Kemper Corporation (NYSE: KMPR)
reported today net income of $65.4 million, or $1.24 per diluted share,
for the fourth quarter of 2014, compared to $55.2 million, or $0.99 per
share, for the fourth quarter of 2013. Consolidated net operating income1
was $53.9 million, or $1.02 per diluted share, for the fourth quarter of
2014, compared to $46.3 million, or $0.83 per share, for the fourth
quarter of 2013. Net operating income per diluted share increased
primarily from higher net investment income and improved underlying loss
results in the Property & Casualty Insurance segment.
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Three Months Ended
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Year Ended
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(Dollars in Millions, Except Per Share Amounts) (Unaudited)
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Dec 31,
2014
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Dec 31,
2013
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Dec 31,
2014
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Dec 31,
2013
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Consolidated Net Operating Income 1
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$
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53.9
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$
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46.3
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$
|
97.1
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$
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159.2
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Income from Continuing Operations
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63.3
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|
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54.8
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|
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112.6
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214.5
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Net Income
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65.4
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55.2
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114.5
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217.7
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|
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Impact of Catastrophe Losses and Related Loss Adjustment Expense
(LAE) on Net Income
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$
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(3.1
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)
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$
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(1.5
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)
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$
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(64.0
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)
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$
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(33.0
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)
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Diluted Net Income Per Share From:
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Consolidated Net Operating Income 1
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$
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1.02
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$
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0.83
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$
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1.79
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$
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2.78
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Continuing Operations
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1.20
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|
0.98
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2.08
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3.74
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Net Income
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1.24
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|
0.99
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2.12
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3.80
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Impact of Catastrophe Losses and Related LAE on Net Income Per
Share
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$
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(0.06
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)
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$
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(0.03
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)
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$
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(1.19
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)
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$
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(0.58
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)
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1 Consolidated net operating income is an after-tax, non-GAAP
financial measure. See “Use of Non-GAAP Financial Measures” for
additional information.
“We finished the year with a strong fourth quarter, reporting net income
of $65.4 million, as we increased net investment income 21 percent and
improved the Property & Casualty segment’s underlying loss and LAE ratio
by 4.1 percentage points,” commented Donald G. Southwell, Kemper’s
Chairman, President and Chief Executive Officer. “While our profit
improvement actions pressured our top line, we are actively engaging
agents and are starting to see improvement.
“The Life & Health segment’s earnings increased 35 percent, benefitting
from the strong performance of our alternative investments portfolio.
“In December, we announced a definitive agreement to purchase Alliance
United Group, a top writer of nonstandard auto in California. We expect
the transaction to close in the first half of 2015 and that it will be
accretive to earnings in 2015. We repurchased $9 million of common stock
in the quarter, bringing our 2014 share repurchases to $116 million. In
total, we returned $167 million to shareholders in 2014,” said Southwell.
Capital
During the fourth quarter of 2014, Kemper repurchased more than 250,000
shares of its common stock at a total cost of $9.0 million, or $34.94
per share, and paid dividends of $12.6 million. For the full year,
Kemper repurchased more than 3.2 million shares of its common stock at a
cost of $115.5 million and paid dividends of $51.8 million.
Kemper ended the year with a book value per share excluding net
unrealized gains on fixed maturities of $34.50, essentially flat with
year-end 2013, as net income was offset by dividends, the impact of
lowering the discount rate assumption 80 basis points and adopting
newly-published mortality tables related to the company’s pension plan.
Book value per share was $39.88, up 8 percent from $36.86 at the end of
2013, largely from the impact of lower yields on the fixed maturities
portfolio.
Revenues
Total revenues were $559.7 million for the fourth quarter of 2014,
compared to $586.0 million in 2013. Revenues decreased $26.3 million
primarily from a $38.2 million decrease in earned premiums in the
Property & Casualty Insurance segment, partially offset by $16.2 million
higher net investment income.
