Kemper Corporation (NYSE: KMPR) reported net income of $97.5
million, or $1.46 per diluted share, for the fourth quarter of
2020, compared to $124.7 million, or $1.85 per diluted share, for
the fourth quarter of 2019. In the fourth quarter of 2020, net
income included a $57.8 million after-tax gain, or $0.86 per
diluted share, attributable to the change in fair value of equity
and convertible securities.
Adjusted Consolidated Net Operating Income1 was $105.8 million,
or $1.59 per diluted share, for the fourth quarter of 2020,
compared to $97.9 million, or $1.45 per diluted share, for the
fourth quarter of 2019.
Highlights of the quarter include:
- Specialty P&C earned premiums increased by $83 million or
10%, and policies-in-force grew ~4%
- Life & Health produced net operating income of $9 million
while absorbing protracted “catastrophe like” pandemic
- Announced the acquisition of American Access, further enhancing
Kemper’s specialty auto expertise
- Kemper’s defined benefit pension plan purchased annuities and
offered lump-sum payments, thereby reducing pension risk resulting
in a non-cash after-tax pension settlement expense of $50.6
million.
“I’m very pleased with our quarter and full-year performance,
against the backdrop of a challenging year,” said President and CEO
Joseph P. Lacher, Jr. “We took actions to further strengthen our
organization and an already strong balance sheet. Our performance
metrics tell the success story, with tangible book value per share
up 15% and return on tangible equity excluding unrealized gains up
16%. For the year, we generated over $400 million of net income,
nearly $440 million of adjusted consolidated net operating income,
and $425 million of cash from operations. Further, we continued to
grow both top and bottom lines. Our ability to deliver these
results is a testament to the strength of our franchise, our
people, and our customers. Additionally, our announced acquisition
of American Access will accelerate expansion of our Specialty auto
business. Overall, Kemper remains well positioned to continue to
deliver value to all our stakeholders.”
Three Months Ended
Year Ended
(Dollars in Millions, Except Per Share
Amounts) (Unaudited)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Net Income
$
97.5
$
124.7
$
409.9
$
531.1
Adjusted Consolidated Net Operating
Income1
$
105.8
$
97.9
$
438.8
$
418.3
Impact of Catastrophe Losses and Related
Loss Adjustment Expense (LAE) on Net Income
$
(4.4
)
$
(12.8
)
$
(84.3
)
$
(61.0
)
Diluted Net Income Per Share From:
Net Income
$
1.46
$
1.85
$
6.14
$
7.96
Adjusted Consolidated Net Operating
Income1
$
1.59
$
1.45
$
6.57
$
6.27
Impact of Catastrophe Losses and Related
LAE on Net Income Per Share
$
(0.07
)
$
(0.19
)
$
(1.26
)
$
(0.91
)
Capital
Total Shareholders’ Equity at the end of the quarter was
$4,563.4 million, an increase of $591.1 million, or 15 percent,
since year-end 2019 primarily driven by net income and an increase
in accumulated other comprehensive income, partially offset by cash
dividends and repurchases of common stock. Kemper ended the quarter
with cash and investments at the holding company of $733.2 million,
and the $400 million revolving credit agreement was undrawn.
During the fourth quarter of 2020, Kemper paid dividends of
$19.7 million.
Kemper ended the quarter with a book value per share of $69.74,
an increase of 17 percent from $59.59 at the end of 2019. Book
Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1
was $58.67, up 11 percent from $53.08 at the end of 2019.
Revenues
Total revenues for the fourth quarter of 2020 increased $108.4
million, or 8.4 percent, to $1,392.1 million, compared to the
fourth quarter of 2019, driven by $82.7 million of higher Specialty
P&C earned premiums and a $33.9 million increase attributable
to the change in fair value of equity and convertible securities.
Net investment income increased $8.8 million to $102.7 million in
the fourth quarter of 2020 due primarily to increased returns from
Alternative Investments and higher levels of investments in fixed
income securities, partially offset by lower yields on fixed income
securities and higher investment expenses. Net realized investment
losses were $0.1 million in the fourth quarter of 2020, compared to
net realized investment gain of $2.8 million in the fourth quarter
of 2019. Other income decreased from $3.7 million to $1.9 million
in the fourth quarter of 2020.
