CHICAGO--(BUSINESS WIRE)--
Kemper Corporation (NYSE: KMPR) reported today net income of $43.6
million ($0.73 per share) for the first quarter of 2012, compared to net
income of $51.5 million ($0.85 per share) for the first quarter of 2011.
Consolidated net operating income1 was $33.4 million ($0.56
per share) for the first quarter of 2012, compared to consolidated net
operating income of $36.1 million ($0.59 per share) for the first
quarter of 2011.
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in millions, except per share amounts) (Unaudited)
| |
2012
| |
2011
|
|
Consolidated Net Operating Income1 | |
$
|
33.4
| | |
$
|
36.1
|
|
Income from Continuing Operations
| |
36.3
| | |
45.0
|
|
Net Income
| |
43.6
| | |
51.5
|
| | | |
|
|
Basic Net Income Per Share From:
| | | | |
|
Consolidated Net Operating Income1 | |
$
|
0.56
| | |
$
|
0.59
|
|
Continuing Operations
| |
0.61
| | |
0.74
|
|
Net Income
| |
0.73
| | |
0.85
|
| | | | |
|
1 Consolidated net operating income is an after-tax, Non-GAAP
financial measure and is not computed in accordance with accounting
principles generally accepted in the United States. See “Use of Non-GAAP
Measures” for additional information.
“Our team achieved solid progress in executing our strategy during the
first quarter, resulting in improving trends across our businesses and a
strengthened capital base,” commented Don Southwell, President and Chief
Executive Officer. “Early in the second quarter, we successfully
completed our rebranding efforts on the P&C business, which will enable
us to leverage our well-known brand in the marketplace.”
“Our Life and Health segment delivered solid results, while yields and
earnings in the investment portfolio were stable amidst the challenging
interest rate environment. Within Kemper Preferred, our focus on
targeted auto and home customers, successful efforts to engage more
independent agents and recent rate actions drove growth. Additionally,
the decisive actions we have been implementing at Kemper Direct
positively influenced results, and we continue efforts to move forward
on additional improvements,” added Southwell.
“On the capital front, we repurchased nearly $20 million of common stock
and are pleased with the return of additional capital from Fireside.
Efficient deployment of capital and improving returns remains a top
priority, and we are now targeting to repurchase up to $100 million in
total during 2012,” said Southwell.
Highlights
-
Earned premiums at Kemper Preferred increased approximately 1.5
percent, driven by a 7 percent increase in the number of its home and
auto package policies.
- Kemper Home Service implemented an average rate increase of 5.7
percent for new life policies in April 2012.
-
Reserve National reported record first quarter earned premiums of
$34.1 million and continued to make substantial progress in its
transition to policies less affected by national health care reform.
-
Kemper Specialty grew its commercial auto earned premium over 4
percent in the quarter.
-
Fireside completed the sale of a portion of its charged-off loan
portfolio and successfully converted from a bank to a general business
corporation.
Capital
During the quarter, Kemper repurchased nearly 650,000 shares of common
stock at a cost of $19.2 million and paid dividends of $14.5 million.
Kemper ended the quarter with a book value per share of $35.69 and book
value per share excluding unrealized gains on fixed maturities of
$30.40, up from $35.13 and $29.70, respectively, at year-end.
During the quarter, Kemper entered into a new $325 million, four year
revolving credit agreement to replace its $245 million revolving credit
agreement that was set to expire in October of 2012.
With the conversion of Fireside from a bank to a general business
corporation, Kemper successfully exited the banking business and is no
longer subject to federal and state banking regulations. Fireside
returned an additional $20 million of capital in April, bringing the
total to $270 million.
Revenues
Total revenues were $611.2 million for the first quarter of 2012,
compared to $641.2 million in 2011. Earned premiums were $529.2 million
for the first quarter of 2012, compared to $546.0 million in 2011. This
decline is largely related to Kemper Direct’s specific actions to
improve its operating results.
