Kemper Corporation (NYSE: KMPR) reported a net loss of $146.3
million, or $(2.28) per share, for the third quarter of 2023,
compared to a net loss of $74.8 million, or $(1.17) per share, for
the third quarter of 2022. Net loss for the third quarter 2023
included a $55.5 million after-tax non-cash charge related to the
termination of Kemper’s remaining pension plan obligations, which
was previously included within accumulated other comprehensive
income (AOCI) and $22.9 million of after-tax net realized losses on
investments.
Adjusted Consolidated Net Operating Loss1 was $27.9 million, or
$(0.44) per share, for the third quarter of 2023, compared to
Adjusted Consolidated Net Operating Loss1,2 of $27.0 million, or
$(0.43) per share, for the third quarter of 2022.
Key themes of the quarter include:
- Specialty Auto Underlying Combined Ratio improved 1.5 points,
sequentially
- Unfavorable prior year reserve development was largely
associated with Florida Personal Injury Protection (PIP)
- Strategic initiatives on track to produce or exceed their
targeted benefits
- Life business trends remain stable; consumer demand remains
strong
“We continue to make strong progress toward profitability
against an ongoing, dynamic operating environment,” said Joseph P.
Lacher, Jr., President, CEO and Chairman. “We are encouraged by the
incremental improvements in our underlying performance. The
implementation of 30 points of California specialty auto rate,
along with the cumulative benefits from our other actions, are
providing a tailwind for the fourth quarter and full year 2024. In
addition, this quarter we advanced our strategic initiatives, which
are on track to produce or exceed the intended operational and
financial targets.”
*NOTE: In third quarter 2023, the Company finalized the
establishment of Kemper Reciprocal, an Illinois-domiciled
reciprocal insurance exchange that began writing policies in
September 2023. The results of Kemper Reciprocal are required to be
consolidated under US GAAP.
Unless specified otherwise, discussion of our third quarter 2023
results is focused on net income attributable to Kemper Corporation
common shareholders, which does not include financial results from
Kemper Reciprocal that are presented within the consolidated
financial results in this release.
1 Non-GAAP financial measure. All Non-GAAP
financial measures are denoted with footnote 1 throughout this
release. See “Use of Non-GAAP Financial Measures” for additional
information.
2 The Company has recast all prior period
results to reflect a change in the Adjusted Consolidated Operating
Net Loss calculation to exclude the results of the Preferred
Insurance business that we expect to fully exit (referred to as
"Non-Core Operations"). The results of this business were
previously reported as a reportable segment. Prior period amounts
have been recast to reflect the change in reportable segments and
the new segment measure of profitability.
Three Months Ended
Nine Months Ended
(Dollars in Millions, Except Per Share
Amounts) (Unaudited)
Sep 30, 2023
Sep 30, 20223
Sep 30, 2023
Sep 30, 20223
Net Loss
$
(146.3
)
$
(74.8
)
$
(323.5
)
$
(233.3
)
Adjusted Consolidated Net Operating Loss
1,2
$
(27.9
)
$
(27.0
)
$
(97.8
)
$
(92.9
)
Impact of Catastrophe Losses and Related
Loss Adjustment Expense (LAE) on Net Loss
$
(16.4
)
$
(21.3
)
$
(68.1
)
$
(56.2
)
Diluted Net Loss Per Share From:
Net Loss
$
(2.28
)
$
(1.17
)
$
(5.05
)
$
(3.66
)
Adjusted Consolidated Net Operating
Loss1,2
$
(0.44
)
$
(0.43
)
$
(1.53
)
$
(1.46
)
Impact of Catastrophe Losses and Related
LAE on Net Loss Per Share
$
(0.32
)
$
(0.33
)
$
(1.35
)
$
(0.88
)
3 This press release recasts previously
reported financial information for the provisions of Accounting
Standards Update No. 2018-12, “Targeted Improvements to the
Accounting for Long-Duration Contracts and related amendments”
(“LDTI”) adopted as of January 1, 2023, with a transition date of
January 1, 2021 under the modified retrospective method.
Revenues
Total revenues for the third quarter of 2023 decreased $162.1
million, or 11.9 percent, to $1,199.4 million, compared to the
third quarter of 2022, mostly driven by $109.1 million of lower
Specialty P&C earned premiums from a decrease in new business
resulting from targeted actions to improve profitability, partially
offset by higher average earned premium per exposure from rate
increases. The decrease in total revenues was also driven by $40.0
million of lower Life earned premiums mostly due to the disposition
of Kemper Health that was completed in December 2022, and a $23.1
million decrease in total revenues from Non-Core Operations.