Although quarter over quarter new business has improved, the Property &
Casualty Insurance segment continued to feel the impact of lower renewal
business due to the aggressive profit improvement actions taken over the
past couple of years, coupled with competitive market conditions,
particularly in auto. As the actions moderate, consistent with profit
improvement, the company anticipates it will see improvements with new
and renewal business over the next several quarters.
Net investment income was $93.1 million in the fourth quarter of 2014,
compared to $76.9 million in 2013. The increase was driven by improved
performance in the alternative investments portfolio, which primarily
consists of limited partnerships, limited liability companies (both
equity method investments and other equity interests) and fair value
option securities. In particular, the company recorded $21.8 million of
dividend income related to the recovery of one investment within the
alternative investments portfolio. Net investment income from the
alternative investment portfolio was $26.8 million in the fourth quarter
of 2014, compared to $10.7 million in 2013.
The company expects quarterly volatility in the alternative investments
portfolio, but has been pleased with the returns over time. Net
investment income from the alternative investments portfolio exceeded
expectations for both 2014 and 2013.
Net investment income for the Life & Health Insurance segment increased
$20.7 million for the fourth quarter of 2014, compared to 2013, largely
from the cash distribution from one investment within the alternative
investments portfolio. Net investment income for the Property & Casualty
Insurance segment decreased by $5.9 million, driven by $4.5 million
lower net investment income on alternative investments.
The investment portfolio in total generated a pre-tax equivalent
annualized book yield of 6.5 percent for the fourth quarter of 2014 and
5.5 percent for the full year of 2014.
Segment Results
Unless otherwise noted, (i) the segment results discussed below are
presented on an after-tax basis, (ii) prior-year development includes
both catastrophe and non-catastrophe losses, (iii) catastrophe losses
exclude the impact of prior-year development and (iv) underlying loss
ratio includes loss and loss adjustment expenses.
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Three Months Ended
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Year Ended
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(Dollars in Millions) (Unaudited)
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Dec 31,
2014
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Dec 31,
2013
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Dec 31,
2014
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Dec 31,
2013
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Segment Net Operating Income:
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Property & Casualty Insurance
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$
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25.3
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$
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29.1
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|
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$
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24.9
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|
$
|
100.6
|
|
|
Life & Health Insurance
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33.5
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|
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24.9
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|
|
91.8
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|
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89.3
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Total Segment Net Operating Income
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58.8
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|
|
54.0
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|
|
116.7
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189.9
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Corporate and Other Net Operating Loss
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(4.9
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)
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|
(7.7
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)
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|
(19.6
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)
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|
(30.7
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)
|
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Consolidated Net Operating Income
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53.9
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|
46.3
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|
|
97.1
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|
|
159.2
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|
Net Income (Loss) From:
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Net Realized Gains on Sales of Investments
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13.6
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13.5
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25.4
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64.4
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Net Impairment Losses Recognized in Earnings
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(4.2
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)
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|
(5.0
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)
|
|
(9.9
|
)
|
|
(9.1
|
)
|
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Income from Continuing Operations
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$
|
63.3
|
|
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$
|
54.8
|
|
|
$
|
112.6
|
|
|
$
|
214.5
|
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The Property & Casualty Insurance segment reported net operating income
of $25.3 million in the fourth quarter of 2014, compared to net
operating income of $29.1 million in 2013. Results decreased primarily
from $4.2 million lower net investment income, $4.1 million less
favorable prior-year development and higher insurance expenses as a
percentage of earned premiums, partially offset by improved underlying
loss and LAE results. Results also included catastrophe losses of $2.9
million in the fourth quarter of 2014, compared to $1.4 million in the
prior year, both lower than expectations for the quarter. The company
successfully implemented various cost-cutting measures and decreased
expenses by $8.0 million pre-tax in the quarter. However, these expense
savings have not kept pace with the decrease in earned premiums and
resulted in the expense ratio increasing to 29.0 percent in the fourth
quarter of 2014, compared to 28.1 percent in 2013. The underlying loss
and LAE ratio for the fourth quarter of 2014 improved 4.1 percentage
points to 66.2 percent, primarily from increases in average earned
premium on personal auto insurance exceeding loss cost trends and higher
favorable development from the first three quarters of 2014.