Net investment income was $77.4 million in the first quarter of 2012, a
$3.8 million decrease from 2011. Net investment income decreased $6.4
million for the combined property and casualty operations, largely
driven by fluctuations of equity method funds’ performance and lower
income from other equity securities. Net investment income increased
$3.0 million for the Life and Health segment, primarily from higher
levels of fixed maturities and fluctuations of equity method funds’
performance, offset by lower yields on fixed maturities. Consolidated
net investment income from equity method investments was $6.7 million in
the first quarter of 2012, compared to $10.0 million in 2011. The
investment portfolio generated a pre-tax equivalent annualized book
yield of 5.8 percent for the first quarter of 2012.
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 (iii) catastrophe losses
exclude the impact of prior-year development.
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2012
| |
2011
|
|
Segment Net Operating Income (Loss):
| | | | |
|
Kemper Preferred
| |
$
|
10.4
| | |
$
|
11.3
| |
|
Kemper Specialty
| |
4.1
| | |
4.4
| |
|
Kemper Direct
| |
(1.3
|
)
| |
(3.9
|
)
|
| Life and Health Insurance | |
27.8
|
| |
30.0
|
|
|
Total Segment Net Operating Income
| |
41.0
| | |
41.8
| |
|
Corporate and Other Net Operating Loss
| |
(7.6
|
)
| |
(5.7
|
)
|
|
Consolidated Net Operating Income
| |
33.4
| | |
36.1
| |
|
Net Income (Loss) From:
| | | | |
|
Net Realized Gains on Sales of Investments
| |
3.2
| | |
9.2
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.3
|
)
| |
(0.3
|
)
|
|
Income from Continuing Operations
| |
$
|
36.3
|
| |
$
|
45.0
|
|
| | | | | | | |
|
Kemper Preferred reported net operating income of $10.4 million for the
first quarter of 2012, compared to $11.3 million in 2011, driven by $2.4
million lower net investment income, offset by a $1.5 million
improvement in underwriting results on an underlying basis. The
underlying combined ratio was 95.4 percent in first quarter 2012,
compared to 96.5 percent in 2011. Homeowners underlying combined ratio
improved from lower non-catastrophe weather losses. The personal auto
underlying combined ratio increased, largely related to higher severity;
however, the first quarter 2011 underlying loss ratio was below
historical trends.
Kemper Specialty reported net operating income of $4.1 million for the
first quarter of 2012, compared to $4.4 million in 2011. The current
quarter included $1.0 million lower net investment income and $0.6
million lower favorable development, offset by a $1.1 million
improvement in underwriting results on an underlying basis. Kemper
Specialty’s underlying combined ratio improved by 1.6 percentage points,
which was driven by an increase in average premium and lower frequency
in personal auto liability lines.
Kemper Direct reported a net operating loss of $1.3 million for the
first quarter of 2012, compared to $3.9 million in 2011. The combined
ratio on both an underlying and a reported basis improved compared to
the prior year. The current quarter results included $2.6 million higher
favorable development, offset by $1.3 million higher catastrophe losses
and $1.3 million lower investment income. As previously-announced, the
initiative to non-renew all direct auto business in Michigan began on
April 10, 2012, and will be largely completed by year-end.
Life and Health Insurance reported net operating income of $27.8 million
for the first quarter of 2012, compared to $30.0 million in 2011, which
included a $4.1 million favorable reserve adjustment on a small block of
policies. This segment also benefited from a $2.0 million increase in
net investment income in the current period.
Corporate and other net operating loss, consisting of interest and other
expenses, as well as unallocated investment income, increased $1.9
million for the first quarter of 2012. The current quarter results
included $0.8 million higher pension expense, $0.3 million to refinance
the revolving credit facility and higher other corporate items.
