- Delivered net income of $38 million in the quarter, up from $5
million in the prior year
- Increased earned premiums by $74 million in the quarter
- Investment portfolio generated a strong pre-tax equivalent book
yield of 5.2 percent
- Returned $30 million of capital to shareholders through share
repurchases and dividends; $79 million year-to-date
CHICAGO--(BUSINESS WIRE)--
Kemper Corporation (NYSE: KMPR)
reported today net income of $37.9 million, or $0.73 per diluted share,
for the third quarter of 2015, compared to $4.7 million, or $0.09 per
share, for the third quarter of 2014. Consolidated net operating income1
was $36.6 million, or $0.70 per diluted share, for the third quarter of
2015, compared to $2.1 million, or $0.04 per share, for the third
quarter of 2014. The prior year’s third quarter results included a $35.5
million after-tax software write-off. Excluding the software write-off,
net operating income for the third quarter of 2014 was $37.6 million, or
$0.71 per share.
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Dollars in Millions, Except Per Share Amounts) (Unaudited)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
|
Consolidated Net Operating Income 1 | |
$
|
36.6
| | |
$
|
2.1
| | |
$
|
65.1
| | |
$
|
43.2
| |
|
Income from Continuing Operations
| |
38.0
| | |
4.8
| | |
78.9
| | |
49.3
| |
|
Net Income
| |
37.9
| | |
4.7
| | |
81.1
| | |
49.1
| |
| | | | | | | |
|
| Impact of Catastrophe Losses and Related Loss Adjustment Expense
(LAE) on Net Income | | $ | (3.1 | ) | | $ | (9.2 | ) | | $ | (34.0 | ) | | $ | (60.9 | ) |
| | | | | | | |
|
|
Diluted Net Income Per Share From:
| | | | | | | | |
|
Consolidated Net Operating Income 1 | |
$
|
0.70
| | |
$
|
0.04
| | |
$
|
1.26
| | |
$
|
0.79
| |
|
Continuing Operations
| |
0.73
| | |
0.09
| | |
1.52
| | |
0.90
| |
|
Net Income
| |
0.73
| | |
0.09
| | |
1.56
| | |
0.90
| |
| | | | | | | |
|
| Impact of Catastrophe Losses and Related LAE on Net Income Per
Share | | $ | (0.06 | ) | | $ | (0.17 | ) | | $ | (0.65 | ) | | $ | (1.12 | ) |
| | | | | | | | | | | | | | | |
|
1 Consolidated net operating income is an after-tax,
non-GAAP financial measure. See “Use of Non-GAAP Financial
Measures” for additional information.
| |
“Kemper had a solid third quarter and delivered $38 million of net
income, up from $5 million last year,” commented Donald G. Southwell,
Kemper’s Chairman, President and Chief Executive Officer. “Net operating
income increased 16 percent in our Life & Health segment, as higher net
investment income and lower expenses more than offset an uptick in
policyholder benefits.
“Alliance United contributed substantially to our Property & Casualty
segment’s earned premiums, leading to an increase of $76 million.
Although earned premiums from our legacy lines declined, we are
encouraged to see continuing improvement in the new business and
retention.
“We repurchased $18 million of common stock during the quarter, bringing
our total through September to $41 million. Additionally, in the quarter
we returned $13 million of capital to shareholders through dividends,
bringing our total to $38 million for the first nine months,” concluded
Southwell.
Capital
During the third quarter of 2015, Kemper repurchased nearly 500,000
shares of its common stock at a total cost of $17.6 million, or $35.39
per share, and paid dividends of $12.5 million. For the first nine
months of 2015, total capital returned to shareholders was $78.6
million, which consisted of $41.3 million from repurchases and $37.3
million from dividends. Additionally, in the second quarter, Kemper
deployed roughly $150 million of capital with the acquisition of
Alliance United Group.
Kemper ended the quarter with a book value per share excluding net
unrealized gains on fixed maturities of $35.04, up 2 percent from $34.50
at the end of 2014, primarily from net operating income, partially
offset by dividends. Book value per share was $39.45, down 1 percent
from $39.88 at the end of 2014, largely from the impact of higher yields
on the fixed maturities portfolio and dividends, partially offset by net
operating income.