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 and LAE, (iii)
catastrophe losses and LAE exclude the impact of prior-year
development, (iv) loss ratio includes loss and LAE, and (v) all
comparisons are made to the prior year quarter unless otherwise
stated.
Three Months Ended
Nine Months Ended
(Dollars in Millions) (Unaudited)
Sep 30, 2023
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
Segment Adjusted Net Operating (Loss)
Income:
Specialty Property & Casualty
Insurance
$
(33.2
)
$
(28.7
)
$
(102.4
)
$
(112.3
)
Life Insurance
14.7
14.0
36.8
45.8
Total Segment Adjusted Net Operating
Loss
(18.5
)
(14.7
)
(65.6
)
(66.5
)
Corporate and Other Adjusted Net Operating
Loss
(9.4
)
(12.3
)
(32.2
)
(26.4
)
Adjusted Consolidated Net Operating
Loss1,2
(27.9
)
(27.0
)
(97.8
)
(92.9
)
Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
2.3
(8.8
)
5.5
(63.1
)
Net Realized Investment (Losses) Gains
(22.9
)
(9.6
)
(30.3
)
0.3
Impairment (Losses) Gains
(0.8
)
(6.6
)
0.1
(17.5
)
Acquisition and Disposition Related
Transaction, Integration, Restructuring and Other Costs
(34.2
)
(20.7
)
(80.5
)
(32.2
)
Debt Extinguishment, Pension Settlement
and Other Charges
(55.5
)
—
(55.5
)
(2.9
)
Goodwill Impairment Charge
—
—
(45.5
)
—
Non-Core Operations
(7.3
)
(2.1
)
(19.5
)
(25.0
)
Net Loss attributable to Kemper
Corporation
(146.3
)
(74.8
)
(323.5
)
(233.3
)
Net Loss Noncontrolling Interest
(0.1
)
—
(0.1
)
—
Net Loss
$
(146.4
)
$
(74.8
)
$
(323.6
)
$
(233.3
)
The Specialty Property and Casualty Insurance segment reported
net operating loss of $33.2 million for the third quarter of 2023,
compared to net operating loss of $28.7 million in the third
quarter of 2022. Results decreased due primarily to adverse prior
year loss and LAE development, partially offset by an improvement
in the Underlying Combined Ratio. Results for third quarter 2023
included $40.6 million of adverse prior year loss and LAE
development from Florida personal injury protection driven by
increased frequency and severity resulting from more litigated
claim activity, mainly from policy years 2020 through 2022, and
$23.9 million of adverse prior year loss and LAE development from
bodily injury and property damage associated with claim activity
from the second half of 2022. The segment’s Underlying Combined
Ratio1 was 100.5 percent, compared to 106.8 percent in the third
quarter of 2022. The improvement was primarily driven by higher
average earned premiums per exposure resulting from rate increases
and lower underlying claim frequency.
The Life Insurance segment reported net operating income of
$14.7 million for the third quarter of 2023, compared to a net
operating income of $14.0 million in the third quarter of 2022.
Capital
Total Shareholders’ Equity at the end of the quarter was
$2,361.3 million, a decrease of $309.3 million, or 12 percent,
since year-end 2022 primarily driven by the net loss for the year.
Kemper and its direct non-insurance subsidiaries ended the quarter
with cash and investments of $153.9 million, and $376.0 million of
available borrowing capacity under the revolving credit
agreement.
On August 2, 2023, Kemper announced that its Board of Directors
declared a quarterly dividend of $0.31 per share, or $20.2 million.
The dividend was paid on August 28, 2023 to its shareholders of
record as of August 14, 2023.
Kemper ended the quarter with a book value per share of $36.85,
a decrease of 12 percent from $41.79 at the end of 2022. Book Value
Per Share Excluding Net Unrealized Losses on Fixed Maturities and
Changes in the Discount Rate on Future Life Policyholder Benefits1
was $44.45, compared to $49.23 at the end of 2022.
Unaudited condensed Consolidated
Statements of Loss for the three and nine months ended September
30, 2023 and 2022 are presented below.
