Kemper Corporation (NYSE: KMPR) reported net loss of $105.8
million, or $(1.66) per diluted share, for the fourth quarter of
2021, compared to net income of $97.5 million, or $1.46 per diluted
share, for the fourth quarter of 2020. As Adjusted for
Acquisitions1 of American Access Casualty Company (“AAC”) and
Infinity Property and Casualty Corporation, net loss was $101.3
million, or $(1.59) per diluted share, for the fourth quarter of
2021, compared to net income of $117.6 million, or $1.76 per
diluted share, for the fourth quarter of 2020. In the fourth
quarter of 2021, net loss included a $17.5 million after-tax gain,
or $0.27 per diluted share, attributable to the change in fair
value of equity and convertible securities.
Adjusted Consolidated Net Operating Loss1 was $130.8 million, or
$(2.05) per diluted share, for the fourth quarter of 2021, compared
to Adjusted Consolidated Net Operating Income1 of $105.8 million,
or $1.59 per diluted share, for the fourth quarter of 2020.
Key themes of the quarter include:
- Specialty P&C earned premiums increased 17.0% due to a
17.9% increase in policies-in-force and the initial impact of rate
changes; AAC contributed 10.3% and 12.6% for earned premiums and
policies-in-force, respectively
- Specialty P&C underlying combined ratio1 was 119.4%, due
primarily to higher claim severity trends
- Rate and non-rate actions continued at an accelerated pace, but
earned benefit was minimal in the quarter
- Investment portfolio continues to provide stable net investment
income supporting long-term business objectives
- Declared dividend of $0.31 per share
“This was another challenging quarter, and it goes without
saying we’re disappointed in our profitability,” said President,
CEO and Chairman Joseph P. Lacher, Jr. “The pandemic-driven
environmental challenges the industry has experienced in the last
couple of quarters intensified further in the fourth quarter,
impacting results in each of our businesses. That said, we closed
the year making significant progress on corrective measures that
will become visible in the coming quarters. Overall, I couldn’t be
prouder of our team and how our organization has responded to the
circumstances and challenges in the last couple of years. We remain
focused on managing through these circumstances, and our team will
continue to deliver on our promises and provide attractive,
long-term intrinsic value for our shareholders.”
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.
Three Months Ended
Year Ended
(Dollars in Millions, Except Per Share
Amounts) (Unaudited)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Net Income (Loss)
$
(105.8
)
$
97.5
$
(120.5
)
$
409.9
Adjusted Consolidated Net Operating Income
(Loss) 1
$
(130.8
)
$
105.8
$
(218.8
)
$
438.8
Impact of Catastrophe Losses and Related
Loss Adjustment Expense (LAE) on Net Income
$
(10.2
)
$
(4.4
)
$
(85.2
)
$
(84.3
)
Diluted Net Income (Loss) Per Share
From:
Net Income (Loss)
$
(1.66
)
$
1.46
$
(1.87
)
$
6.14
Adjusted Consolidated Net Operating Income
(Loss) 1
$
(2.05
)
$
1.59
$
(3.40
)
$
6.57
Impact of Catastrophe Losses and Related
LAE on Net Income (Loss) Per Share
$
(0.16
)
$
(0.07
)
$
(1.33
)
$
(1.26
)
Revenues
Total revenues for the fourth quarter of 2021 increased $101.8
million, or 7 percent, to $1,493.9 million, compared to the fourth
quarter of 2020, driven by $149.9 million of higher Specialty
P&C earned premiums, partially offset by a $50.9 million
decrease attributable to the change in fair value of equity and