Revenues
Total revenues for the third quarter of 2015 increased $75.6 million, or
14 percent, to $615.4 million, driven by $76.4 million higher earned
premiums from the Property & Casualty Insurance segment. Earned premiums
in the Property & Casualty Insurance segment increased $99.6 million
from the Alliance United acquisition. Excluding the Alliance United
acquisition, earned premiums in the Property & Casualty segment
decreased $23.2 million, primarily from the impact of profit improvement
actions taken over the past couple of years. The company continued to
see improved new business sales and retention ratios on its legacy
business.
Net investment income was $75.9 million in the third quarter of 2015,
compared to $72.3 million in 2014. The increase was primarily the result
of higher income from equity method investments and interest and
dividends on fixed maturities, partially offset by lower dividends on
equity securities and returns on fair value option investments.
The investment portfolio in total generated a pre-tax equivalent
annualized book yield of 5.2 percent for the third quarter of 2015, up
from 5.1 percent in 2014.
Segment Results
Kemper completed its acquisition of Alliance United on April 30, 2015.
The results of Alliance United’s operations since the acquisition date
are included in the Property & Casualty Insurance segment.
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)
underlying loss ratio includes loss and LAE, and (v) all comparisons are
made to the prior year quarter.
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Dollars in Millions) (Unaudited)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
|
Segment Net Operating Income (Loss):
| | | | | | | | |
| Property & Casualty Insurance | |
$
|
21.0
| | |
$
|
(13.6
|
)
| |
$
|
31.8
| | |
$
|
(0.4
|
)
|
| Life & Health Insurance | |
23.5
|
| |
20.3
|
| |
53.9
|
| |
58.3
|
|
|
Total Segment Net Operating Income
| |
44.5
| | |
6.7
| | |
85.7
| | |
57.9
| |
|
Corporate and Other Net Operating Loss
| |
(7.9
|
)
| |
(4.6
|
)
| |
(20.6
|
)
| |
(14.7
|
)
|
|
Consolidated Net Operating Income
| |
36.6
| | |
2.1
| | |
65.1
| | |
43.2
| |
|
Net Income (Loss) From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
3.5
| | |
5.2
| | |
27.8
| | |
11.8
| |
|
Net Impairment Losses Recognized in Earnings
| |
(2.1
|
)
| |
(2.5
|
)
| |
(8.1
|
)
| |
(5.7
|
)
|
|
Loss from Early Extinguishment of Debt
| |
—
|
| |
—
|
| |
(5.9
|
)
| |
—
|
|
|
Income from Continuing Operations
| |
$
|
38.0
|
| |
$
|
4.8
|
| |
$
|
78.9
|
| |
$
|
49.3
|
|
The Property & Casualty Insurance segment reported net operating income
of $21.0 million in the third quarter of 2015, compared to a net
operating loss of $13.6 million in 2014. Results in the third quarter of
2014 included a $35.5 million software write-off. Excluding the
write-off, results decreased slightly, primarily from $5.0 million less
favorable reserve development and a higher underlying loss and LAE
ratio, mostly offset by $6.2 million lower catastrophes and a lower
expense ratio.
The underlying loss and LAE ratio increased 6.5 percentage points in the
third quarter of 2015, to 73.3 percent, driven by the change in mix of
business from the Alliance United acquisition. Non-standard auto
insurance tends to have a higher loss and LAE ratio and a lower expense
ratio, net of fees. Excluding the Alliance United acquisition, the
underlying loss and LAE ratio increased 1.2 percentage points, primarily
from higher frequency and severity in the non-standard auto line and
higher frequency in the commercial auto line, mostly offset by lower
frequency in the preferred auto line. Excluding the impact from the 2014
write-off, the Property & Casualty Insurance segment’s expense ratio
decreased 3.7 percentage points to 24.4 percent in the third quarter of
2015, largely from the impact of the Alliance United acquisition.
Excluding the Alliance United acquisition and the software write-off,
the expense ratio increased slightly primarily from a lower premium base.
The Life & Health Insurance segment reported net operating income of
$23.5 million for the third quarter of 2015, compared to $20.3 million
in 2014. Results increased primarily from higher net investment income
and lower expenses, partially offset by higher policyholder benefits.
Corporate and Other net operating loss increased $3.3 million compared
to the third quarter of 2014, largely from higher employee retirement
benefits, primarily from the impacts of low interest rates on the
pension liability, and lower net investment income on fair value option
investments.