Three Months Ended
Nine Months Ended
(Dollars in Millions, Except Per Share
Amounts)
Sep 30, 2023
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
Revenues:
Earned Premiums
$
1,117.8
$
1,290.9
$
3,465.6
$
3,948.5
Net Investment Income
107.0
97.8
315.1
316.3
Change in Value of Alternative Energy
Partnership Investments4
0.8
0.4
2.3
(21.2
)
Other Income
2.4
4.0
5.3
7.3
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
2.8
(11.2
)
6.9
(79.9
)
Net Realized Investment (Losses) Gains
(30.3
)
(12.1
)
(38.3
)
0.4
Impairment (Losses) Gains
(1.1
)
(8.3
)
0.1
(22.1
)
Total Revenues
1,199.4
1,361.5
3,757.0
4,149.3
Expenses:
Policyholders’ Benefits and Incurred
Losses and Loss Adjustment Expenses
975.2
1,085.3
3,011.9
3,359.6
Insurance Expenses
259.0
300.5
794.4
913.0
Loss from Early Extinguishment of Debt
—
—
—
3.7
Interest and Other Expenses
156.0
63.5
311.7
171.1
Goodwill Impairment
—
—
49.6
—
Total Expenses
1,390.2
1,449.3
4,167.6
4,447.4
Loss before Income Taxes
(190.8
)
(87.8
)
(410.6
)
(298.1
)
Income Tax Benefit
44.4
13.0
87.0
64.8
Net Loss
$
(146.4
)
$
(74.8
)
$
(323.6
)
$
(233.3
)
Less: Net Loss attributable to
Noncontrolling Interest
(0.1
)
—
(0.1
)
—
Net Loss attributable to Kemper
Corporation
$
(146.3
)
$
(74.8
)
$
(323.5
)
$
(233.3
)
Net Loss Per Unrestricted
Share:
Basic
$
(2.28
)
$
(1.17
)
$
(5.05
)
$
(3.66
)
Diluted
$
(2.28
)
$
(1.17
)
$
(5.05
)
$
(3.66
)
Weighted-average Outstanding (Shares in
Thousands):
Unrestricted Shares - Basic
64,056.9
63,852.8
64,004.4
63,804.4
Unrestricted Shares and Equivalent Shares
- Diluted
64,056.9
63,852.8
64,004.4
63,804.4
Dividends Paid to Shareholders Per
Share
$
0.31
$
0.31
$
0.93
$
0.93
4 Income related to Changes in Value of
Alternative Energy Partnership Investments was $0.8 million for the
three months ended September 30, 2023, compared to income of $0.4
million for the same period in 2022. Tax expense related to the
Alternative Energy Partnership Investments was $0.2 million for the
three months ended September 30, 2023, compared to tax expense of
$0.1 million for the same period in 2022. This resulted in net
income of $0.6 million and net income of $0.3 million attributable
to Alternative Energy Partnership Investments for the three months
ended September 30, 2023 and 2022, respectively.
4 Income related to Changes in Value of
Alternative Energy Partnership Investments was $2.3 million for the
nine months ended September 30, 2023, compared to a loss of $21.2
million for the same period in 2022. Tax expense related to the
Alternative Energy Partnership Investments was $0.6 million for the
nine months ended September 30, 2023, compared to tax benefit of
$8.0 million for the same period in 2022. This resulted in net
income of $1.7 million and a net loss of $13.2 million attributable
to Alternative Energy Partnership Investments for the nine months
ended September 30, 2023 and 2022, respectively.
Unaudited business segment revenues for
the three and nine months ended September 30, 2023 and 2022 are
presented below.