Unaudited condensed consolidated statements of income for thethree
months ended March 31, 2012 and 2011are presented below:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in millions, except per share amounts)
| |
2012
| |
2011
|
| Revenues: | | | | |
|
Earned Premiums
| |
$
|
529.2
| | |
$
|
546.0
| |
|
Net Investment Income
| |
77.4
| | |
81.2
| |
|
Other Income
| |
0.2
| | |
0.2
| |
|
Net Realized Gains on Sales of Investments
| |
4.9
| | |
14.2
| |
|
Other-than-temporary Impairment Losses:
| | | | |
|
Total Other-than-temporary Impairment Losses
| |
(0.5
|
)
| |
(0.4
|
)
|
|
Portion of Losses Recognized in Other Comprehensive (Income) Loss
| |
—
|
| |
—
|
|
|
Net Impairment Losses Recognized in Earnings
| |
(0.5
|
)
| |
(0.4
|
)
|
| Total Revenues | |
611.2
|
| |
641.2
|
|
| Expenses: | | | | |
|
Policyholders’ Benefits and Incurred Losses and Loss Adjustment
Expenses
| |
376.6
| | |
392.3
| |
|
Insurance Expenses
| |
162.4
| | |
166.1
| |
|
Interest and Other Expenses
| |
21.8
|
| |
19.7
|
|
| Total Expenses | |
560.8
|
| |
578.1
|
|
|
Income from Continuing Operations before Income Taxes
| |
50.4
| | |
63.1
| |
|
Income Tax Expense
| |
(14.1
|
)
| |
(18.1
|
)
|
| Income from Continuing Operations | |
36.3
|
| |
45.0
|
|
|
Income from Discontinued Operations
| |
7.3
|
| |
6.5
|
|
| Net Income | |
$
|
43.6
|
| |
$
|
51.5
|
|
| | | |
|
| Income from Continuing Operations Per Unrestricted Share: | | | | |
| Basic | |
$
|
0.61
|
| |
$
|
0.74
|
|
|
Diluted
| |
$
|
0.60
|
| |
$
|
0.73
|
|
| | | |
|
| Net Income Per Unrestricted Share: | | | | |
| Basic | |
$
|
0.73
|
| |
$
|
0.85
|
|
|
Diluted
| |
$
|
0.72
|
| |
$
|
0.84
|
|
| | | |
|
| Dividends Paid to Shareholders Per Share | |
$
|
0.24
|
| |
$
|
0.24
|
|
| | | | | | | |
|
Unaudited business segment revenues for the three months ended
March 31, 2012 and 2011 are presented below:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2012
| |
2011
|
| REVENUES | | | | |
| Kemper Preferred: | | | | |
|
Earned Premiums
| |
$
|
215.0
| | |
$
|
211.9
| |
|
Net Investment Income
| |
10.9
| | |
14.2
| |
|
Other Income
| |
0.1
|
| |
0.1
|
|
|
Total Kemper Preferred
| |
226.0
|
| |
226.2
|
|
| Kemper Specialty: | | | | |
|
Earned Premiums
| |
106.8
| | |
112.4
| |
|
Net Investment Income
| |
5.2
| | |
6.6
| |
|
Other Income
| |
—
|
| |
0.1
|
|
|
Total Kemper Specialty
| |
112.0
|
| |
119.1
|
|
| Kemper Direct: | | | | |
|
Earned Premiums
| |
47.0
| | |
59.9
| |
|
Net Investment Income
| |
3.6
|
| |
5.3
|
|
|
Total Kemper Direct
| |
50.6
|
| |
65.2
|
|
| Life and Health Insurance: | | | | |
|
Earned Premiums
| |
160.4
| | |
161.8
| |
|
Net Investment Income
| |
55.7
| | |
52.7
| |
|
Other Income
| |
0.1
|
| |
—
|
|
| Total Life and Health Insurance | |
216.2
|
| |
214.5
|
|
| Total Segment Revenues | |
604.8
| | |
625.0
| |
|
Net Realized Gains on the Sales of Investments
| |
4.9
| | |
14.2
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.5