The Life & Health Insurance segment reported net operating income of
$33.5 million for the fourth quarter of 2014, compared to $24.9 million
in 2013. Results increased largely from higher net investment income,
partially offset by higher expenses and higher benefits at Reserve
National. Insurance expenses increased primarily from start-up expenses
to expand distribution channels at Reserve National and higher legal
fees.
Corporate and Other net operating loss improved $2.8 million over the
fourth quarter of 2013, driven by lower employee retirement benefits and
higher unallocated net investment income, partially offset by higher
interest expense.
Unaudited condensed consolidated statements of income for the three
and twelve months ended December 31, 2014 and 2013 are presented below:
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Three Months Ended
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Year Ended
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(Dollars in Millions, Except Per Share Amounts)
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Dec 31,
2014
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Dec 31,
2013
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Dec 31,
2014
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Dec 31,
2013
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Revenues:
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Earned Premiums
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$
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451.5
|
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$
|
495.6
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$
|
1,862.2
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|
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$
|
2,025.8
|
|
|
Net Investment Income
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93.1
|
|
|
76.9
|
|
|
309.1
|
|
|
314.7
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|
|
Other Income
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|
0.6
|
|
|
0.3
|
|
|
1.4
|
|
|
0.8
|
|
|
Net Realized Gains on Sales of Investments
|
|
21.0
|
|
|
20.8
|
|
|
39.1
|
|
|
99.1
|
|
|
Other-than-temporary Impairment Losses:
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|
|
|
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|
|
|
|
|
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|
|
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Total Other-than-temporary Impairment Losses
|
|
(6.5
|
)
|
|
(7.6
|
)
|
|
(15.2
|
)
|
|
(15.8
|
)
|
|
Portion of Losses Recognized in Other Comprehensive Income
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—
|
|
|
—
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|
|
—
|
|
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1.9
|
|
|
Net Impairment Losses Recognized in Earnings
|
|
(6.5
|
)
|
|
(7.6
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)
|
|
(15.2
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)
|
|
(13.9
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)
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Total Revenues