Three Months Ended
Nine Months Ended
(Dollars in Millions)
Sep 30, 2023
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
REVENUES:
Specialty Property & Casualty
Insurance:
Earned Premiums:
Personal Automobile
$
724.0
$
858.8
$
2,278.5
$
2,666.3
Commercial Automobile
166.4
140.7
488.4
398.5
Total Earned Premiums
890.4
999.5
2,766.9
3,064.8
Net Investment Income
42.7
33.9
125.7
102.8
Change in Value of Alternative Energy
Partnership Investments
0.5
0.3
1.3
(10.6
)
Other Income
1.6
2.3
3.2
5.0
Total Specialty Property & Casualty
Insurance Revenues
935.2
1,036.0
2,897.1
3,162.0
Life & Health Insurance:
Earned Premiums:
Life
84.9
84.3
251.9
253.8
Accident & Health
5.8
45.9
17.5
136.8
Property
11.4
11.9
34.2
38.3
Total Earned Premiums
102.1
142.1
303.6
428.9
Net Investment Income
49.4
52.6
146.3
163.9
Change in Value of Alternative Energy
Partnership Investments
0.2
0.1
0.6
(5.6
)
Other (Loss) Income
(0.1
)
—
(0.4
)
(0.8
)
Total Life & Health Insurance
Revenues
151.6
194.8
450.1
586.4
Total Segment Revenues
1,086.8
1,230.8
3,347.2
3,748.4
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
2.8
(11.2
)
6.9
(79.9
)
Net Realized Investment (Losses) Gains
(30.3
)
(12.1
)
(38.3
)
0.4
Impairment (Losses) Gains
(1.1
)
(8.3
)
0.1
(22.1
)
Non-Core Operations
138.0
161.1
431.7
486.0
Other
3.2
1.2
9.4
16.5
Total Revenues
$
1,199.4
$
1,361.5
$
3,757.0
$
4,149.3
KEMPER CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in Millions)
(Unaudited)
Sep 30, 2023
Dec 31, 2022
Assets:
Investments:
Fixed Maturities at Fair Value
$
6,474.5
$
6,894.8
Equity Securities at Fair Value
233.4
243.2
Equity Method Limited Liability
Investments
224.1
217.0
Alternative Energy Partnership
Investments
17.2
16.3
Short-term Investments at Cost which
Approximates Fair Value
418.5
278.4
Company-Owned Life Insurance
506.9
586.5
Loans to Policyholders
281.8
283.4
Other Investments
273.1
269.9
Total Investments
8,429.5
8,789.5
Cash
110.0
212.4
Receivables from Policyholders
1,102.6
1,286.6
Other Receivables
223.4
262.6
Deferred Policy Acquisition Costs
622.2
635.6
Goodwill
1,250.7
1,300.3
Current Income Tax Assets
59.5
167.6
Deferred Income Tax Assets
258.5
129.0
Other Assets
488.7
530.0
Assets of Consolidated Variable Interest
Entity
Fixed Maturities at Fair Value
1.6
—
Cash
2.4
—
Receivables from Policyholders
0.1
—
Other Assets
0.1
—
Total Assets
$
12,549.3
$
13,313.6
Liabilities and Shareholders’
Equity:
Insurance Reserves:
Life & Health
$
3,098.1
$
3,276.2
Property & Casualty
2,724.5
2,756.9
Total Insurance Reserves
5,822.6
6,033.1
Unearned Premiums
1,485.1
1,704.4
Policyholder Contract Liabilities
656.3
701.3
Deferred Income Tax Liabilities
57.8
—
Accrued Expenses and Other Liabilities
777.6
817.3
Long-term Debt, Current and Non-current,
at Amortized Cost
1,388.6
1,386.9
Liabilities of Consolidated Variable
Interest Entity
Insurance Reserves
—
—
Unearned Premiums
0.1
—
Accrued Expenses and Other Liabilities
—
—
Total Liabilities
10,188.1
10,643.0
Shareholders’ Equity:
Common Stock
6.4
6.4
Paid-in Capital
1,845.9
1,812.7
Retained Earnings
982.4
1,366.4
Accumulated Other Comprehensive Loss
(473.4
)
(514.9
)
Total Kemper Corporation Shareholders’
Equity
2,361.3
2,670.6
Noncontrolling Interest
(0.1
)
—
Total Shareholders’ Equity
2,361.2
2,670.6
Total Liabilities and Shareholders’
Equity
$
12,549.3
$
13,313.6
Unaudited selected financial
information for the Specialty Property & Casualty Insurance
segment follows.