convertible securities. Specialty P&C earned premiums increased
due primarily to the acquisition of AAC and growth in existing
portfolio. Net investment income increased $5.7 million to $108.4
million in the fourth quarter of 2021 compared to the fourth
quarter of 2020 due primarily to higher levels of investments and
rate on Company-Owned Life Insurance. Net realized investment gains
were $21.7 million in the fourth quarter of 2021, compared to a net
loss of $0.1 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, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Segment Net Operating Income (Loss):
Specialty Property & Casualty
Insurance
$
(125.2
)
$
91.1
$
(196.1
)
$
337.9
Preferred Property & Casualty
Insurance
(7.4
)
16.9
(12.5
)
3.5
Life & Health Insurance
5.1
9.4
28.2
60.0
Total Segment Net Operating Income
(Loss)
(127.5
)
117.4
(180.4
)
401.4
Corporate and Other Net Operating Income
(Loss)
(3.3
)
(11.6
)
(38.4
)
37.4
Adjusted Consolidated Net Operating Income
(Loss) 1
(130.8
)
105.8
(218.8
)
438.8
Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
17.5
57.8
90.5
57.0
Net Realized Gains on Sales of
Investments
17.2
(0.1
)
51.2
30.1
Impairment Losses
(2.5
)
0.4
(8.7
)
(15.4
)
Acquisition Related Transaction,
Integration and Other Costs
(7.2
)
(15.8
)
(34.7
)
(50.0
)
Debt Extinguishment, Pension and Other
Charges
—
(50.6
)
—
(50.6
)
Net Income (Loss)
$
(105.8
)
$
97.5
$
(120.5
)
$
409.9
The Specialty Property & Casualty Insurance segment reported
net operating loss of $125.2 million for the fourth quarter of
2021, compared to net operating income of $91.1 million in the
fourth quarter of 2020. Results decreased due primarily to higher
Underlying Combined Ratio1. The segment’s Underlying Combined
Ratio1 was 119.4 percent, compared to 91.3 percent in the fourth
quarter of 2020.
The Preferred Property & Casualty Insurance segment reported
net operating loss of $7.4 million for the fourth quarter of 2021,
compared to net operating income of $16.9 million in the fourth
quarter of 2020. Results deteriorated due primarily to a higher
Underlying Combined Ratio1, higher catastrophe losses and LAE,
partially offset by lower adverse prior year development. The
segment’s Underlying Combined Ratio1 was 106.9 percent, compared to
93.6 percent in the fourth quarter of 2020.
The Life & Health Insurance segment reported net operating
income of $5.1 million for the fourth quarter of 2021, compared to
$9.4 million in the fourth quarter of 2020.
Capital
Total Shareholders’ Equity at the end of the quarter was
$4,007.7 million, a decrease of $555.7 million, or 12 percent,
since year-end 2020 primarily driven by a decrease in the valuation
of our fixed income bond portfolio, a net operating loss,
repurchases of common stock, and cash dividends. Kemper and its
direct non-insurance subsidiaries ended the quarter with cash and
investments of $233.9 million, and the $400.0 million revolving
credit agreement was undrawn.
On November 3, 2021, Kemper announced that its Board of
Directors declared a quarterly dividend of $0.31 per share, or
$19.9 million. The dividend was paid on December 1, 2021 to its
shareholders of record as of November 15, 2021.
Kemper ended the quarter with a book value per share of $62.93,
a decrease of 10 percent from $69.74 at the end of 2020. Book Value
Per Share Excluding Net Unrealized Gains on Fixed Maturities1 was
$55.04, compared to $58.67 at the end of 2020.
Unaudited condensed consolidated statements of income for the
three and twelve months ended December 31, 2021 and 2020 are
presented below.