|
)
| |
(0.4
|
)
|
|
Other
| |
2.0
|
| |
2.4
|
|
| Total Revenues | |
$
|
611.2
|
| |
$
|
641.2
|
|
| | | | | | | |
|
| KEMPER CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Dollars in millions) |
| (Unaudited) |
|
| Mar 31,
|
|
Dec 31,
|
| |
2012
| |
2011
|
| Assets: | | | | |
|
Investments:
| | | | |
|
Fixed Maturities at Fair Value
| |
$
|
4,787.7
| | |
$
|
4,773.4
|
| Equity Securities at Fair Value
| |
429.6
| | |
397.3
|
|
Equity Method Limited Liability Investments at Cost Plus Cumulative
Undistributed Earnings
| |
311.7
| | |
306.3
|
|
Short-term Investments at Cost which Approximates Fair Value
| |
364.2
| | |
247.4
|
|
Other Investments
| |
499.0
|
| |
498.3
|
|
Total Investments
| |
6,392.2
|
| |
6,222.7
|
|
Cash
| |
128.7
| | |
251.2
|
|
Receivables from Policyholders
| |
378.4
| | |
379.2
|
|
Other Receivables
| |
210.5
| | |
218.7
|
|
Deferred Policy Acquisition Costs
| |
297.9
| | |
294.0
|
|
Goodwill
| |
311.8
| | |
311.8
|
|
Current and Deferred Income Tax Assets
| |
—
| | |
6.4
|
|
Other Assets
| |
250.9
|
| |
250.7
|
|
Total Assets
| |
$
|
7,970.4
|
| |
$
|
7,934.7
|
| Liabilities and Shareholders’ Equity: | | | | |
|
Insurance Reserves:
| | | | |
|
Life and Health
| |
$
|
3,117.8
| | |
$
|
3,102.7
|
|
Property and Casualty
| |
1,001.4
|
| |
1,029.1
|
|
Total Insurance Reserves
| |
4,119.2
|
| |
4,131.8
|
|
Unearned Premiums
| |
668.3
| | |
666.2
|
|
Liabilities for Income Taxes
| |
18.2
| | |
6.2
|
|
Notes Payable at Amortized Cost
| |
610.8
| | |
610.6
|
|
Accrued Expenses and Other Liabilities
| |
422.1
|
| |
403.3
|
|
Total Liabilities
| |
5,838.6
|
| |
5,818.1
|
| Shareholders’ Equity: | | | | |
|
Common Stock
| |
6.0
| | |
6.0
|
| Paid-in Capital | |
737.5
| | |
743.9
|
|
Retained Earnings
| |
1,126.2
| | |
1,108.7
|
|
Accumulated Other Comprehensive Income
| |
262.1
|
| |
258.0
|
|
Total Shareholders’ Equity
| |
2,131.8
|
| |
2,116.6
|
|
Total Liabilities and Shareholders’ Equity
| |
$
|
7,970.4
|
| |
$
|
7,934.7
|
| | | | | | |
|
Unaudited selected financial information for the Kemper Preferred
segment follows:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2012
| |
2011
|
| | | |
|
Results of Operations |
| | | |
|
|
Net Premiums Written
| |
$
|
207.0
|
| |
$
|
199.6
|
|
|
Earned Premiums:
| | | | |
|
Automobile
| |
$
|
126.6
| | |
$
|
126.9
| |
|
Homeowners
| |
74.7
| | |
71.9
| |
|
Other Personal
| |
13.7
|
| |
13.1
|
|
|
Total Earned Premiums
| |
215.0
| | |
211.9
| |
|
Net Investment Income
| |
10.9
| | |
14.2
| |
|
Other Income
| |
0.1
|
| |
0.1
|
|
|
Total Revenues
| |
226.0
|
| |
226.2
|
|
|
Incurred Losses and LAE related to:
| | | | |
|
Current Year:
| | | | |
|
Non-catastrophe Losses and LAE
| |
145.0
| | |
145.5
| |
|
Catastrophe Losses and LAE
| |
8.5
| | |
9.0
| |
|
Prior Years:
| | | | |
|
Non-catastrophe Losses and LAE
| |
(0.6
|
)
| |
(1.1
|
)
|
|
Catastrophe Losses and LAE
| |
(0.3
|
)
| |
(0.3
|
)
|
|
Total Incurred Losses and LAE
