed by the Company distribute these products. Corporate and Other operations include interest expense, board of directors fees, and

Note 3 - Business Segments (Continued)

general corporate expenses incurred by the Company which are not allocated to other businesses. Non-Core Operations includes the results of our Preferred Insurance business which we expect to fully exit.

Segment Adjusted Operating Income (Loss)

The Company analyzes the operating performance of each segment using segment adjusted operating income (loss). Segment adjusted operating income (loss) does not equate to “income (loss) before income taxes” or “net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss used by the Company’s Chief Operating Decision Maker (“CODM”) to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is the measure of segment performance presented below. Segment adjusted operating income (loss) is calculated by adjusting each segment’s income (loss) before income taxes for the following items:

(i) Change in Fair Value of Equity and Convertible Securities;

(ii) Net Realized Investment Gains;

(iii) Impairment Losses;

(iv) Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs;

(v) Debt Extinguishment, Pension Settlement and Other Charges;

(vi) Goodwill Impairment Charge;

(vii) Non-Core Operations; and

(viii) Significant non-recurring or infrequent items that may not be indicative of ongoing operations

These items are important to an understanding of overall results of operations. Segment adjusted operating income (loss) is not a substitute for income determined in accordance with U.S. GAAP, and the Company’s definition of segment adjusted operating income (loss) may differ from that used by other companies. The Company, however, believes that the presentation of segment adjusted consolidated operating income (loss) as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of its businesses.

Earned Premiums by product line, including a reconciliation to Total Earned Premiums, for the three months ended March 31, 2024 and 2023 were:

	Three Months Ended
(Dollars in Millions)	Mar 31, 2024		Mar 31, 2023
Specialty Property & Casualty Insurance:
Personal Automobile	$	675.3	$	787.9
Commercial Automobile	164.7		156.3
Life Insurance:
Life	80.6		82.2
Accident and Health	5.6		5.9
Property	11.1		11.2
Total Segment Earned Premiums	937.3		1,043.5
Non-Core Operations	94.6		137.4
Total Earned Premiums	$	1,031.9	$	1,180.9

Note 3 - Business Segments (Continued)

Segment Revenues, including a reconciliation to Total Revenues, for the three months ended March 31, 2024 and 2023 were:

	Three Months Ended
(Dollars in Millions)	Mar 31, 2024		Mar 31, 2023
Segment Revenues:
Specialty Property & Casualty Insurance:
Earned Premiums	$	840.0	$	944.2
Net Investment Income	41.1		38.5
Change in Value of Alternative Energy Partnership Investments	0.3		0.4
Other Income	1.1		0.9
Total Specialty Property & Casualty Insurance	882.5		984.0
Life Insurance:
Earned Premiums	97.3		99.3
Net Investment Income	44.3		49.8
Change in Value of Alternative Energy Partnership Investments	0.1		0.2
Other Income (Loss)	0.2		(0.4)
Total Life Insurance	141.9		148.9
Total Segment Revenues	1,024.4		1,132.9
Change in Fair Value of Equity and Convertible Securities	3.4		1.7
Net Realized Investment Gains	6.6		6.4
Net Impairment Losses Recognized in Earnings	(1.5)		2.1
Non-Core Operations	106.2		148.0
Other	3.9		3.7
Total Revenues	$	1,143.0	$	1,294.8

Note 3 - Business Segments (Continued)

Adjusted Consolidated Operating Income (Loss), including a reconciliation to Income (Loss) before Income Taxes attributable to Kemper Corporation, for the three months ended March 31, 2024 and 2023 was:

	Three Months Ended
(Dollars in Millions)	Mar 31, 2024		Mar 31, 2023
Segment Adjusted Operating Income (Loss):
Specialty Property & Casualty Insurance	$	86.5	$	(74.7)
Life Insurance	14.0		14.8
Total Segment Adjusted Operating Income (Loss)	100.5		(59.9)
Corporate and Other Adjusted Operating Loss	(15.6)		(12.9)
Less: (Loss) Income before Income Taxes attributable to Noncontrolling Interest	(1.4)		—
Adjusted Consolidated Operating Income (Loss)	86.3		(72.8)
Income (Loss) From:
Change in Fair Value of Equity and Convertible Securities	3.4		1.7
Net Realized Investment Gains	6.6		6.4
Impairment Losses	(1.5)		2.1
Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs	(12.8)		(29.1)
Non-Core Operations	6.0		(12.2)
Income (Loss) before Income Taxes attributable to Kemper Corporation	$	88.0	$	(103.9)

Adjusted Consolidated Net Operating Income (Loss), including a reconciliation to Net Income (Loss) attributable to Kemper Corporation, for the three months ended March 31, 2024 and 2023 was:

	Three Months Ended
(Dollars in Millions and Net of Income Taxes)	Mar 31, 2024		Mar 31, 2023
Segment Adjusted Net Operating Income (Loss):
Specialty Property & Casualty Insurance	$	69.2	$	(58.4)
Life Insurance	11.9		13.2
Total Segment Adjusted Net Operating Income (Loss)	81.1		(45.2)
Corporate and Other Adjusted Net Operating Loss	(12.5)		(10.5)
Less: Net (Loss) Income attributable to Noncontrolling Interest	(1.1)		—
Adjusted Consolidated Net Operating Income (Loss)	69.7		(55.7)
Net Income (Loss) From:
Change in Fair Value of Equity and Convertible Securities	2.7		1.3
Net Realized Investment Gains	5.2		5.1
Impairment Losses	(1.2)		1.7
Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs	(10.1)		(23.0)
Non-Core Operations	5.0		(9.5)
Net Income (Loss) attributable to Kemper Corporation	$	71.3	$	(80.1)