Three Months Ended
Year Ended
(Dollars in Millions, Except Per Share
Amounts)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Revenues:
Earned Premiums
$
1,359.1
$
1,214.0
$
5,253.7
$
4,672.2
Net Investment Income
108.4
102.7
427.3
348.2
Change in Value of Alternative Energy
Partnership Investments2
(14.3
)
—
(61.2
)
—
Other Income
—
1.9
4.8
94.6
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
22.2
73.1
114.6
72.1
Net Realized Gains on Sales of
Investments
21.7
(0.1
)
64.8
38.1
Impairment Losses
(3.2
)
0.5
(11.0
)
(19.5
)
Total Revenues
1,493.9
1,392.1
5,793.0
5,205.7
Expenses:
Policyholders’ Benefits and Incurred
Losses and Loss Adjustment Expenses
1,276.0
863.4
4,600.8
3,323.6
Insurance Expenses
309.1
279.3
1,218.1
1,100.5
Interest and Other Expenses
56.2
128.8
219.4
271.5
Total Expenses
1,641.3
1,271.5
6,038.3
4,695.6
Income (Loss) before Income Taxes
(147.4
)
120.6
(245.3
)
510.1
Income Tax Benefit (Expense)
41.6
(23.1
)
124.8
(100.2
)
Net Income (Loss)
$
(105.8
)
$
97.5
$
(120.5
)
$
409.9
Net Income (Loss) Per Unrestricted
Share:
Basic
$
(1.66
)
$
1.49
$
(1.87
)
$
6.24
Diluted
$
(1.66
)
$
1.46
$
(1.87
)
$
6.14
Weighted-average Outstanding (Shares in
Thousands):
Unrestricted Shares - Basic
63,654.6
65,413.7
64,264.4
65,636.1
Unrestricted Shares and Equivalent Shares
- Diluted
63,654.6
66,528.7
64,264.4
66,729.8
Dividends Paid to Shareholders Per
Share
$
0.31
$
0.30
$
1.24
$
1.20
2The Alternative Energy Partnership Investments results are
included as a pre-tax loss in the Change in Value of Alternative
Energy Partnership Investments of $14.3 million and $61.2 million
and benefit in income tax expense of $11.2 million and $79.0
million for a net loss of $3.1 million and net income of $17.8
million for the three and twelve months ended December 31, 2021,
respectively.
Unaudited business segment revenues for the three and twelve
months ended December 31, 2021 and 2020 are presented
below.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
REVENUES:
Specialty Property & Casualty
Insurance:
Earned Premiums:
Specialty Automobile
$
918.1
$
796.1
$
3,533.7
$
3,031.3
Commercial Automobile
114.2
86.3
414.8
304.0
Total Earned Premiums
1,032.3
882.4
3,948.5
3,335.3
Net Investment Income
37.8
37.9
152.5
114.1
Change in Value of Alternative Energy
Partnership Investments
(6.7
)
—
(29.0
)
—
Other Income
1.0
0.4
4.1
1.8
Total Specialty Property & Casualty
Insurance Revenues
1,064.4
920.7
4,076.1
3,451.2
Preferred Property & Casualty
Insurance:
Earned Premiums:
Preferred Automobile
101.4
107.1
410.5
431.7
Homeowners
52.7
53.3
207.3
220.7
Other Personal
8.5
8.8
33.9
35.8
Total Earned Premiums
162.6
169.2
651.7
688.2
Net Investment Income
17.1
13.4
68.6
37.7
Change in Value of Alternative Energy
Partnership Investments
(3.8
)
—
(16.3
)
—
Other Income
—
—
—
0.1
Total Preferred Property & Casualty
Insurance Revenues
175.9
182.6
704.0
726.0
Life & Health Insurance:
Earned Premiums:
Life
101.5
96.5
401.7
385.7
Accident & Health
47.6
50.2
189.9
199.3
Property
15.1
15.7
61.9
63.7
Total Earned Premiums
164.2
162.4
653.5
648.7