|
|
559.7
|
|
|
586.0
|
|
|
2,196.6
|
|
|
2,426.5
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policyholders’ Benefits and Incurred Losses and Loss Adjustment
Expenses
|
|
285.8
|
|
|
315.5
|
|
|
1,261.7
|
|
|
1,357.2
|
|
|
Insurance Expenses
|
|
156.4
|
|
|
162.9
|
|
|
628.4
|
|
|
654.4
|
|
|
Write-off of Long-lived Asset
|
|
—
|
|
|
—
|
|
|
54.6
|
|
|
—
|
|
|
Interest and Other Expenses
|
|
24.4
|
|
|
26.2
|
|
|
91.7
|
|
|
100.5
|
|
|
Total Expenses
|
|
466.6
|
|
|
504.6
|
|
|
2,036.4
|
|
|
2,112.1
|
|
|
Income from Continuing Operations before Income Taxes
|
|
93.1
|
|
|
81.4
|
|
|
160.2
|
|
|
314.4
|
|
|
Income Tax Expense
|
|
(29.8
|
)
|
|
(26.6
|
)
|
|
(47.6
|
)
|
|
(99.9
|
)
|
|
Income from Continuing Operations
|
|
63.3
|
|
|
54.8
|
|
|
112.6
|
|
|
214.5
|
|
|
Income from Discontinued Operations
|
|
2.1
|
|
|
0.4
|
|
|
1.9
|
|
|
3.2
|
|
|
Net Income
|
|
$
|
65.4
|
|
|
$
|
55.2
|
|
|
$
|
114.5
|
|
|
$
|
217.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations Per Unrestricted Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.20
|
|
|
$
|
0.98
|
|
|
$
|
2.08
|
|
|
$
|
3.75
|
|
|
Diluted
|
|
$
|
1.20
|
|
|
$
|
0.98
|
|
|
$
|
2.08
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Unrestricted Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.24
|
|
|
$
|
0.99
|
|
|
$
|
2.12
|
|
|
$
|
3.81
|
|
|
Diluted
|
|
$
|
1.24
|
|
|
$
|
0.99
|
|
|
$
|
2.12
|
|
|
$
|
3.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average Outstanding (Shares in Thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrestricted Shares - Basic
|
|
52,465.3
|
|
|
55,412.4
|
|
|
53,762.5
|
|
|
56,856.9
|
|
|
Unrestricted Shares and Equivalent Shares - Diluted
|
|
52,555.4
|
|
|
55,562.6
|
|
|
53,867.9
|
|
|
56,983.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid to Shareholders Per Share
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.96
|
|
|
$
|
0.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited business segment revenues for the three and twelve months
ended December 31, 2014 and 2013 are presented below:
|
|
|
Three Months Ended
|
|
Year Ended
|
|
(Dollars in Millions)
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property & Casualty Insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Automobile
|
|
$
|
198.0
|
|
|
$
|
229.7
|
|
|
$
|
831.4
|
|
|
$
|
959.1
|
|
|
Homeowners
|
|
75.8
|
|
|
81.4
|
|
|
312.4
|
|
|
326.2
|
|
|
Other Personal
|
|
12.2
|
|
|
13.5
|
|
|
50.9
|
|
|
55.3
|
|
|
Total Personal
|
|
286.0
|
|
|
324.6
|
|
|
1,194.7
|
|
|
1,340.6
|
|
|
Commercial Automobile
|
|
14.0
|
|
|
13.6
|
|
|
54.8
|
|
|
52.3
|
|
|
Total Earned Premiums
|
|
300.0
|
|
|
338.2
|
|
|
1,249.5
|
|
|
1,392.9
|
|
|
Net Investment Income
|
|
17.1
|
|
|
23.0
|
|
|
72.7
|
|
|
90.9
|
|
|
Other Income
|
|
0.1
|
|
|
0.1
|
|
|
0.5
|
|
|
0.5
|
|
|
Total Property & Casualty Insurance
|
|
317.2
|
|
|
361.3
|
|
|
1,322.7
|
|
|
1,484.3
|
|
|
Life & Health Insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
96.0
|
|
|
97.8
|
|
|
387.6
|
|
|
392.7
|
|
|
Accident and Health
|
|
36.5
|
|
|
40.2
|
|
|
148.6
|
|
|
161.4
|
|
|
Property