| |
152.6
| | |
153.1
| |
|
Insurance Expenses
| |
60.3
|
| |
59.0
|
|
|
Operating Profit
| |
13.1
| | |
14.1
| |
|
Income Tax Expense
| |
(2.7
|
)
| |
(2.8
|
)
|
|
Segment Net Operating Income
| |
$
|
10.4
|
| |
$
|
11.3
|
|
| | | |
|
Ratios Based On Earned Premiums |
| | | |
|
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
67.4
|
%
| |
68.7
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
4.0
| | |
4.2
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(0.3
|
)
| |
(0.5
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(0.1
|
)
| |
(0.1
|
)
|
|
Total Incurred Loss and LAE Ratio
| |
71.0
| | |
72.3
| |
|
Incurred Expense Ratio
| |
28.0
|
| |
27.8
|
|
|
Combined Ratio
| |
99.0
|
%
| |
100.1
|
%
|
| | | |
|
Underlying Combined Ratio |
| | | |
|
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
67.4
|
%
| |
68.7
|
%
|
|
Incurred Expense Ratio
| |
28.0
|
| |
27.8
|
|
|
Underlying Combined Ratio
| |
95.4
|
%
| |
96.5
|
%
|
| | | |
|
Non-GAAP Measure Reconciliation |
| | | |
|
|
Underlying Combined Ratio
| |
95.4
|
%
| |
96.5
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
4.0
| | |
4.2
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(0.3
|
)
| |
(0.5
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(0.1
|
)
| |
(0.1
|
)
|
|
Combined Ratio as Reported
| |
99.0
|
%
| |
100.1
|
%
|
| | | | | |
|
Unaudited selected financial information for the Kemper Specialty
segment follows:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2012
| |
2011
|
| | | |
|
Results of Operations |
| | | |
|
|
Net Premiums Written
| |
$
|
117.7
|
| |
$
|
123.1
|
|
|
Earned Premiums:
| | | | |
|
Personal Automobile
| |
$
|
96.6
| | |
$
|
102.6
| |
|
Commercial Automobile
| |
10.2
|
| |
9.8
|
|
|
Total Earned Premiums
| |
106.8
| | |
112.4
| |
|
Net Investment Income
| |
5.2
| | |
6.6
| |
|
Other Income
| |
—
|
| |
0.1
|
|
|
Total Revenues
| |
112.0
|
| |
119.1
|
|
|
Incurred Losses and LAE related to:
| | | | |
|
Current Year:
| | | | |
|
Non-catastrophe Losses and LAE
| |
86.2
| | |
92.8
| |
|
Catastrophe Losses and LAE
| |
0.1
| | |
0.1
| |
|
Prior Years:
| | | | |
|
Non-catastrophe Losses and LAE
| |
(1.0
|
)
| |
(1.9
|
)
|
|
Catastrophe Losses and LAE
| |
0.1
|
| |
0.1
|
|
|
Total Incurred Losses and LAE
| |
85.4
| | |
91.1
| |
|
Insurance Expenses
| |
21.7
|
| |
22.6
|
|
|
Operating Profit
| |
4.9
| | |
5.4
| |
|
Income Tax Expense
| |
(0.8
|
)
| |
(1.0
|
)
|
|
Segment Net Operating Income
| |
$
|
4.1
|
| |
$
|
4.4
|
|
| | | |
|
Ratios Based On Earned Premiums |
| | | |
|
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
80.7
|
%
| |
82.5
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
0.1
| | |
0.1
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(0.9
|
)
| |
(1.7
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
0.1
|
| |
0.1
|
|
|
Total Incurred Loss and LAE Ratio
| |
80.0
| | |
81.0
| |
|
Incurred Expense Ratio
| |
20.3
|
| |
20.1
|
|
|
Combined Ratio
| |