Net Investment Income
50.8
52.8
202.7
198.8
Change in Value of Alternative Energy
Partnership Investments
(3.7
)
—
(15.8
)
—
Other Income
(1.6
)
—
(1.3
)
0.6
Total Life & Health Insurance
Revenues
209.7
215.2
839.1
848.1
Total Segment Revenues
1,450.0
1,318.5
5,619.2
5,025.3
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
22.2
73.1
114.6
72.1
Net Realized Gains on Sales of
Investments
21.7
(0.1
)
64.8
38.1
Impairment Losses
(3.2
)
0.5
(11.0
)
(19.5
)
Other
3.2
0.1
5.4
89.7
Total Revenues
$
1,493.9
$
1,392.1
$
5,793.0
$
5,205.7
KEMPER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in
Millions) (Unaudited)
Dec 31, 2021
Dec 31, 2020
Assets:
Investments:
Fixed Maturities at Fair Value
$
7,986.9
$
7,605.9
Equity Securities at Fair Value
830.6
858.5
Equity Securities at Modified Cost
32.3
40.1
Equity Method Limited Liability
Investments at Cost Plus Cumulative Undistributed Earnings
241.9
204.0
Alternative Energy Partnership
Investments
39.6
21.3
Convertible Securities at Fair Value
46.4
39.9
Short-term Investments at Cost which
Approximates Fair Value
284.1
875.4
Other Investments
925.6
779.0
Total Investments
10,387.4
10,424.1
Cash
148.2
206.1
Receivables from Policyholders
1,418.7
1,194.5
Other Receivables
207.3
222.4
Deferred Policy Acquisition Costs
677.6
589.3
Goodwill
1,312.0
1,114.0
Current Income Tax Assets
173.1
15.6
Other Assets
592.2
575.9
Total Assets
$
14,916.5
$
14,341.9
Liabilities and Shareholders’
Equity:
Insurance Reserves:
Life & Health
$
3,540.9
$
3,527.5
Property & Casualty
2,772.7
1,982.5
Total Insurance Reserves
6,313.6
5,510.0
Unearned Premiums
1,898.7
1,615.1
Policyholder Contract Liabilities
504.0
467.0
Deferred Income Tax Liabilities
227.0
285.7
Accrued Expenses and Other Liabilities
843.6
727.9
Debt at Amortized Cost
1,121.9
1,172.8
Total Liabilities
10,908.8
9,778.5
Shareholders’ Equity:
Common Stock
6.4
6.5
Paid-in Capital
1,790.7
1,805.2
Retained Earnings
1,762.5
2,071.2
Accumulated Other Comprehensive Income
448.1
680.5
Total Shareholders’ Equity
4,007.7
4,563.4
Total Liabilities and Shareholders’
Equity
$
14,916.5
$
14,341.9
Unaudited selected financial information for the Specialty
Property & Casualty Insurance segment follows.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Results
of Operations
Net Premiums Written
$
979.0
$
829.2
$
4,057.3
$
3,435.5
Earned Premiums
$
1,032.3
$
882.4
$
3,948.5
$
3,335.3
Net Investment Income
37.8
37.9
152.5
114.1
Change in Value of Alternative Energy
Partnership Investments
(6.7
)
—
(29.0
)
—
Other Income
1.0
0.4
4.1
1.8
Total Revenues
1,064.4
920.7
4,076.1
3,451.2
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE
1,028.5
626.2
3,480.3
2,350.8
Catastrophe Losses and LAE
2.5
5.5
15.7
12.3
Prior Years:
Non-catastrophe Losses and LAE
(7.6
)
(1.7
)
97.4
15.1
Catastrophe Losses and LAE
—
0.1
0.3
0.2
Total Incurred Losses and LAE
1,023.4
630.1
3,593.7
2,378.4
Insurance Expenses
204.4
179.1
774.5
651.9
Operating Income (Loss)
(163.4
)
111.5
(292.1
)
420.9
Income Tax Benefit (Expense)
38.2
(20.4
)
96.0
(83.0
)
Segment Net Operating Income (Loss)