|
|
19.0
|
|
|
19.4
|
|
|
76.5
|
|
|
78.8
|
|
|
Total Earned Premiums
|
|
151.5
|
|
|
157.4
|
|
|
612.7
|
|
|
632.9
|
|
|
Net Investment Income
|
|
71.3
|
|
|
50.6
|
|
|
218.7
|
|
|
209.9
|
|
|
Other Income
|
|
0.5
|
|
|
0.1
|
|
|
0.9
|
|
|
0.2
|
|
|
Total Life & Health Insurance
|
|
223.3
|
|
|
208.1
|
|
|
832.3
|
|
|
843.0
|
|
|
Total Segment Revenues
|
|
540.5
|
|
|
569.4
|
|
|
2,155.0
|
|
|
2,327.3
|
|
|
Net Realized Gains on Sales of Investments
|
|
21.0
|
|
|
20.8
|
|
|
39.1
|
|
|
99.1
|
|
|
Net Impairment Losses Recognized in Earnings
|
|
(6.5
|
)
|
|
(7.6
|
)
|
|
(15.2
|
)
|
|
(13.9
|
)
|
|
Other
|
|
4.7
|
|
|
3.4
|
|
|
17.7
|
|
|
14.0
|
|
|
Total Revenues
|
|
$
|
559.7
|
|
|
$
|
586.0
|
|
|
$
|
2,196.6
|
|
|
$
|
2,426.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEMPER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
|
|
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Assets:
|
|
(Unaudited)
|
|
|
|
Investments:
|
|
|
|
|
|
|
Fixed Maturities at Fair Value
|
|
$
|
4,777.6
|
|
|
$
|
4,575.0
|
|
Equity Securities at Fair Value
|
|
632.2
|
|
|
598.5
|
|
Equity Method Limited Liability Investments at Cost Plus Cumulative
Undistributed Earnings
|
|
184.8
|
|
|
245.1
|
|
Fair Value Option Investments
|
|
53.3
|
|
|
—
|
|
Short-term Investments at Cost which Approximates Fair Value
|
|
342.2
|
|
|
284.7
|
|
Other Investments
|
|
449.6
|
|
|
448.0
|
|
Total Investments
|
|
6,439.7
|
|
|
6,151.3
|
|
Cash
|
|
76.1
|
|
|
66.5
|
|
Receivables from Policyholders
|
|
295.3
|
|
|
331.6
|
|
Other Receivables
|
|
187.0
|
|
|
193.1
|
|
Deferred Policy Acquisition Costs
|
|
303.3
|
|
|
302.9
|
|
Goodwill
|
|
311.8
|
|
|
311.8
|
|
Deferred Income Tax Assets
|
|
—
|
|
|
31.8
|
|
Other Assets
|
|
220.2
|
|
|
267.4
|
|
Total Assets
|
|
$
|
7,833.4
|
|
|
$
|
7,656.4
|
|
Liabilities and Shareholders’ Equity:
|
|
|
|
|
|
|
Insurance Reserves:
|
|
|
|
|
|
|
Life and Health
|
|
$
|
3,273.7
|
|
|
$
|
3,217.5
|
|
Property and Casualty
|
|
733.9
|
|
|
843.5
|
|
Total Insurance Reserves
|
|
4,007.6
|
|
|
4,061.0
|
|
Unearned Premiums
|
|
536.9
|
|
|
598.9
|
|
Liabilities for Income Taxes
|
|
36.5
|
|
|
8.3
|
|
Debt at Amortized Cost
|
|
752.1
|
|
|
606.9
|
|
Accrued Expenses and Other Liabilities
|
|
409.6
|
|
|
329.8
|
|
Total Liabilities
|
|
5,742.7
|
|
|
5,604.9
|
|
Shareholders’ Equity:
|
|
|
|
|
|
|
Common Stock
|
|
5.2
|
|
|
5.6
|
|
Paid-in Capital
|
|
660.1
|
|
|
694.8
|
|
Retained Earnings
|
|
1,202.7
|
|
|
1,215.8
|
|
Accumulated Other Comprehensive Income
|
|
222.7
|
|
|
135.3
|
|
Total Shareholders’ Equity
|
|
2,090.7
|
|
|
2,051.5
|
|
Total Liabilities and Shareholders’ Equity
|
|
$
|
7,833.4
|
|
|
$
|
7,656.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited selected financial information for the Property & Casualty
Insurance segment follows:
|
|
|
Three Months Ended
|
|
Year Ended
|
|
(Dollars in Millions)
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of Operations
|
|
Net Premiums Written
|
|
$
|
269.1
|
|
|
$
|
302.9
|
|
|
$
|
1,189.1
|
|
|
$
|
1,342.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned Premiums
|
|
$
|