Three Months Ended
Nine Months Ended
(Dollars in Millions)
Sep 30, 2023
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
Results
of Operations
Net Premiums Written
$
733.0
$
968.5
$
2,585.7
$
3,012.1
Earned Premiums
$
890.4
$
999.5
$
2,766.9
$
3,064.8
Net Investment Income
42.7
33.9
125.7
102.8
Change in Value of Alternative Energy
Partnership Investments
0.5
0.3
1.3
(10.6
)
Other Income
1.6
2.3
3.2
5.0
Total Revenues
935.2
1,036.0
2,897.1
3,162.0
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE
712.1
868.0
2,301.4
2,709.9
Catastrophe Losses and LAE
6.2
14.8
32.0
23.1
Prior Years:
Non-catastrophe Losses and LAE
78.8
(6.6
)
135.4
(24.8
)
Catastrophe Losses and LAE
(1.0
)
0.2
(2.4
)
0.7
Total Incurred Losses and LAE
796.1
876.4
2,466.4
2,708.9
Insurance Expenses
182.3
198.8
563.6
603.5
Segment Adjusted Operating Loss
(43.2
)
(39.2
)
(132.9
)
(150.4
)
Income Tax Benefit
10.0
10.5
30.5
38.1
Total Segment Adjusted Net Operating
Loss
$
(33.2
)
$
(28.7
)
$
(102.4
)
$
(112.3
)
Ratios
Based On Earned Premiums
Current Year Non-catastrophe Losses and
LAE Ratio
80.0
%
86.9
%
83.1
%
88.4
%
Current Year Catastrophe Losses and LAE
Ratio
0.7
1.5
1.2
0.8
Prior Years Non-catastrophe Losses and LAE
Ratio
8.8
(0.7
)
4.9
(0.8
)
Prior Years Catastrophe Losses and LAE
Ratio
(0.1
)
—
(0.1
)
—
Total Incurred Loss and LAE Ratio
89.4
87.7
89.1
88.4
Insurance Expense Ratio
20.5
19.9
20.4
19.7
Combined Ratio
109.9
%
107.6
%
109.5
%
108.1
%
Underlying Combined Ratio1
Current Year Non-catastrophe Losses and
LAE Ratio
80.0
%
86.9
%
83.1
%
88.4
%
Insurance Expense Ratio
20.5
19.9
20.4
19.7
Underlying Combined Ratio1
100.5
%
106.8
%
103.5
%
108.1
%
Non-GAAP
Measure Reconciliation
Combined Ratio
109.9
%
107.6
%
109.5
%
108.1
%
Less:
Current Year Catastrophe Losses and LAE
Ratio
0.7
1.5
1.2
0.8
Prior Years Non-catastrophe Losses and LAE
Ratio
8.8
(0.7
)
4.9
(0.8
)
Prior Years Catastrophe Losses and LAE
Ratio
(0.1
)
—
(0.1
)
—
Underlying Combined Ratio1
100.5
%
106.8
%
103.5
%
108.1
%
Unaudited selected financial
information for the Life Insurance segment follows.
Three Months Ended
Nine Months Ended
(Dollars in Millions)
Sep 30, 2023
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
Results
of Operations
Earned Premiums
$
102.1
$
142.1
$
303.6
$
428.9
Net Investment Income
49.4
52.6
146.3
163.9
Change in Value of Alternative Energy
Partnership Investments
0.2
0.1
0.6
(5.6
)
Other (Loss) Income
(0.1
)
—
(0.4
)
(0.8
)
Total Revenues
151.6
194.8
450.1
586.4
Policyholders’ Benefits and Incurred
Losses and LAE
64.7
88.5
202.9
272.7
Insurance Expenses
69.4
90.7
204.8
262.2
Segment Adjusted Operating Income
17.5
15.6
42.4
51.5
Income Tax Expense
(2.8
)
(1.6
)
(5.6
)
(5.7
)
Total Segment Adjusted Net Operating
Income
$
14.7
$
14.0
$
36.8
$
45.8
Use of Non-GAAP Financial Measures
Adjusted Consolidated Net Operating
Loss1 is an after-tax, non-GAAP financial measure and is
computed by excluding from Net Loss the after-tax impact of:
(i) Income (Loss) from Change in Fair Value
of Equity and Convertible Securities; (ii) Net Realized Investment
(Losses) Gains; (iii) Impairment (Losses) Gains; (iv) Acquisition
and Disposition Related Transaction, Integration, Restructuring and
Other Costs; (v) Debt Extinguishment, Pension Settlement and Other
Charges; (vi) Goodwill Impairment Charges; (vii) Non-Core
Operations; and (viii) 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 Net Loss. There were no applicable significant
non-recurring items that Kemper excluded from the calculation of
Adjusted Consolidated Net Operating Loss1 for the three and nine
months ended September 30, 2023 or 2022.