Unaudited condensed consolidated statements of income for the three
and nine months ended September 30, 2015 and 2014 are presented below:
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Dollars in Millions, Except Per Share Amounts)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
| Revenues: | | | | | | | | |
|
Earned Premiums
| |
$
|
536.7
| | |
$
|
462.8
| | |
$
|
1,468.1
| | |
$
|
1,410.7
| |
|
Net Investment Income
| |
75.9
| | |
72.3
| | |
223.2
| | |
216.0
| |
|
Other Income
| |
0.8
| | |
0.5
| | |
2.3
| | |
0.8
| |
|
Net Realized Gains on Sales of Investments
| |
5.3
| | |
8.0
| | |
42.7
| | |
18.1
| |
|
Other-than-temporary Impairment Losses:
| | | | | | | | |
|
Total Other-than-temporary Impairment Losses
| |
(3.3
|
)
| |
(3.8
|
)
| |
(12.5
|
)
| |
(8.7
|
)
|
|
Portion of Losses Recognized in Other Comprehensive Income
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Net Impairment Losses Recognized in Earnings
| |
(3.3
|
)
| |
(3.8
|
)
| |
(12.5
|
)
| |
(8.7
|
)
|
| Total Revenues | |
615.4
|
| |
539.8
|
| |
1,723.8
|
| |
1,636.9
|
|
| Expenses: | | | | | | | | |
|
Policyholders’ Benefits and Incurred Losses and Loss Adjustment
Expenses
| |
378.8
| | |
300.5
| | |
1,051.6
| | |
975.9
| |
|
Insurance Expenses
| |
161.1
| | |
158.6
| | |
468.1
| | |
472.0
| |
|
Write-offs of Long-lived Assets
| |
—
| | |
54.6
| | |
11.1
| | |
54.6
| |
|
Loss from Early Extinguishment of Debt
| |
—
| | |
—
| | |
9.1
| | |
—
| |
|
Interest and Other Expenses
| |
25.7
|
| |
22.1
|
| |
82.0
|
| |
67.3
|
|
| Total Expenses | |
565.6
|
| |
535.8
|
| |
1,621.9
|
| |
1,569.8
|
|
|
Income from Continuing Operations before Income Taxes
| |
49.8
| | |
4.0
| | |
101.9
| | |
67.1
| |
|
Income Tax Benefit (Expense)
| |
(11.8
|
)
| |
0.8
|
| |
(23.0
|
)
| |
(17.8
|
)
|
| Income from Continuing Operations | |
38.0
| | |
4.8
| | |
78.9
| | |
49.3
| |
|
Income (Loss) from Discontinued Operations
| |
(0.1
|
)
| |
(0.1
|
)
| |
2.2
|
| |
(0.2
|
)
|
| Net Income | |
$
|
37.9
|
| |
$
|
4.7
|
| |
$
|
81.1
|
| |
$
|
49.1
|
|
| | | | | | | |
|
| Income from Continuing Operations Per Unrestricted Share: | | | | | | | | |
|
Basic
| |
$
|
0.73
|
| |
$
|
0.09
|
| |
$
|
1.52
|
| |
$
|
0.90
|
|
|
Diluted
| |
$
|
0.73
|
| |
$
|
0.09
|
| |
$
|
1.52
|
| |
$
|
0.90
|
|
| | | | | | | |
|
| Net Income Per Unrestricted Share: | | | | | | | | |
|
Basic
| |
$
|
0.73
|
| |
$
|
0.09
|
| |
$
|
1.56
|
| |
$
|
0.90
|
|
|
Diluted
| |
$
|
0.73
|
| |
$
|
0.09
|
| |
$
|
1.56
|
| |
$
|
0.90
|
|
| | | | | | | |
|
| Weighted-average Outstanding (Shares in Thousands): | | | | | | | | |
|
Unrestricted Shares - Basic
| |
51,611.8
|
| |
52,605.3
|
| |
51,737.6
|
| |
54,245.7
|
|
|
Unrestricted Shares and Equivalent Shares - Diluted
| |
51,672.0
|
| |
52,699.9
|
| |
51,815.8
|
| |
54,356.2
|
|
| | | | | | | |
|
| Dividends Paid to Shareholders Per Share | |
$
|
0.24
|
| |
$
|
0.24
|
| |
$
|
0.72
|
| |
$
|
0.72
|
|
Unaudited business segment revenues for the three and nine months
ended September 30, 2015 and 2014 are presented below:
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Dollars in Millions)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
| REVENUES: | | | | | | | | |
| Property & Casualty Insurance: | | | | | | | | |
|
Earned Premiums:
| | | | | | | | |
|
Personal Automobile
| |
$
|
288.5
| | |
$
|
205.1
| | |
$
|
730.9
| | |
$
|
633.4
| |
|
Homeowners
| |
72.1
| | |
77.9
| | |
216.3
| | |
236.6
| |
|
Other Personal
| |
11.8
|
| |
12.6
|
| |
35.2
|
| |
38.7
|
|
|
Total Personal
| |
372.4
| | |
295.6
| | |
982.4
| | |
908.7
| |
|
Commercial Automobile
| |
13.7
|
| |
14.1
|
| |
40.7
|
| |
40.8
|
|
|
Total Earned Premiums
| |
386.1
| | |
309.7
| | |
1,023.1
| | |
949.5
| |
|
Net Investment Income
| |
18.3
| | |
18.5
| | |
51.7
| | |
55.6
| |
|
Other Income
| |
0.1
|
| |
0.1
|
| |
0.5
|
| |
0.4
|
|
| Total Property & Casualty Insurance | |
404.5
|
| |
328.3
|
| |
1,075.3
|
| |
1,005.5
|
|
| Life & Health Insurance: | | | | | | | | |
|
Earned Premiums:
| | | | | | | | |
|
Life
| |
95.5
| | |
96.8
| | |
279.5
| | |
291.6
| |
|
Accident and Health
| |
36.2
| | |
37.1
| | |
108.7
| | |
112.1
| |
|
Property
| |
18.9
|
| |
19.2
|
| |
56.8
|
| |
57.5
|
|
|
Total Earned Premiums
| |
150.6
| | |
153.1
| | |
445.0
| | |
461.2
| |
|
Net Investment Income
| |
55.1
| | |
49.2
| | |
159.0
| | |
147.4
| |
|
Other Income
| |
0.7
|
| |
0.4
|
| |
1.7
|
| |
0.4
|
|
| Total Life & Health Insurance | |
206.4
|
| |
202.7
|
| |
605.7
|
| |
609.0
|
|
| Total Segment Revenues | |
610.9
| | |
531.0
| | |
1,681.0
| | |
1,614.5
| |
|
Net Realized Gains on Sales of Investments
| |
5.3
| | |
8.0
| | |
42.7
| | |
18.1
| |
|
Net Impairment Losses Recognized in Earnings
| |
(3.3
|
)
| |
(3.8
|
)
| |
(12.5
|
)
| |
(8.7
|
)
|
|
Other
| |
2.5
|
| |
4.6
|
| |
12.6
|
| |
13.0
|
|
| Total Revenues | |
$
|
615.4
|
| |
$
|
539.8
|
| |
$
|
1,723.8
|
| |
$
|
1,636.9
|
|
| KEMPER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Millions) |
|
| Sep 30,
2015
|
| Dec 31,
2014
|
| Assets: | |
(Unaudited)
| | |
|
Investments:
| | | | |
|
Fixed Maturities at Fair Value
| |
$
|
4,844.9
| | |
$
|
4,777.6
|
| Equity Securities at Fair Value
| |
535.7
| | |
632.2
|
|
Equity Method Limited Liability Investments at Cost Plus Cumulative
Undistributed Earnings
| |
179.4
| | |
184.8
|
|
Fair Value Option Investments
| |
166.1
| | |
53.3
|
|
Short-term Investments at Cost which Approximates Fair Value
| |
295.9
| | |
342.2
|
|
Other Investments
| |
451.0
|
| |
449.6
|
|
Total Investments
| |
6,473.0
|
| |
6,439.7
|
|
Cash
| |
147.1
| | |
76.1
|
|
Receivables from Policyholders
| |
347.9
| | |
295.3
|
|
Other Receivables
| |
198.9
| | |
187.0
|
|
Deferred Policy Acquisition Costs
| |
325.8
| | |
303.3
|
| Goodwill | |
323.0
| | |
311.8
|
|
Current and Deferred Income Tax Assets
| |
22.3
| | |
—
|
|
Other Assets
| |
237.6
|
| |
220.2
|
|
Total Assets
| |
$
|
8,075.6
|
| |
$
|
7,833.4
|
| Liabilities and Shareholders’ Equity: | | | | |
|
Insurance Reserves:
| | | | |
|
Life and Health
| |
$
|
3,327.8
| | |
$
|
3,273.7
|
|
Property and Casualty
| |
852.9
|
| |
733.9
|
|
Total Insurance Reserves
| |
4,180.7
|
| |
4,007.6
|
|
Unearned Premiums