100.3
|
%
| |
101.1
|
%
|
| | | |
|
Underlying Combined Ratio |
| | | |
|
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
80.7
|
%
| |
82.5
|
%
|
|
Incurred Expense Ratio
| |
20.3
|
| |
20.1
|
|
|
Underlying Combined Ratio
| |
101.0
|
%
| |
102.6
|
%
|
| | | |
|
Non-GAAP Measure Reconciliation |
| | | |
|
|
Underlying Combined Ratio
| |
101.0
|
%
| |
102.6
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
0.1
| | |
0.1
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(0.9
|
)
| |
(1.7
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
0.1
|
| |
0.1
|
|
|
Combined Ratio as Reported
| |
100.3
|
%
| |
101.1
|
%
|
| | | | | |
|
Unaudited selected financial information for the Kemper Direct
segment follows:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2012
| |
2011
|
| | | |
|
Results of Operations |
| | | |
|
|
Net Premiums Written
| |
$
|
43.9
|
| |
$
|
60.9
|
|
|
Earned Premiums:
| | | | |
|
Automobile
| |
$
|
44.5
| | |
$
|
57.6
| |
|
Homeowners
| |
2.4
| | |
2.2
| |
|
Other Personal
| |
0.1
|
| |
0.1
|
|
|
Total Earned Premiums
| |
47.0
| | |
59.9
| |
|
Net Investment Income
| |
3.6
|
| |
5.3
|
|
|
Total Revenues
| |
50.6
|
| |
65.2
|
|
|
Incurred Losses and LAE related to:
| | | | |
|
Current Year:
| | | | |
|
Non-catastrophe Losses and LAE
| |
39.8
| | |
52.3
| |
|
Catastrophe Losses and LAE
| |
2.1
| | |
0.1
| |
|
Prior Years:
| | | | |
|
Non-catastrophe Losses and LAE
| |
(3.9
|
)
| |
(0.1
|
)
|
|
Catastrophe Losses and LAE
| |
—
|
| |
0.3
|
|
|
Total Incurred Losses and LAE
| |
38.0
| | |
52.6
| |
|
Insurance Expenses
| |
15.6
|
| |
20.1
|
|
|
Operating Loss
| |
(3.0
|
)
| |
(7.5
|
)
|
|
Income Tax Benefit
| |
1.7
|
| |
3.6
|
|
|
Segment Net Operating Loss
| |
$
|
(1.3
|
)
| |
$
|
(3.9
|
)
|
| | | |
|
Ratios Based On Earned Premiums |
| | | |
|
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
84.7
|
%
| |
87.3
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
4.5
| | |
0.2
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(8.3
|
)
| |
(0.2
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
—
|
| |
0.5
|
|
|
Total Incurred Loss and LAE Ratio
| |
80.9
| | |
87.8
| |
|
Incurred Expense Ratio
| |
33.2
|
| |
33.6
|
|
|
Combined Ratio
| |
114.1
|
%
| |
121.4
|
%
|
| | | |
|
Underlying Combined Ratio |
| | | |
|
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
84.7
|
%
| |
87.3
|
%
|
|
Incurred Expense Ratio
| |
33.2
|
| |
33.6
|
|
|
Underlying Combined Ratio
| |
117.9
|
%
| |
120.9
|
%
|
| | | |
|
Non-GAAP Measure Reconciliation |
| | | |
|
|
Underlying Combined Ratio
| |
117.9
|
%
| |
120.9
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
4.5
| | |
0.2
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(8.3
|
)
| |
(0.2
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
—
|
| |
0.5
|
|
|
Combined Ratio as Reported
| |
114.1
|
%
| |
121.4
|
%
|
| | | | | |
|
Unaudited selected financial information for the Life and Health