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
Year Ended
(Dollars in Millions) (Unaudited)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Segment Net Operating Income:
Specialty Property & Casualty
Insurance
$
91.1
$
62.3
$
337.9
$
283.1
Preferred Property & Casualty
Insurance
16.9
12.8
3.5
41.9
Life & Health Insurance
9.4
28.9
60.0
98.7
Total Segment Net Operating Income
117.4
104.0
401.4
423.7
Corporate and Other Net Operating Income
(Loss)
(11.6
)
(6.1
)
37.4
(5.4
)
Adjusted Consolidated Net Operating
Income1
105.8
97.9
438.8
418.3
Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
57.8
30.9
57.0
109.7
Net Realized Gains on Sales of
Investments
(0.1
)
2.2
30.1
33.1
Impairment Losses
0.4
(1.3
)
(15.4
)
(10.9
)
Acquisition Related Transaction,
Integration and Other Costs
(15.8
)
(5.0
)
(50.0
)
(14.5
)
Debt Extinguishment, Pension and Other
Charges
(50.6
)
—
(50.6
)
(4.6
)
Net Income
$
97.5
$
124.7
$
409.9
$
531.1
The Specialty Property & Casualty Insurance segment reported
net operating income of $91.1 million for the fourth quarter of
2020, compared to $62.3 million in the fourth quarter of 2019.
Results improved due primarily to higher premium volume and an
improvement in underlying losses and LAE ratio. The segment’s
Underlying Combined Ratio1 was 91.3 percent, compared to 93.8
percent in the fourth quarter of 2019 reflecting favorable
short-term pandemic-related frequency trends.
The Preferred Property & Casualty Insurance segment reported
net operating income of $16.9 million for the fourth quarter of
2020, compared to net operating income of $12.8 million in the
fourth quarter of 2019. Results improved due primarily to an
improvement in underlying losses and LAE and lower catastrophe
losses and LAE (excluding loss and LAE reserve development),
partially offset by adverse loss and LAE reserve development. The
Preferred Property & Casualty Insurance segment’s Underlying
Combined Ratio1 improved 3.0 percentage points to 93.6 percent in
the fourth quarter of 2020 due primarily to lower incurred losses
and LAE reflecting similar auto frequency trends experienced in our
Specialty segment, as well as ongoing profit improvement
actions.
The Life & Health Insurance segment reported net operating
income of $9.4 million for the fourth quarter of 2020, compared to
$28.9 million in the fourth quarter of 2019. Results deteriorated
due primarily to an increase in COVID-related mortality, in line
with country-wide trends.
Unaudited condensed consolidated statements of income for the
three and twelve months ended December 31, 2020 and 2019 are
presented below.
Three Months Ended
Year Ended
(Dollars in Millions, Except Per Share
Amounts)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Revenues:
Earned Premiums
$
1,214.0
$
1,145.8
$
4,672.2
$
4,472.4
Net Investment Income
102.7
93.9
348.2
364.3
Other Income
1.9
3.7
94.6
35.5
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
73.1
39.2
72.1
138.9
Net Realized Gains (Losses) on Sales of
Investments
(0.1
)
2.8
38.1
41.9
Impairment Losses
0.5
(1.7
)
(19.5
)
(13.8
)
Total Revenues
1,392.1
1,283.7
5,205.7
5,039.2
Expenses:
Policyholders’ Benefits and Incurred
Losses and Loss Adjustment Expenses