$
(125.2
)
$
91.1
$
(196.1
)
$
337.9
Ratios
Based On Earned Premiums
Current Year Non-catastrophe Losses and
LAE Ratio
99.6
%
71.0
%
88.1
%
70.4
%
Current Year Catastrophe Losses and LAE
Ratio
0.2
0.6
0.4
0.4
Prior Years Non-catastrophe Losses and LAE
Ratio
(0.7
)
(0.2
)
2.5
0.5
Prior Years Catastrophe Losses and LAE
Ratio
—
—
—
—
Total Incurred Loss and LAE Ratio
99.1
71.4
91.0
71.3
Insurance Expense Ratio
19.8
20.3
19.6
19.5
Combined Ratio
118.9
%
91.7
%
110.6
%
90.8
%
Underlying Combined Ratio1
Current Year Non-catastrophe Losses and
LAE Ratio
99.6
%
71.0
%
88.1
%
70.4
%
Insurance Expense Ratio
19.8
20.3
19.6
19.5
Underlying Combined Ratio1
119.4
%
91.3
%
107.7
%
89.9
%
Non-GAAP
Measure Reconciliation
Combined Ratio
118.9
%
91.7
%
110.6
%
90.8
%
Less:
Current Year Catastrophe Losses and LAE
Ratio
0.2
0.6
0.4
0.4
Prior Years Non-catastrophe Losses and LAE
Ratio
(0.7
)
(0.2
)
2.5
0.5
Prior Years Catastrophe Losses and LAE
Ratio
—
—
—
—
Underlying Combined Ratio1
119.4
%
91.3
%
107.7
%
89.9
%
Unaudited selected financial information for the Preferred
Property & Casualty Insurance segment follows.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Results
of Operations
Net Premiums Written
$
153.2
$
155.2
$
642.0
$
653.0
Earned Premiums
$
162.6
$
169.2
$
651.7
$
688.2
Net Investment Income
17.1
13.4
68.6
37.7
Change in Value of Alternative Energy
Partnership Investments
(3.8
)
—
(16.3
)
—
Other Income
—
—
—
0.1
Total Revenues
175.9
182.6
704.0
726.0
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE
122.4
107.1
450.4
400.9
Catastrophe Losses and LAE
7.5
(5.3
)
79.1
82.0
Prior Years:
Non-catastrophe Losses and LAE
8.4
9.5
13.5
20.7
Catastrophe Losses and LAE
(2.0
)
0.1
(5.6
)
(0.5
)
Total Incurred Losses and LAE
136.3
111.4
537.4
503.1
Insurance Expenses
51.6
51.4
206.4
221.1
Operating Income (Loss)
(12.0
)
19.8
(39.8
)
1.8
Income Tax Benefit (Expense)
4.6
(2.9
)
27.3
1.7
Segment Net Operating Income (Loss)
$
(7.4
)
$
16.9
$
(12.5
)
$
3.5
Ratios
Based On Earned Premiums
Current Year Non-catastrophe Losses and
LAE Ratio
75.2
%
63.2
%
69.2
%
58.3
%
Current Year Catastrophe Losses and LAE
Ratio
4.6
(3.1
)
12.1
11.9
Prior Years Non-catastrophe Losses and LAE
Ratio
5.2
5.6
2.1
3.0
Prior Years Catastrophe Losses and LAE
Ratio
(1.2
)
0.1
(0.9
)
(0.1
)
Total Incurred Loss and LAE Ratio
83.8
65.8
82.5
73.1
Insurance Expense Ratio
31.7
30.4
31.7
32.1
Combined Ratio
115.5
%
96.2
%
114.2
%
105.2
%
Underlying Combined Ratio1
Current Year Non-catastrophe Losses and
LAE Ratio
75.2
%
63.2
%
69.2
%
58.3
%
Insurance Expense Ratio
31.7
30.4
31.7
32.1
Underlying Combined Ratio1
106.9
%
93.6
%
100.9
%
90.4
%
Non-GAAP
Measure Reconciliation
Combined Ratio
115.5
%
96.2
%
114.2
%
105.2
%
Less:
Current Year Catastrophe Losses and LAE
Ratio
4.6
(3.1
)
12.1
11.9
Prior Years Non-catastrophe Losses and LAE
Ratio
5.2
5.6
2.1
3.0
Prior Years Catastrophe Losses and LAE
Ratio
(1.2
)
0.1
(0.9
)
(0.1
)
Underlying Combined Ratio1
106.9
%
93.6
%
100.9
%
90.4
%
Unaudited selected financial information for the Life &
Health Insurance segment follows.
