Press Release

Kemper Reports Strong First Quarter 2021 Operating Results

Company Release - 4/29/2021

CHICAGO--(BUSINESS WIRE)-- Kemper Corporation (NYSE: KMPR) reported net income of $123.2 million, or $1.85 per diluted share, for the first quarter of 2021, compared to $64.0 million, or $0.95 per diluted share, for the first quarter of 2020. In the first quarter of 2021, net income included a $41.2 million after-tax gain, or $0.62 per diluted share, attributable to the change in fair value of equity and convertible securities.

Adjusted Consolidated Net Operating Income1 was $87.2 million, or $1.31 per diluted share, for the first quarter of 2021, compared to $162.9 million, or $2.43 per diluted share, for the first quarter of 2020.

Highlights of the quarter include:

  • Specialty P&C earned premiums increased 7% and policies-in-force (ex. Classic Car) grew ~2%, reflecting headwinds from continued state shut-downs early in the quarter impacting shopping behavior
  • Underlying Specialty combined ratio was 94%, in line with 1Q’20 as miles driven and corresponding accident frequency are increasing
  • Repurchased shares worth $47 million
  • Kemper remains well-positioned to support customers and grow long-term shareholder value

“I’m pleased to report that Kemper, despite some short-term headwinds, continued to deliver solid results and intrinsic value to our shareholders,” said Joseph P. Lacher, Jr., President and Chief Executive Officer. “This quarter, we continued to generate double-digit ROE and growth in tangible book value per share excluding fixed income unrealized gains and losses. Our Specialty Auto business continues to produce strong earnings, and although we saw impacts from slower state re-openings, our Specialty Auto business reported net operating income of $80 million, or 33% over the prior year quarter, with the top line increasing by 7%. The business remains well-positioned for attractive long-term growth and returns.

“Further, since the beginning of the year, we have deployed roughly $500 million of capital through several actions. These demonstrate our thoughtful approach to capital deployment. Notable items include the repurchase of approximately $85 million in stock, the repayment of a $50 million term loan, an increase in our annual dividend to $1.24 per share, and the close of our acquisition of American Access. The strength of Kemper’s business model and our history of effective strategy execution positions us to navigate through the pandemic recovery. We feel confident that we will continue to meet the ongoing needs of our customers, as well as provide quality results and value creation for our stakeholders.”

 

 

Three Months Ended

(Dollars in Millions, Except Per Share Amounts) (Unaudited)

 

Mar 31,
2021

 

Mar 31,
2020

Net Income

 

$

123.2

 

 

$

64.0

 

Adjusted Consolidated Net Operating Income (Loss)1

 

$

87.2

 

 

$

162.9

 

 

 

 

 

 

Impact of Catastrophe Losses and Related Loss Adjustment Expense (LAE) on Net Income

 

$

(21.8

)

 

$

(4.6

)

 

 

 

 

 

Diluted Net Income Per Share From:

 

 

 

 

Net Income

 

$

1.85

 

 

$

0.95

 

Adjusted Consolidated Net Operating Income (Loss)1

 

$

1.31

 

 

$

2.43

 

 

 

 

 

 

Impact of Catastrophe Losses and Related LAE on Net Income Per Share

 

$

(0.33

)

 

$

(0.07

)

Capital

Total Shareholders’ Equity at the end of the quarter was $4,339.1 million, a decrease of $224.3 million, or 5 percent, since year-end 2020 primarily driven by a decrease in the valuation of our fixed income bond portfolio, cash dividends and repurchases of common stock, partially offset by net income. Kemper and its direct non-insurance subsidiaries ended the quarter with cash and investments of $607.1 million, and the $400.0 million revolving credit agreement was undrawn.

During the first quarter of 2021, Kemper paid dividends of $21.0 million.

On February 23, 2021, Kemper announced that its Board of Directors declared a quarterly dividend of $0.31 per share.

Kemper ended the quarter with a book value per share of $66.74, a decrease of 4 percent from $69.74 at the end of 2020. Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 was $60.00, up 2 percent from $58.67 at the end of 2020.

Revenues

Total revenues for the first quarter of 2021 increased $123.0 million, or 10.0 percent, to $1,352.0 million, compared to the first quarter of 2020, driven by $55.1 million of higher Specialty P&C earned premiums and a $170.0 million increase attributable to the change in fair value of equity and convertible securities. Specialty P&C earned premiums increased due primarily to higher premium volume. Net investment income increased $17.5 million to $103.1 million in the first quarter of 2021 due primarily to the continued recovery of Alternative Investments and higher levels of investments in fixed income securities, partially offset by lower yields on fixed income securities. Net realized investment gains were $13.8 million in the first quarter of 2021, compared to $16.5 million in thefirst quarter of 2020. Other income decreased from $90.3 million to $1.5 million in the first quarter of 2021. The first quarter of 2020 included a final judgment received by the Company in connection with an arbitration award against Computer Sciences Corporation.

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

(Dollars in Millions) (Unaudited)

 

Mar 31,
2021

 

Mar 31,
2020

Segment Net Operating Income (Loss):

 

 

 

 

Specialty Property & Casualty Insurance

 

$

80.1

 

 

$

60.1

 

Preferred Property & Casualty Insurance

 

9.6

 

 

18.4

 

Life & Health Insurance

 

7.3

 

 

22.3

 

Total Segment Net Operating Income (Loss)

 

97.0

 

 

100.8

 

Corporate and Other Net Operating Income (Loss)

 

(9.8

)

 

62.1

 

Adjusted Consolidated Net Operating Income (Loss)1

 

87.2

 

 

162.9

 

Net Income (Loss) From:

 

 

 

 

Change in Fair Value of Equity and Convertible Securities

 

41.2

 

 

(93.1

)

Net Realized Gains on Sales of Investments

 

10.9

 

 

13.0

 

Impairment Losses

 

(3.2

)

 

(9.5

)

Acquisition Related Transaction, Integration and Other Costs

 

(12.9

)