| |
629.4
| | |
536.9
|
|
Liabilities for Income Taxes
| |
3.7
| | |
36.5
|
|
Debt at Amortized Cost
| |
750.4
| | |
752.1
|
|
Accrued Expenses and Other Liabilities
| |
486.8
|
| |
409.6
|
|
Total Liabilities
| |
6,051.0
|
| |
5,742.7
|
| Shareholders’ Equity: | | | | |
|
Common Stock
| |
5.1
| | |
5.2
|
| Paid-in Capital | |
651.9
| | |
660.1
|
|
Retained Earnings
| |
1,218.6
| | |
1,202.7
|
|
Accumulated Other Comprehensive Income
| |
149.0
|
| |
222.7
|
|
Total Shareholders’ Equity
| |
2,024.6
|
| |
2,090.7
|
|
Total Liabilities and Shareholders’ Equity
| |
$
|
8,075.6
|
| |
$
|
7,833.4
|
Unaudited selected financial information for the Property & Casualty
Insurance segment follows:
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Dollars in Millions)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
| | | | | | | |
|
Results of Operations |
|
Net Premiums Written
| |
$
|
403.6
|
| |
$
|
307.0
|
| |
$
|
1,031.5
|
| |
$
|
920.0
|
|
| | | | | | | |
|
|
Earned Premiums
| |
$
|
386.1
| | |
$
|
309.7
| | |
$
|
1,023.1
| | |
$
|
949.5
| |
|
Net Investment Income
| |
18.3
| | |
18.5
| | |
51.7
| | |
55.6
| |
|
Other Income
| |
0.1
|
| |
0.1
|
| |
0.5
|
| |
0.4
|
|
|
Total Revenues
| |
404.5
|
| |
328.3
|
| |
1,075.3
|
| |
1,005.5
|
|
|
Incurred Losses and LAE related to:
| | | | | | | | |
|
Current Year:
| | | | | | | | |
|
Non-catastrophe Losses and LAE
| |
283.2
| | |
206.8
| | |
727.2
| | |
646.6
| |
|
Catastrophe Losses and LAE
| |
4.7
| | |
14.2
| | |
50.4
| | |
92.1
| |
|
Prior Years:
| | | | | | | | |
|
Non-catastrophe Losses and LAE
| |
(0.9
|
)
| |
(3.3
|
)
| |
(7.3
|
)
| |
(30.5
|
)
|
|
Catastrophe Losses and LAE
| |
(1.9
|
)
| |
(7.2
|
)
| |
(6.5
|
)
| |
(15.0
|
)
|
|
Total Incurred Losses and LAE
| |
285.1
| | |
210.5
| | |
763.8
| | |
693.2
| |
|
Insurance Expenses, Excluding Write-off of Long-lived Asset
| |
94.4
| | |
87.1
| | |
265.8
| | |
266.6
| |
|
Write-offs of Long-lived Assets
| |
—
|
| |
54.6
|
| |
11.1
|
| |
54.6
|
|
|
Operating Profit (Loss)
| |
25.0
| | |
(23.9
|
)
| |
34.6
| | |
(8.9
|
)
|
|
Income Tax Benefit (Expense)
| |
(4.0
|
)
| |
10.3
|
| |
(2.8
|
)
| |
8.5
|
|
|
Segment Net Operating Income (Loss)
| |
$
|
21.0
|
| |
$
|
(13.6
|
)
| |
$
|
31.8
|
| |
$
|
(0.4
|
)
|
| | | | | | | |
|
Ratios Based On Earned Premiums |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
73.3
|
%
| |
66.8
|
%
| |
71.1
|
%
| |
68.1
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
1.2
| | |
4.6
| | |
4.9
| | |
9.7
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(0.2
|
)
| |
(1.1
|
)
| |
(0.7
|
)
| |
(3.2
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(0.5
|
)
| |
(2.3
|
)
| |
(0.6
|
)
| |
(1.6
|
)
|
|
Total Incurred Loss and LAE Ratio
| |
73.8
| | |
68.0
| | |
74.7
| | |
73.0
| |
|
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset
| |
24.4
| | |
28.1
| | |
26.0
| | |
28.1
| |
|
Impact on Ratio from Write-offs of Long-lived Assets
| |
—
|
| |
17.6
|
| |
1.1
|
| |
5.8
|
|
|
Combined Ratio
| |
98.2
|
%
| |
113.7
|
%
| |
101.8
|
%
| |
106.9
|
%
|
| | | | | | | |
|