Three Months Ended
Year Ended
(Dollars in Millions)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Results
of Operations
Earned Premiums
$
164.2
$
162.4
$
653.5
$
648.7
Net Investment Income
50.8
52.8
202.7
198.8
Change in Value of Alternative Energy
Partnership Investments
(3.7
)
—
(15.8
)
—
Other Income (Loss)
(1.6
)
—
(1.3
)
0.6
Total Revenues
209.7
215.2
839.1
848.1
Policyholders’ Benefits and Incurred
Losses and LAE
116.2
121.8
469.7
442.0
Insurance Expenses
89.5
83.8
358.9
334.9
Operating Income (Loss)
4.0
9.6
10.5
71.2
Income Tax Benefit (Expense)
1.1
(0.2
)
17.7
(11.2
)
Segment Net Operating Income (Loss)
$
5.1
$
9.4
$
28.2
$
60.0
Use of Non-GAAP Financial Measures
Adjusted Consolidated Net Operating Income
(Loss)1 is an after-tax, non-GAAP financial measure and is
computed by excluding from Net Income (Loss) the after-tax impact
of:
(i) Income (Loss) from Change in Fair Value
of Equity and Convertible Securities; (ii) Net Realized Gains or
Losses on Sales of Investments; (iii) Impairment Losses; (iv)
Acquisition Related Transaction, Integration and Other Costs; (v)
Debt Extinguishment, Pension and Other Charges; and (vi)
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 (Loss). There were no applicable
significant non-recurring items that Kemper excluded from the
calculation of Adjusted Consolidated Net Operating Income (Loss)1
for the three and twelve months ended December 31, 2021 or
2020.
Kemper believes that Adjusted Consolidated Net Operating Income
(Loss)1 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 or Losses on Sales of
Investments and Impairment Losses 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 Kemper’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 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.
Significant non-recurring items are excluded because, by their
nature, they are not indicative of the 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 overall profitability
of the Kemper’s businesses.
A reconciliation of Net Income (Loss) to Adjusted
Consolidated Net Operating Income (Loss) 1 for the three and twelve
months ended December 31, 2021 and 2020 is presented below.
Three Months Ended
Year Ended
(Dollars in Millions) (Unaudited)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Net Income (Loss)
$
(105.8
)
$
97.5
$
(120.5
)
$
409.9
Less Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
17.5
57.8
90.5
57.0
Net Realized Gains on Sales of
Investments
17.2
(0.1
)
51.2
30.1
Impairment Losses
(2.5
)
0.4
(8.7
)
(15.4
)
Acquisition Related Transaction,
Integration and Other Costs
(7.2
)
(15.8
)
(34.7
)
(50.0
)
Debt Extinguishment, Pension and Other
Charges
—
(50.6
)
—
(50.6
)
Adjusted Consolidated Net Operating Income
(Loss) 1
$
(130.8
)
$
105.8
$
(218.8
)
$
438.8
Diluted Adjusted Consolidated Net
Operating Income (Loss) Per Unrestricted Share1 is a
non-GAAP financial measure computed by dividing Adjusted
Consolidated Net Operating Income (Loss)1 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 (Loss) Per Unrestricted
Share.
A reconciliation of Diluted Net Income (Loss) Per Unrestricted
Share to Diluted Adjusted Consolidated Net Operating Income (Loss)
Per Unrestricted Share1 for the three and twelve months ended
December 31, 2021 and 2020 is presented below.
Three Months Ended
Year Ended
(Unaudited)
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Diluted Net Income (Loss) Per Unrestricted
Share
$
(1.66
)
$
1.46
$
(1.87
)
$
6.14
Less Net Income (Loss) Per Unrestricted
Share From:
Change in Fair Value of Equity and
Convertible Securities
0.27
0.86
1.41
0.86
Net Realized Gains on Sales of
Investments
0.27
—
0.80
0.45
Impairment Losses
(0.04
)
0.01
(0.14
)
(0.23
)
Acquisition Related Transaction,
Integration and Other Costs
(0.11
)
(0.24
)
(0.54
)
(0.75
)
Debt Extinguishment, Pension and Other
Charges
—
(0.76
)
—
(0.76
)
Diluted Adjusted Consolidated Net
Operating Income (Loss) Per Unrestricted Share1
$
(2.05
)
$
1.59
$
(3.40
)
$
6.57
Book Value Per Share Excluding Net
Unrealized Gains on Fixed Maturities1 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 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, 2021 and
December 31, 2020 is presented below.