863.4
814.9
3,323.6
3,188.3
Insurance Expenses
279.3
265.4
1,100.5
1,019.7
Loss from Early Extinguishment of Debt
—
—
—
5.8
Interest and Other Expenses
128.8
46.5
271.5
163.8
Total Expenses
1,271.5
1,126.8
4,695.6
4,377.6
Income from before Income Taxes
120.6
156.9
510.1
661.6
Income Tax Expense
(23.1
)
(32.2
)
(100.2
)
(130.5
)
Net Income
$
97.5
$
124.7
$
409.9
$
531.1
Net Income Per Unrestricted
Share:
Basic
$
1.49
$
1.87
$
6.24
$
8.04
Diluted
$
1.46
$
1.85
$
6.14
$
7.96
Weighted-average Outstanding (Shares in
Thousands):
Unrestricted Shares - Basic
65,413.7
66,649.7
65,636.1
65,880.9
Unrestricted Shares and Equivalent Shares
- Diluted
66,528.7
67,160.5
66,729.8
66,548.1
Dividends Paid to Shareholders Per
Share
$
0.30
$
0.28
$
1.20
$
1.03
Unaudited business segment revenues for the three and twelve
months ended December 31, 2020 and 2019 are presented
below.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
REVENUES:
Specialty Property & Casualty
Insurance:
Earned Premiums:
Specialty Automobile
$
796.1
$
733.1
$
3,031.3
$
2,825.6
Commercial Automobile
86.3
66.6
304.0
252.8
Total Earned Premiums
882.4
799.7
3,335.3
3,078.4
Net Investment Income
37.9
28.3
114.1
107.5
Other Income
0.4
0.8
1.8
7.0
Total Specialty Property & Casualty
Insurance Revenues
920.7
828.8
3,451.2
3,192.9
Preferred Property & Casualty
Insurance:
Earned Premiums:
Preferred Automobile
107.1
117.2
431.7
470.2
Homeowners
53.3
58.7
220.7
241.3
Other Personal
8.8
9.3
35.8
38.8
Total Earned Premiums
169.2
185.2
688.2
750.3
Net Investment Income
13.4
11.5
37.7
44.1
Other Income
—
—
0.1
—
Total Preferred Property & Casualty
Insurance Revenues
182.6
196.7
726.0
794.4
Life & Health Insurance:
Earned Premiums:
Life
96.5
95.6
385.7
384.6
Accident & Health
50.2
48.5
199.3
190.9
Property
15.7
16.8
63.7
68.2
Total Earned Premiums
162.4
160.9
648.7
643.7
Net Investment Income
52.8
52.0
198.8
206.4
Other Income
—
2.9
0.6
8.5
Total Life & Health Insurance
Revenues
215.2
215.8
848.1
858.6
Total Segment Revenues
1,318.5
1,241.3
5,025.3
4,845.9
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
73.1
39.2
72.1
138.9
Net Realized Gains on Sales of
Investments
(0.1
)
2.8
38.1
41.9
Impairment Losses
0.5
(1.7
)
(19.5
)
(13.8
)
Other
0.1
2.1
89.7
26.3
Total Revenues
$
1,392.1
$
1,283.7
$
5,205.7
$
5,039.2
KEMPER CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in Millions)
(Unaudited)
Dec 31, 2020
Dec 31, 2019
Assets:
Investments:
Fixed Maturities at Fair Value
$
7,605.9
$
6,922.1
Equity Securities at Fair Value
858.5
907.3
Equity Securities at Modified Cost
40.1
41.9
Equity Method Limited Liability
Investments
225.3
220.4
Convertible Securities at Fair Value
39.9
37.3
Short-term Investments at Cost which
Approximates Fair Value
875.4
470.9
Other Investments
779.0
661.5
Total Investments
10,424.1
9,261.4
Cash
206.1
136.8
Receivables from Policyholders
1,194.5
1,117.1
Other Receivables
222.4
219.7
Deferred Policy Acquisition Costs
589.3
537.7
Goodwill
1,114.0
1,114.0
Current Income Tax Assets
15.6
44.7
Other Assets
575.9
557.7
Total Assets
$
14,341.9
$
12,989.1
Liabilities and Shareholders’
Equity:
Insurance Reserves:
Life & Health
$
3,527.5
$
3,502.0
Property & Casualty
1,982.5
1,969.8