300.0
|
|
|
$
|
338.2
|
|
|
$
|
1,249.5
|
|
|
$
|
1,392.9
|
|
|
Net Investment Income
|
|
17.1
|
|
|
23.0
|
|
|
72.7
|
|
|
90.9
|
|
|
Other Income
|
|
0.1
|
|
|
0.1
|
|
|
0.5
|
|
|
0.5
|
|
|
Total Revenues
|
|
317.2
|
|
|
361.3
|
|
|
1,322.7
|
|
|
1,484.3
|
|
|
Incurred Losses and LAE related to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-catastrophe Losses and LAE
|
|
198.6
|
|
|
237.7
|
|
|
845.2
|
|
|
980.2
|
|
|
Catastrophe Losses and LAE
|
|
4.4
|
|
|
2.1
|
|
|
96.5
|
|
|
47.1
|
|
|
Prior Years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-catastrophe Losses and LAE
|
|
(8.1
|
)
|
|
(11.1
|
)
|
|
(38.6
|
)
|
|
(45.5
|
)
|
|
Catastrophe Losses and LAE
|
|
(0.8
|
)
|
|
(4.1
|
)
|
|
(15.8
|
)
|
|
(12.5
|
)
|
|
Total Incurred Losses and LAE
|
|
194.1
|
|
|
224.6
|
|
|
887.3
|
|
|
969.3
|
|
|
Insurance Expenses, Excluding Write-off of Long-lived Asset
|
|
87.1
|
|
|
95.1
|
|
|
353.7
|
|
|
375.4
|
|
|
Write-off of Long-lived Asset
|
|
—
|
|
|
—
|
|
|
54.6
|
|
|
—
|
|
|
Operating Profit
|
|
36.0
|
|
|
41.6
|
|
|
27.1
|
|
|
139.6
|
|
|
Income Tax Expense
|
|
(10.7
|
)
|
|
(12.5
|
)
|
|
(2.2
|
)
|
|
(39.0
|
)
|
|
Segment Net Operating Income
|
|
$
|
25.3
|
|
|
$
|
29.1
|
|
|
$
|
24.9
|
|
|
$
|
100.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios Based On Earned Premiums
|
|
Current Year Non-catastrophe Losses and LAE Ratio
|
|
66.2
|
%
|
|
70.3
|
%
|
|
67.7
|
%
|
|
70.4
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
|
|
1.5
|
|
|
0.6
|
|
|
7.7
|
|
|
3.4
|
|
|
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(2.7
|
)
|
|
(3.3
|
)
|
|
(3.1
|
)
|
|
(3.3
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
|
|
(0.3
|
)
|
|
(1.2
|
)
|
|
(1.3
|
)
|
|
(0.9
|
)
|
|
Total Incurred Loss and LAE Ratio
|
|
64.7
|
|
|
66.4
|
|
|
71.0
|
|
|
69.6
|
|
|
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset
|
|
29.0
|
|
|
28.1
|
|
|
28.3
|
|
|
27.0
|
|
|
Impact on Ratio from Write-off of Long-lived Asset
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|
—
|
|
|
Combined Ratio
|
|
93.7
|
%
|
|
94.5
|
%
|
|
103.7
|
%
|
|
96.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying Combined Ratio
|
|
Current Year Non-catastrophe Losses and LAE Ratio
|
|
66.2
|
%
|
|
70.3
|
%
|
|
67.7
|
%
|
|
70.4
|
%
|
|
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset
|
|
29.0
|
|
|
28.1
|
|
|
28.3
|
|
|
27.0
|
|
|
Impact on Ratio from Write-off of Long-lived Asset
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|
—
|
|
|
Underlying Combined Ratio
|
|
95.2
|
%
|
|
98.4
|
%
|
|
100.4
|
%
|
|
97.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measure Reconciliation
|
|
Underlying Combined Ratio
|
|
95.2
|
%
|
|
98.4
|
%
|
|
100.4
|
%
|
|
97.4
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
|
|
1.5
|
|
|
0.6
|
|
|
7.7
|
|
|
3.4
|
|
|
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(2.7
|
)
|
|
(3.3
|
)
|
|
(3.1
|
)
|
|
(3.3
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
|
|
(0.3
|
)
|
|
(1.2
|
)
|
|
(1.3
|
)
|
|
(0.9
|
)
|
|
Combined Ratio as Reported
|
|
93.7
|
%
|
|
94.5
|
%
|
|
103.7
|
%
|
|