Insurance segment follows:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2012
| |
2011
|
| | | |
|
Results of Operations |
| | | |
|
|
Earned Premiums:
| | | | |
|
Life
| |
$
|
98.5
| | |
$
|
99.4
| |
|
Accident and Health
| |
41.5
| | |
41.2
| |
|
Property
| |
20.4
|
| |
21.2
|
|
|
Total Earned Premiums
| |
160.4
| | |
161.8
| |
|
Net Investment Income
| |
55.7
| | |
52.7
| |
|
Other Income
| |
0.1
|
| |
—
|
|
|
Total Revenues
| |
216.2
|
| |
214.5
|
|
|
Policyholders’ Benefits and Incurred Losses and LAE
| |
100.6
| | |
95.5
| |
|
Insurance Expenses
| |
72.6
|
| |
72.5
|
|
|
Operating Profit
| |
43.0
| | |
46.5
| |
|
Income Tax Expense
| |
(15.2
|
)
| |
(16.5
|
)
|
|
Segment Net Operating Income
| |
$
|
27.8
|
| |
$
|
30.0
|
|
| | | | | | | |
|
Use of Non-GAAP Measures
Consolidated Net Operating Income
Consolidated Net Operating Income (Loss) is an after-tax, non-GAAP
measure and is computed by excluding from income (loss) from continuing
operations the after-tax impact of 1) net realized gains (losses) on
sales of investments, 2) net impairment losses recognized in earnings
related to investments and 3) other significant non-recurring or
infrequent items that may not be indicative of ongoing operations.
Significant non-recurring items are excluded when (a) the nature of the
charge or gain is such that it is reasonably unlikely to recur within
two years, and (b) there has been no similar charge or gain within the
prior two years. The most directly comparable GAAP financial measure is
income from continuing operations.
The company believes that Consolidated Net Operating Income (Loss)
provides investors with a valuable measure of its ongoing performance
because it reveals underlying operational performance trends that
otherwise might be less apparent if the items were not excluded. Net
realized gains (losses) on sales of investments and net impairment
losses recognized in earnings 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. 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 Consolidated Net Operating Income to Income from
Continuing Operations for the three months ended March 31, 2012 and 2011
is presented below:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2012
| |
2011
|
|
Consolidated Net Operating Income
| |
$
|
33.4
| | |
$
|
36.1
| |
|
Net Income (Loss) From:
| | | | |
|
Net Realized Gains on Sales of Investments
| |
3.2
| | |
9.2
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.3
|
)
| |
(0.3
|
)
|
|
Income from Continuing Operations
| |
$
|
36.3
|
| |
$
|
45.0
|
|
| | | | | | | |
|
Consolidated Net Operating Income Per
Unrestricted Share
Consolidated Net Operating Income Per Unrestricted Share is a non-GAAP
financial measure, which is computed by dividing Consolidated Net
Operating Income by the weighted average unrestricted shares
outstanding. The most directly comparable GAAP financial measure is
Income from Continuing Operations Per Unrestricted share‐basic.