Kemper believes that Adjusted Consolidated Net Operating Loss1
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. Income (Loss) from Change in Fair Value of Equity and
Convertible Securities, Net Realized Investment (Losses) Gains and
Impairment (Losses) Gains 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 Kemper’s investments, the timing of which is unrelated to
the insurance underwriting process. Acquisition and Disposition
Related Transaction, Integration, Restructuring and Other Costs may
vary significantly between periods and are generally driven by the
timing of acquisitions and business decisions which are unrelated
to the insurance underwriting process. Debt Extinguishment, Pension
Settlement and Other Charges relate to (i) loss from early
extinguishment of debt, which is driven by Kemper’s financing and
refinancing decisions and capital needs, as well as external
economic developments such as debt market conditions, the timing of
which is unrelated to the insurance underwriting process; (ii)
settlement of pension plan obligations which are business decisions
made by Kemper, the timing of which is unrelated to the
underwriting process; and (iii) other charges that are
non-standard, not part of the ordinary course of business, and
unrelated to the insurance underwriting process. Goodwill
impairment charges are excluded because they are infrequent and
non-recurring charges. Non-Core Operations includes the results of
our Preferred Insurance business which we expect to fully exit.
These results are excluded because they are irrelevant to our
ongoing operations and do not qualify for Discontinued Operations
under Generally Accepted Accounting Principles ("GAAP").
Significant non-recurring items are excluded because, by their
nature, they are not indicative of Kemper’s business or economic
trends.
The preceding non-GAAP financial measures should not be
considered a substitute for the comparable GAAP financial measures,
as they do not fully recognize the profitability of Kemper’s
businesses.
A reconciliation of Net Loss to Adjusted Consolidated Net
Operating Loss1 for the three and nine months ended September 30,
2023 and 2022 is presented below.
Three Months Ended
Nine Months Ended
(Dollars in Millions) (Unaudited)
Sep 30, 2023
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
Net Loss
$
(146.4
)
$
(74.8
)
$
(323.6
)
$
(233.3
)
Less: Net Loss attributable to
noncontrolling interest
(0.1
)
—
(0.1
)
—
Net Loss attributable to Kemper
Corporation
$
(146.3
)
$
(74.8
)
$
(323.5
)
$
(233.3
)
Less Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
2.3
(8.8
)
5.5
(63.1
)
Net Realized Investment (Losses) Gains
(22.9
)
(9.6
)
(30.3
)
0.3
Impairment (Losses) Gains
(0.8
)
(6.6
)
0.1
(17.5
)
Acquisition and Disposition Related
Transaction, Integration, Restructuring and Other Costs
(34.2
)
(20.7
)
(80.5
)
(32.2
)
Debt Extinguishment, Pension Settlement
and Other Charges
(55.5
)
—
(55.5
)
(2.9
)
Goodwill Impairment Charge
—
—
(45.5
)
—
Non-Core Operations
(7.3
)
(2.1
)
(19.5
)
(25.0
)
Adjusted Consolidated Net Operating
Loss1,2
$
(27.9
)
$
(27.0
)
$
(97.8
)
$
(92.9
)
Diluted Adjusted Net Operating Loss Per
Unrestricted Share1 is a non-GAAP financial measure computed
by dividing Adjusted Net Operating Loss1 attributed to unrestricted
shares by the weighted-average unrestricted shares and equivalent
shares outstanding. The most directly comparable GAAP financial
measure is Diluted Net Loss Per Unrestricted Share.
A reconciliation of Diluted Net Loss Per Unrestricted Share to
Diluted Adjusted Net Operating Loss Per Unrestricted Share1 for the
three and nine months ended September 30, 2023 and 2022 is
presented below.