96.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited selected financial information for the Life & Health
Insurance segment follows:
|
|
|
Three Months Ended
|
|
Year Ended
|
|
(Dollars in Millions)
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
$
|
96.0
|
|
|
$
|
97.8
|
|
|
$
|
387.6
|
|
|
$
|
392.7
|
|
|
Accident and Health
|
|
36.5
|
|
|
40.2
|
|
|
148.6
|
|
|
161.4
|
|
|
Property
|
|
19.0
|
|
|
19.4
|
|
|
76.5
|
|
|
78.8
|
|
|
Total Earned Premiums
|
|
151.5
|
|
|
157.4
|
|
|
612.7
|
|
|
632.9
|
|
|
Net Investment Income
|
|
71.3
|
|
|
50.6
|
|
|
218.7
|
|
|
209.9
|
|
|
Other Income
|
|
0.5
|
|
|
0.1
|
|
|
0.9
|
|
|
0.2
|
|
|
Total Revenues
|
|
223.3
|
|
|
208.1
|
|
|
832.3
|
|
|
843.0
|
|
|
Policyholders’ Benefits and Incurred Losses and LAE
|
|
91.7
|
|
|
91.0
|
|
|
374.4
|
|
|
387.9
|
|
|
Insurance Expenses
|
|
80.4
|
|
|
78.5
|
|
|
316.0
|
|
|
318.2
|
|
|
Operating Profit
|
|
51.2
|
|
|
38.6
|
|
|
141.9
|
|
|
136.9
|
|
|
Income Tax Expense
|
|
(17.7
|
)
|
|
(13.7
|
)
|
|
(50.1
|
)
|
|
(47.6
|
)
|
|
Segment Net Operating Income
|
|
$
|
33.5
|
|
|
$
|
24.9
|
|
|
$
|
91.8
|
|
|
$
|
89.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Measures
Consolidated Net Operating Income
Consolidated Net Operating Income is an after-tax, non-GAAP financial
measure computed by excluding from income 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 and
3) 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 from continuing operations.
Kemper believes that Consolidated Net Operating Income 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 and net impairment losses recognized in earnings
related to investments included in Kemper’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.
Significant non-recurring items are excluded because, by their nature,
they are not indicative of Kemper’s business or economic trends.
A reconciliation of Consolidated Net Operating Income to Income from
Continuing Operations for the three and twelve months ended December 31,
2014 and 2013 is presented below:
|
|
|
Three Months Ended
|
|
Year Ended
|
|
(Dollars in Millions) (Unaudited)
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Consolidated Net Operating Income
|
|
$
|
53.9
|
|
|
$
|
46.3
|
|
|
$
|
97.1
|
|
|
$
|
159.2
|
|
|
Net Income (Loss) From:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Realized Gains on Sales of Investments
|
|
13.6
|
|
|
13.5
|
|
|
25.4
|
|
|
64.4
|
|
|
Net Impairment Losses Recognized in Earnings
|
|
(4.2
|
)
|
|
(5.0
|
)
|
|
(9.9
|
)
|
|
(9.1
|
)
|
|
Income from Continuing Operations
|
|
$
|
63.3
|
|
|
$
|
54.8
|
|
|
$
|
112.6
|
|
|
$
|
214.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Consolidated Net Operating Income Per
Unrestricted Share
Diluted Consolidated Net Operating Income Per Unrestricted Share is a
non-GAAP financial measure computed by dividing Consolidated Net
Operating Income attributed to unrestricted shares by the
weighted-average unrestricted shares and equivalent shares outstanding.
The most directly comparable GAAP financial measure is Income from
Continuing Operations Per Unrestricted Share-diluted.