Underlying Combined Ratio |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
73.3
|
%
| |
66.8
|
%
| |
71.1
|
%
| |
68.1
|
%
|
|
Insurance Expense Ratio
| |
24.4
| | |
28.1
| | |
26.0
| | |
28.1
| |
|
Impact on Ratio from Write-offs of Long-lived Assets
| |
—
|
| |
17.6
|
| |
1.1
|
| |
5.8
|
|
|
Underlying Combined Ratio
| |
97.7
|
%
| |
112.5
|
%
| |
98.2
|
%
| |
102.0
|
%
|
| | | | | | | |
|
Non-GAAP Measure Reconciliation |
|
Underlying Combined Ratio
| |
97.7
|
%
| |
112.5
|
%
| |
98.2
|
%
| |
102.0
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
1.2
| | |
4.6
| | |
4.9
| | |
9.7
| |
|
Prior Years Non-catastrophe Losses and LAE Ratio
| |
(0.2
|
)
| |
(1.1
|
)
| |
(0.7
|
)
| |
(3.2
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(0.5
|
)
| |
(2.3
|
)
| |
(0.6
|
)
| |
(1.6
|
)
|
|
Combined Ratio as Reported
| |
98.2
|
%
| |
113.7
|
%
| |
101.8
|
%
| |
106.9
|
%
|
Unaudited selected financial information for the Life & Health
Insurance segment follows:
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Dollars in Millions)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
| | | | | | | |
|
Results of Operations |
| | | | | | | |
|
|
Earned Premiums:
| | | | | | | | |
|
Life
| |
$
|
95.5
| | |
$
|
96.8
| | |
$
|
279.5
| | |
$
|
291.6
| |
|
Accident and Health
| |
36.2
| | |
37.1
| | |
108.7
| | |
112.1
| |
|
Property
| |
18.9
|
| |
19.2
|
| |
56.8
|
| |
57.5
|
|
|
Total Earned Premiums
| |
150.6
| | |
153.1
| | |
445.0
| | |
461.2
| |
|
Net Investment Income
| |
55.1
| | |
49.2
| | |
159.0
| | |
147.4
| |
|
Other Income
| |
0.7
|
| |
0.4
|
| |
1.7
|
| |
0.4
|
|
|
Total Revenues
| |
206.4
|
| |
202.7
|
| |
605.7
|
| |
609.0
|
|
|
Policyholders’ Benefits and Incurred Losses and LAE
| |
93.7
| | |
89.9
| | |
287.8
| | |
282.7
| |
|
Insurance Expenses
| |
77.3
|
| |
81.4
|
| |
235.5
|
| |
235.6
|
|
|
Operating Profit
| |
35.4
| | |
31.4
| | |
82.4
| | |
90.7
| |
|
Income Tax Expense
| |
(11.9
|
)
| |
(11.1
|
)
| |
(28.5
|
)
| |
(32.4
|
)
|
|
Segment Net Operating Income
| |
$
|
23.5
|
| |
$
|
20.3
|
| |
$
|
53.9
|
| |
$
|
58.3
|
|
Use of Non-GAAP Financial Measures
Consolidated Net Operating Income
Consolidated Net Operating Income is an after-tax, non-GAAP financial
measure computed by excluding from income from continuing operations the
after-tax impact of 1) net realized gains on sales of investments, 2)
net impairment losses recognized in earnings related to investments, 3)
loss from early extinguishment of debt and 4) 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.
Kemper believes that Consolidated Net Operating Income 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 on
sales of investments and net impairment losses recognized in earnings
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 company’s investments, the
timing of which is unrelated to the insurance underwriting process. Loss
from Early Extinguishment of Debt 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. Significant
non-recurring items are excluded because, by their nature, they are not
indicative of Kemper’s business or economic trends.