Total Insurance Reserves
5,510.0
5,471.8
Unearned Premiums
1,615.1
1,545.5
Policyholder Contract Liabilities
467.0
309.8
Deferred Income Tax Liabilities
285.7
178.2
Accrued Expenses and Other Liabilities
727.9
733.1
Debt at Amortized Cost
1,172.8
778.4
Total Liabilities
9,778.5
9,016.8
Shareholders’ Equity:
Common Stock
6.5
6.7
Paid-in Capital
1,805.2
1,819.2
Retained Earnings
2,071.2
1,810.3
Accumulated Other Comprehensive Income
680.5
336.1
Total Shareholders’ Equity
4,563.4
3,972.3
Total Liabilities and Shareholders’
Equity
$
14,341.9
$
12,989.1
Unaudited selected financial information for the Specialty
Property & Casualty Insurance segment follows.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Results
of Operations
Net Premiums Written
$
829.2
$
782.5
$
3,435.5
$
3,211.3
Earned Premiums
$
882.4
$
799.7
$
3,335.3
$
3,078.4
Net Investment Income
37.9
28.3
114.1
107.5
Other Income
0.4
0.8
1.8
7.0
Total Revenues
920.7
828.8
3,451.2
3,192.9
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE
626.2
599.5
2,350.8
2,302.4
Catastrophe Losses and LAE
5.5
3.8
12.3
11.1
Prior Years:
Non-catastrophe Losses and LAE
(1.7
)
(4.1
)
15.1
(35.1
)
Catastrophe Losses and LAE
0.1
0.2
0.2
0.5
Total Incurred Losses and LAE
630.1
599.4
2,378.4
2,278.9
Insurance Expenses
179.1
150.7
651.9
555.6
Other Expenses
—
0.2
—
2.5
Operating Income
111.5
78.5
420.9
355.9
Income Tax Benefit
(20.4
)
(16.2
)
(83.0
)
(72.8
)
Segment Net Operating Income
$
91.1
$
62.3
$
337.9
$
283.1
Ratios
Based On Earned Premiums
Current Year Non-catastrophe Losses and
LAE Ratio
71.0
%
75.0
%
70.4
%
74.7
%
Current Year Catastrophe Losses and LAE
Ratio
0.6
0.5
0.4
0.4
Prior Years Non-catastrophe Losses and LAE
Ratio
(0.2
)
(0.5
)
0.5
(1.1
)
Prior Years Catastrophe Losses and LAE
Ratio
—
—
—
—
Total Incurred Loss and LAE Ratio
71.4
75.0
71.3
74.0
Insurance Expense Ratio
20.3
18.8
19.5
18.0
Combined Ratio
91.7
%
93.8
%
90.8
%
92.0
%
Underlying Combined Ratio1
Current Year Non-catastrophe Losses and
LAE Ratio
71.0
%
75.0
%
70.4
%
74.7
%
Insurance Expense Ratio
20.3
18.8
19.5
18.0
Underlying Combined Ratio1
91.3
%
93.8
%
89.9
%
92.7
%
Non-GAAP
Measure Reconciliation
Combined Ratio
91.7
%
93.8
%
90.8
%
92.0
%
Less:
Current Year Catastrophe Losses and LAE
Ratio
0.6
0.5
0.4
0.4
Prior Years Non-catastrophe Losses and LAE
Ratio
(0.2
)
(0.5
)
0.5
(1.1
)
Prior Years Catastrophe Losses and LAE
Ratio
—
—
—
—
Underlying Combined Ratio1
91.3
%
93.8
%
89.9
%
92.7
%
Unaudited selected financial information for the Preferred
Property & Casualty Insurance segment follows.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Results
of Operations
Net Premiums Written
$
155.2
$
172.6
$
653.0
$
739.3
Earned Premiums
$
169.2
$
185.2
$
688.2
$
750.3
Net Investment Income
13.4
11.5
37.7
44.1
Other Income
—
—
0.1
—
Total Revenues
182.6
196.7
726.0
794.4
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE
107.1
120.2
400.9
481.8
Catastrophe Losses and LAE
(5.3
)
11.9
82.0
63.0
Prior Years:
Non-catastrophe Losses and LAE
9.5
(7.1
)
20.7
(17.6
)
Catastrophe Losses and LAE
0.1
(3.1
)
(0.5
)
(18.4
)
Total Incurred Losses and LAE
111.4
121.9
503.1
508.8
Insurance Expenses
51.4
58.7
221.1
233.3
Operating Income (Loss)