A reconciliation of Diluted Consolidated Net Operating Income Per
Unrestricted Share to Diluted Income from Continuing Operations Per
Unrestricted Share for the three and twelve months ended December 31,
2014 and 2013 is presented below:
|
|
|
Three Months Ended
|
|
Year Ended
|
|
(Unaudited)
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Diluted Consolidated Net Operating Income Per Unrestricted Share
|
|
$
|
1.02
|
|
|
$
|
0.83
|
|
|
$
|
1.79
|
|
|
$
|
2.78
|
|
|
Net Income (Loss) Per Unrestricted Share From:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Realized Gains on Sales of Investments
|
|
0.26
|
|
|
0.24
|
|
|
0.47
|
|
|
1.12
|
|
|
Net Impairment Losses Recognized in Earnings
|
|
(0.08
|
)
|
|
(0.09
|
)
|
|
(0.18
|
)
|
|
(0.16
|
)
|
|
Diluted Income from Continuing Operations Per Unrestricted Share
|
|
$
|
1.20
|
|
|
$
|
0.98
|
|
|
$
|
2.08
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per Share Excluding Net Unrealized
Gains on Fixed Maturities
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities
is a ratio 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. Kemper uses the trend 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. Kemper 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 generally not influenced by
management. Kemper believes it enhances understanding and comparability
of performance by highlighting underlying business activity and
profitability drivers.
A reconciliation of the numerator used in the computation of Book Value
Per Share Excluding Net Unrealized Gains on Fixed Maturities and Book
Value Per Share at December 31, 2014 and December 31, 2013 is presented
below:
|
(Dollars in Millions) (Unaudited)
|
|
Dec 31,
2014
|
|
Dec 31,
2013
|
|
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed
Maturities
|
|
$
|
1,808.5
|
|
|
$
|
1,919.3
|
|
Net Unrealized Gains on Fixed Maturities
|
|
282.2
|
|
|
132.2
|
|
Shareholders’ Equity
|
|
$
|
2,090.7
|
|
|
$
|
2,051.5
|
|
|
|
|
|
|
|
|
|
Underlying Combined Ratio
Underlying Combined Ratio is a non-GAAP financial measure, which is
computed by adding the current year non-catastrophe losses and LAE ratio
with the insurance expense (including write-offs of long-lived assets)
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
(including write-offs of long-lived assets) ratio. Kemper believes the
underlying combined ratio is useful to investors and is used by
management to reveal the trends in Kemper’s property and casualty
insurance businesses that may be obscured by catastrophe losses and
prior-year reserve development. These catastrophe losses may 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 incurred losses and LAE and the combined ratio. Prior-year reserve
development is 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 the
company’s insurance products in the current period. Kemper believes it
is useful for investors to evaluate these components separately and in
the aggregate when reviewing its 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.
Conference Call
Kemper will discuss its fourth quarter 2014 results in a conference call
on Friday, February 6, at 11 a.m. Eastern Time. Kemper’s conference call
will be accessible via the internet and by telephone. The phone number
for Kemper’s conference call is 866.393.1565. To listen via
webcast, register online at the investor section of kemper.com at least
15 minutes prior to the webcast to download and install any necessary
software.
A replay of the call will be available through February 20, 2015 at 855.859.2056
using conference ID number 61652309.
More detailed financial information can be found in Kemper’s Investor
Financial Supplement for the fourth quarter of 2014, which is available
at the investor section of kemper.com.
About Kemper
Kemper is a diversified insurance holding company with subsidiaries that
provide an array of products to the individual and small business
markets:
Kemper markets to its customers through a network of independent agents,
brokers and career agents.
Additional information about Kemper, including its filings on Forms
10-K, 10-Q and 8-K and its investor supplement, is available by visiting
kemper.com.
Caution Regarding Forward-Looking Statements
This press release 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 the date of this press release.
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 Securities and Exchange Commission (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 press release. The reader
is advised, however, to consult any further disclosures Kemper makes on
related subjects in its filings with the SEC.
Copyright Business Wire 2015