A reconciliation of Consolidated Net Operating Income (Loss) Per
Unrestricted Share to Income (Loss) from Continuing Operations Per
Unrestricted Share for the three months ended March 31, 2012 and 2011 is
presented below:
|
|
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2012
| |
2011
|
|
Consolidated Net Operating Income Per Unrestricted Share
| |
$
|
0.56
| | |
$
|
0.59
|
|
Net Income Per Unrestricted Share From:
| | | | |
|
Net Realized Gains on Sales of Investments
| |
0.05
| | |
0.15
|
|
Net Impairment Losses Recognized in Earnings
| |
—
|
| |
—
|
|
Income from Continuing Operations Per Unrestricted Share
| |
$
|
0.61
|
| |
$
|
0.74
|
| | | | | | |
|
Book Value Per Share Excluding Unrealized Gains
on Fixed Maturities
Book Value Per Share Excluding Unrealized Gains on Fixed Maturities is a
ratio that uses a non-GAAP financial measure. It is calculated by
dividing shareholders’ equity after excluding the impact of unrealized
net capital gains and losses on fixed income securities by total Common
Shares Issued and Outstanding. Book Value Per Share is the most directly
comparable GAAP financial measure. The company uses the trend in book
value per share, excluding the impact of unrealized net capital gains
and losses 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. 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 generally 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 Unrealized Gains on Fixed Maturities and Book Value
Per Share at March 31, 2012 and December 31, 2011 is presented below:
|
| Mar 31,
|
| Dec 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2012
| |
2011
|
|
Shareholders’ Equity Excluding Unrealized Gains
| |
$
|
1,815.5
| | |
$
|
1,789.2
|
|
Unrealized Gains and Losses on Fixed Maturities
| |
316.3
|
| |
327.4
|
|
Shareholders’ Equity
| |
$
|
2,131.8
|
| |
$
|
2,116.6
|
| | | | | | |
|
Underlying Combined Ratio
Underlying combined ratio is a non-GAAP financial measure, which is
computed by adding the current year non-catastrophe losses and LAE ratio
with the incurred expense ratio. The most directly comparable GAAP
financial measure is the combined ratio, which uses total incurred
losses and LAE, including the impact of catastrophe losses, and loss and
LAE reserve development. The company believes the underlying combined
ratio is useful to investors and is used by management to reveal the
trends in the company’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. The company believes it is useful for
investors to evaluate these components separately and in the aggregate
when reviewing its underwriting performance. The underlying combined
ratio should not be considered a substitute for the combined ratio and
does not reflect the overall underwriting profitability of our business.
Conference Call
Kemper will discuss its first quarter 2012 results in a conference call
on Tuesday, May 8 at 11 a.m. EST. Kemper’s conference call will be
accessible via the internet and by telephone. The phone number for
Kemper’s conference call is 866.393.1565. To listen via webcast,
register on-line at the investor section of kemper.com at least 15
minutes prior to the webcast to download and install any necessary
software.
A replay of the call will be available through May 22, 2012 at
855.859.2056 using conference ID number 68614462.
More detailed financial information can be found in Kemper's Investor
Financial Supplement for the first quarter of 2012 which is available at
kemper.com.
About Kemper
Kemper is a diversified insurance holding company with subsidiaries that
provide an array of products to the individual and small business
markets:
Kemper markets to its customers through a network of independent agents,
brokers and career agents, as well as directly to consumers.
Additional information about Kemper, including its filings on Forms
10-K, 10-Q and 8-K and its investor supplement, is available by visiting
kemper.com.
Caution Regarding Forward-Looking Statements
This press release may contain or incorporate by reference information
that includes or is based on forward-looking statements within the
meaning of the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements give
expectations or forecasts of future events, and can be identified by the
fact that they relate to future actions, performance or results rather
than strictly to historical or current facts.
Any or all forward-looking statements may turn out to be wrong, and,
accordingly, readers are cautioned not to place undue reliance on such
statements, which speak only as of the date of this press release.
Forward-looking statements involve a number of risks and uncertainties
that are difficult to predict, and are not guarantees of future
performance. Among the general factors that could cause actual results
to differ materially from estimated results are those listed in periodic
reports filed by Kemper with the Securities and Exchange Commission (the
“SEC”). No assurances can be given that the results contemplated in any
forward-looking statements will be achieved or will be achieved in any
particular timetable. Kemper assumes no obligation to publicly correct
or update any forward-looking statements as a result of events or
developments subsequent to the date of this press release. The reader is
advised, however, to consult any further disclosures Kemper makes on
related subjects in its filings with the SEC.
Kemper Corporation
Investors:
Diana Hickert-Hill
312.661.4930
or investor.relations@kemper.com
Source: Kemper Corporation