19.8
16.1
1.8
52.3
Income Tax Benefit (Expense)
(2.9
)
(3.3
)
1.7
(10.4
)
Segment Net Operating Income (Loss)
$
16.9
$
12.8
$
3.5
$
41.9
Ratios
Based On Earned Premiums
Current Year Non-catastrophe Losses and
LAE Ratio
63.2
%
64.9
%
58.3
%
64.2
%
Current Year Catastrophe Losses and LAE
Ratio
(3.1
)
6.4
11.9
8.4
Prior Years Non-catastrophe Losses and LAE
Ratio
5.6
(3.8
)
3.0
(2.3
)
Prior Years Catastrophe Losses and LAE
Ratio
0.1
(1.7
)
(0.1
)
(2.5
)
Total Incurred Loss and LAE Ratio
65.8
65.8
73.1
67.8
Insurance Expense Ratio
30.4
31.7
32.1
31.1
Combined Ratio
96.2
%
97.5
%
105.2
%
98.9
%
Underlying Combined Ratio1
Current Year Non-catastrophe Losses and
LAE Ratio
63.2
%
64.9
%
58.3
%
64.2
%
Insurance Expense Ratio
30.4
31.7
32.1
31.1
Underlying Combined Ratio1
93.6
%
96.6
%
90.4
%
95.3
%
Non-GAAP
Measure Reconciliation
Combined Ratio
96.2
%
97.5
%
105.2
%
98.9
%
Less:
Current Year Catastrophe Losses and LAE
Ratio
(3.1
)
6.4
11.9
8.4
Prior Years Non-catastrophe Losses and LAE
Ratio
5.6
(3.8
)
3.0
(2.3
)
Prior Years Catastrophe Losses and LAE
Ratio
0.1
(1.7
)
(0.1
)
(2.5
)
Underlying Combined Ratio1
93.6
%
96.6
%
90.4
%
95.3
%
Unaudited selected financial information for the Life &
Health Insurance segment follows.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Results
of Operations
Earned Premiums
$
162.4
$
160.9
$
648.7
$
643.7
Net Investment Income
52.8
52.0
198.8
206.4
Other Income
—
2.9
0.6
8.5
Total Revenues
215.2
215.8
848.1
858.6
Policyholders’ Benefits and Incurred
Losses and LAE
121.8
95.0
442.0
402.7
Insurance Expenses
83.8
85.3
334.9
334.0
Operating Profit
9.6
35.5
71.2
121.9
Income Tax Expense
(0.2
)
(6.6
)
(11.2
)
(23.2
)
Segment Net Operating Income
$
9.4
$
28.9
$
60.0
$
98.7
Use of Non-GAAP Financial Measures
Adjusted Consolidated Net Operating
Income1
Adjusted Consolidated Net Operating Income1 is an after-tax,
non-GAAP financial measure computed by excluding from Net
Income the after-tax impact of 1) income (loss) from change in
fair value of equity and convertible securities, 2) net realized
gains on sales of investments, 3) impairment losses 4) acquisition
related transaction, integration and other costs, 5) debt
extinguishment, pension and other charges, and 6) 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
Income.
Kemper believes that Adjusted Consolidated Net Operating Income1
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 Gains on Sales of Investments
and Impairment Losses related to investments included in the
Company’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. Acquisition
Related Transaction and Integration 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 and
Other Charges relate to (i) loss from early extinguishment of debt,
which is driven by the Company’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 are made by
the Company, 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. Significant non-recurring items are excluded
because, by their nature, they are not indicative of the Company’s
business or economic trends.
A reconciliation of Net Income to Adjusted Consolidated
Net Operating Income1 for the three and twelve months ended
December 31, 2020 and 2019 is presented below.