Three Months Ended
Nine Months Ended
(Unaudited)
Sep 30, 2023
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
Diluted Net Loss Per Unrestricted
Share
$
(2.28
)
$
(1.17
)
$
(5.05
)
$
(3.66
)
Less Net Income (Loss) Per Unrestricted
Share From:
Change in Fair Value of Equity and
Convertible Securities
0.04
(0.14
)
0.09
(0.99
)
Net Realized Investment (Losses) Gains
(0.35
)
(0.15
)
(0.47
)
—
Impairment (Losses) Gains
(0.01
)
(0.10
)
—
(0.27
)
Acquisition and Disposition Related
Transaction, Integration, Restructuring and Other Costs
(0.54
)
(0.32
)
(1.26
)
(0.50
)
Debt Extinguishment, Pension Settlement
and Other Charges
(0.87
)
—
(0.87
)
(0.05
)
Goodwill Impairment Charge
—
—
(0.71
)
—
Non-Core Operations
(0.11
)
(0.03
)
(0.30
)
(0.39
)
Diluted Adjusted Net Operating Loss Per
Unrestricted Share1,2
$
(0.44
)
$
(0.43
)
$
(1.53
)
$
(1.46
)
Book Value Per Share Excluding Net
Unrealized Gains and Losses Losses on Fixed Maturities and the
Change in Discount Rate on Future Life Policyholder
Benefits1 is a calculation that uses a non-GAAP financial
measure. It is calculated by dividing shareholders’ equity after
excluding the after-tax impact of net unrealized gains and losses
on fixed income securities and the change in discount rate on
future life policyholder benefits by total Common Shares Issued and
Outstanding. Book value per share is the most directly comparable
GAAP financial measure. The Company uses the trends in book value
per share excluding the after-tax impact of net unrealized gains
and losses on fixed income securities and the change in discount
rate on future life policyholder benefits in conjunction with book
value per share to identify and analyze the change in net worth
attributable to management efforts between periods. The Company
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 not influenced by management. The
Company 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 and Losses on
Fixed Maturities and the Change in Discount Rate on Future Life
Policyholder Benefits1 and Book Value Per Share at September 30,
2023 and December 31, 2022 is presented below.
(Dollars in Millions) (Unaudited)
Sep 30, 2023
Dec 31, 2022
Shareholders’ Equity
$
2,361.3
$
2,670.6
Less: Net Unrealized Losses on Fixed
Maturities
(900.1
)
(716.8
)
Less: Change in Discount Rate on Future
Life Policyholder Benefits
412.8
241.1
Kemper Corporation Shareholders’ Equity
Excluding Net Unrealized Losses on Fixed Maturities and Change in
Discount Rate on Future Life Policyholder Benefits1
$
2,848.6
$
3,146.3
Underlying Combined Ratio1 is a
non-GAAP financial measure. It is computed by adding the Current
Year Non-catastrophe Losses and LAE Ratio with the Insurance
Expense Ratio. The most directly comparable GAAP financial measure
is the Combined Ratio, which is computed by adding Total Incurred
Losses and LAE Ratio, including the impact of catastrophe losses
and loss and LAE reserve development from prior years, with the
Insurance Expense Ratio.
Kemper believes Underlying Losses and LAE and the Underlying
Combined Ratio are useful to investors and uses these financial
measures to reveal the trends in Kemper’s Property & Casualty
Insurance segment that may be obscured by catastrophe losses and
prior-year reserve development. These catastrophe losses may cause
Kemper’s 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 developments are 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 Kemper’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 Kemper’s underwriting performance.
Conference Call
Kemper will host its conference call to discuss third quarter
2023 results on Monday October 30th, at 5:00 p.m. Eastern (4:00
p.m. Central). The conference call will be accessible via the
internet and by telephone at 888.259.6580, access code
15917686. 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 online at the investor
section of kemper.com.
More detailed financial information can be found in Kemper’s
Investor Financial Supplement and Earnings Call Presentation for
the third quarter of 2023, which is available at the investor
section of kemper.com.
About Kemper
The Kemper family of companies is one of the nation’s leading
specialized insurers. With approximately $13 billion in assets,
Kemper is improving the world of insurance by providing affordable
and easy-to-use personalized solutions to individuals, families and
businesses through its Auto and Life brands. Kemper serves over 5.1
million policies, is represented by approximately 25,000 agents and
brokers, and has approximately 8,400 associates dedicated to
meeting the ever-changing needs of its customers.
Learn more about Kemper at 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. We caution investors that
these forward-looking statements are not guarantees of future
performance, and actual results may differ materially. Such
statements involve known and unknown risks, uncertainties, and
other factors, including but not limited to:
- changes in the frequency and severity of insurance claims;
- claim development and the process of estimating claim
reserves;
- the impacts of inflation;
- changes in the interest rate environment;
- supply chain disruption;
- product demand and pricing;
- effects of governmental and regulatory actions;
- litigation outcomes and trends;
- investment risks;
- cybersecurity risks;
- impact of catastrophes; and
- other risks and uncertainties detailed in Kemper’s Annual
Report on Form 10-K and subsequent filings with the Securities and
Exchange Commission (“SEC”).
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231030111746/en/
Investors: Karen Guerra 312.668.9720 or investors@kemper.com
Media: Barbara Ciesemier 312.661.4521 or
bciesemier@kemper.com
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