(Dollars in Millions) (Unaudited)
Dec 31, 2021
Dec 31, 2020
Shareholders’ Equity
$
4,007.7
$
4,563.4
Net Unrealized Gains on Fixed
Maturities
502.6
724.0
Shareholders’ Equity Excluding Net
Unrealized Gains on Fixed Maturities1
$
3,505.1
$
3,839.4
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
the 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 the 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 the Kemper’s underwriting
performance.
As Adjusted for Acquisitions1
amounts are non-GAAP financial measures. Subsequent to the
applicable acquisitions, the As Adjusted for Acquisitions1 amounts
are computed by subtracting the impact of purchase accounting
adjustments from the comparable consolidated GAAP financial measure
reported by Kemper. Kemper believes computing and presenting
results on an adjusted basis are useful to investors and are used
by management to provide meaningful and comparable year-over-year
comparisons.
A reconciliation of the As Adjusted for Acquisitions1 non-GAAP
financial measures used in this press release to the comparable
GAAP financial measure for the three months ended December 31, 2021
is presented below.
(Dollars in Millions, Except Per Share
Amounts) (Unaudited)
Kemper Consolidated GAAP
Financial Measure
Less Impact of Purchase
Accounting Adjustments
As Adjusted for Acquisitions1
Net Income (Loss)
$
(105.8
)
$
(4.5
)
$
(101.3
)
Net Income (Loss) Per Share - Diluted
$
(1.66
)
$
(0.07
)
$
(1.59
)
Specialty Property & Casualty
Insurance Segment:
Earned Premiums
$
1,032.3
$
—
$
1,032.3
Segment Net Operating Income (Loss)
$
(125.2
)
$
(4.8
)
$
(120.4
)
Specialty Personal Automobile
Insurance:
Earned Premiums
$
918.1
$
—
$
918.1
Segment Net Operating Income (Loss)
$
(129.7
)
$
(4.5
)
$
(125.2
)
A reconciliation of the As Adjusted for Acquisitions1 non-GAAP
financial measures used in this press release to the comparable
GAAP financial measure for the three months ended December 31, 2020
is presented below.
(Dollars in Millions, Except Per Share
Amounts) (Unaudited)
Kemper Consolidated GAAP
Financial Measure
AAC Historical GAAP Financial
Measure
Less Impact of Purchase
Accounting Adjustments
As Adjusted for Acquisitions1
Net Income (Loss)
$
97.5
$
16.9
$
(3.2
)
$
117.6
Net Income (Loss) Per Share - Diluted
$
1.46
$
0.25
$
(0.05
)
$
1.76
Specialty Property & Casualty
Insurance Segment:
Earned Premiums
$
882.4
$
91.2
$
—
$
973.6
Segment Net Operating Income (Loss)
$
91.1
$
9.5
$
(3.6
)
$
104.2
Specialty Personal Automobile
Insurance:
Earned Premiums
$
796.1
$
91.2
$
—
$
887.3
Segment Net Operating Income (Loss)
$
77.4
$
9.5
$
(2.8
)
$
89.7
Conference Call
Kemper will host its conference call to discuss fourth quarter
2021 results on Monday, January 31st, at 5:00 p.m. Eastern (4:00
p.m. Central). The conference call will be accessible via the
internet and by telephone at 844.200.6205, access code
863164. 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 2021, 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 $15 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 6.5 million policies, is represented by
approximately 35,400 agents and brokers, and has approximately
10,300 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;
- product demand and pricing;
- effects of governmental and regulatory actions;
- litigation outcomes;
- 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”).
The COVID-19 outbreak and subsequent global pandemic
(“Pandemic”) is an extraordinary catastrophe that creates unique
uncertainties and risks. Kemper cannot provide any assurances as to
the impacts of the Pandemic and related economic conditions on
Kemper’s operating and financial results.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220131005236/en/
Investors: Karen Guerra 312.661.4930 or investors@kemper.com
Media: Barbara Ciesemier 312.661.4521 or
bciesemier@kemper.com
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