Three Months Ended
Year Ended
(Dollars in Millions) (Unaudited)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Net Income
$
97.5
$
124.7
$
409.9
$
531.1
Less Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
57.8
30.9
57.0
109.7
Net Realized Gains on Sales of
Investments
(0.1
)
2.2
30.1
33.1
Impairment Losses
0.4
(1.3
)
(15.4
)
(10.9
)
Acquisition Related Transaction,
Integration and Other Costs
(15.8
)
(5.0
)
(50.0
)
(14.5
)
Debt Extinguishment, Pension and Other
Charges
(50.6
)
—
(50.6
)
(4.6
)
Adjusted Consolidated Net Operating
Income1
$
105.8
$
97.9
$
438.8
$
418.3
Diluted Adjusted Consolidated Net
Operating Income Per Unrestricted Share1
Diluted Adjusted Consolidated Net Operating Income Per
Unrestricted Share1 is a non-GAAP financial measure computed by
dividing Adjusted Consolidated Net Operating Income1 attributed to
unrestricted shares by the weighted-average unrestricted shares and
equivalent shares outstanding. The most directly comparable GAAP
financial measure is Diluted Net Income.
A reconciliation of Diluted Net Income to Diluted Adjusted
Consolidated Net Operating Income Per Unrestricted Share1 for the
three and twelve months ended December 31, 2020 and 2019 is
presented below.
Three Months Ended
Year Ended
(Unaudited)
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
Diluted Net Income
$
1.46
$
1.85
$
6.14
$
7.96
Less Net Income (Loss) Per Unrestricted
Share From:
Change in Fair Value of Equity and
Convertible Securities
0.86
0.46
0.86
1.64
Net Realized Gains on Sales of
Investments
—
0.03
0.45
0.50
Impairment Losses
0.01
(0.02
)
(0.23
)
(0.16
)
Acquisition Related Transaction,
Integration and Other Costs
(0.24
)
(0.07
)
(0.75
)
(0.22
)
Debt Extinguishment, Pension and Other
Charges
(0.76
)
—
(0.76
)
(0.07
)
Diluted Adjusted Consolidated Net
Operating Income Per Unrestricted Share1
$
1.59
$
1.45
$
6.57
$
6.27
Book Value Per Share Excluding Net
Unrealized Gains on Fixed Maturities1
Book Value Per Share Excluding Net Unrealized Gains on Fixed
Maturities1 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 trends 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 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
Maturities1 and Book Value Per Share at December 31, 2020 and
December 31, 2019 is presented below.
(Dollars in Millions) (Unaudited)
Dec 31, 2020
Dec 31, 2019
Shareholders’ Equity
$
4,563.4
$
3,972.3
Net Unrealized Gains on Fixed
Maturities
724.0
434.0
Shareholders’ Equity Excluding Net
Unrealized Gains on Fixed Maturities1
$
3,839.4
$
3,538.3
Underlying Combined Ratio1
Underlying Combined Ratio1 is a non-GAAP financial measure that
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, including the
impact of catastrophe losses and loss and LAE reserve development
from prior years, with the insurance expense 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
Ratio1 should not be considered a substitute for the combined ratio
and does not reflect the overall underwriting profitability of our
business.
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.
Conference Call
Kemper will discuss its fourth quarter 2020 results in a
conference call on Monday, February 1st, at 5:00 p.m. Eastern (4:00
p.m. Central) Time. Kemper’s conference call will be accessible via
the internet and by telephone. The phone number for Kemper’s
conference call is 844.826.3041. 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 fourth quarter of 2020, 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 $14.3 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, Personal Insurance, Life and Health
brands. Kemper serves over 6.2 million policies, is represented by
more than 30,000 agents and brokers, and has 9,500 associates
dedicated to meeting the ever-changing needs of its customers.
Learn more about Kemper at the Company’s website,
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 factors listed
in periodic reports filed by Kemper with the Securities and
Exchange Commission (“SEC”). The COVID-19 outbreak and subsequent
global pandemic (“Pandemic”) is an extraordinary event that creates
unique uncertainties and risks. Kemper cannot provide any
assurances as to the impacts of the Pandemic and related economic
conditions on the Company’s operating and financial results.
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, including any such
statements related to the Pandemic. The reader is advised, however,
to consult any further disclosures Kemper makes on related subjects
in its filings with the SEC.
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version on businesswire.com: https://www.businesswire.com/news/home/20210201005869/en/
Investors: Christine Patrick 312.661.4803 or cpatrick@kemper.com
Media: Barbara Ciesemier 312.661.4521 or bciesemier@kemper.com
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