A reconciliation of Consolidated Net Operating Income to Income from
Continuing Operations for the three and nine months ended September 30,
2015 and 2014 is presented below:
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Dollars in Millions) (Unaudited)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
|
Consolidated Net Operating Income
| |
$
|
36.6
| | |
$
|
2.1
| | |
$
|
65.1
| | |
$
|
43.2
| |
|
Net Income (Loss) From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
3.5
| | |
5.2
| | |
27.8
| | |
11.8
| |
|
Net Impairment Losses Recognized in Earnings
| |
(2.1
|
)
| |
(2.5
|
)
| |
(8.1
|
)
| |
(5.7
|
)
|
|
Loss from Early Extinguishment of Debt
| |
—
|
| |
—
|
| |
(5.9
|
)
| |
—
|
|
|
Income from Continuing Operations
| |
$
|
38.0
|
| |
$
|
4.8
|
| |
$
|
78.9
|
| |
$
|
49.3
|
|
Diluted Consolidated Net Operating Income Per
Unrestricted Share
Diluted Consolidated Net Operating Income Per Unrestricted Share is a
non-GAAP financial measure computed by dividing Consolidated Net
Operating Income attributed to unrestricted shares by the
weighted-average unrestricted shares and equivalent shares outstanding.
The most directly comparable GAAP financial measure is Diluted Income
from Continuing Operations Per Unrestricted Share.
A reconciliation of Diluted Consolidated Net Operating Income Per
Unrestricted Share to Diluted Income from Continuing Operations Per
Unrestricted Share for the three and nine months ended September 30,
2015 and 2014 is presented below:
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
(Unaudited)
| | Sep 30,
2015
|
| Sep 30,
2014
| | Sep 30,
2015
|
| Sep 30,
2014
|
|
Diluted Consolidated Net Operating Income Per Unrestricted Share
| |
$
|
0.70
| | |
$
|
0.04
| | |
$
|
1.26
| | |
$
|
0.79
| |
|
Net Income (Loss) Per Unrestricted Share From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
0.07
| | |
0.10
| | |
0.53
| | |
0.21
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.04
|
)
| |
(0.05
|
)
| |
(0.16
|
)
| |
(0.10
|
)
|
|
Loss from Early Extinguishment of Debt
| |
—
|
| |
—
|
| |
(0.11
|
)
| |
—
|
|
|
Diluted Income from Continuing Operations Per Unrestricted Share
| |
$
|
0.73
|
| |
$
|
0.09
|
| |
$
|
1.52
|
| |
$
|
0.90
|
|
Book Value Per Share Excluding Net Unrealized
Gains on Fixed Maturities
Book Value Per Share Excluding Net 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 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 trend 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 generally 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 Maturities and Book
Value Per Share at September 30, 2015 and December 31, 2014 is presented
below:
|
(Dollars in Millions) (Unaudited)
|
| Sep 30,
2015
|
| Dec 31,
2014
|
|
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed
Maturities
| |
$
|
1,798.4
| | |
$
|
1,808.5
|
|
Net Unrealized Gains on Fixed Maturities
| |
226.2
|
| |
282.2
|
|
Shareholders’ Equity
| |
$
|
2,024.6
|
| |
$
|
2,090.7
|
Underlying Combined Ratio
Underlying Combined Ratio is a non-GAAP financial measure, that is
computed by adding the current year non-catastrophe losses and LAE ratio
with the insurance expense (including write-offs of long-lived assets)
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 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 third quarter 2015 results in a conference call
on Friday, November 6, at 11 a.m. Eastern Time. 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 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 through November 20, 2015 at 855.859.2056
using conference ID number 55394638.
More detailed financial information can be found in Kemper’s Investor
Financial Supplement for the third quarter of 2015, which is available
at the investor section of kemper.com.
About Kemper
The Kemper family of companies is one of the nation’s leading insurers.
With $8 billion in assets, Kemper is improving the world of insurance by
offering personalized solutions for individuals, families and
businesses. Kemper's businesses collectively:
-
Offer insurance for home, auto, life, health and valuables
-
Service six million policies
-
Are represented by more than 20,000 independent agents and brokers
-
Employ 6,000 associates dedicated to providing exceptional service
-
Are licensed to sell insurance in 50 states and the District of
Columbia
Learn more about Kemper.
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 listed in periodic reports filed by Kemper
with the Securities and Exchange Commission (the “SEC”). 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. The reader
is advised, however, to consult any further disclosures Kemper makes on
related subjects in its filings with the SEC.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151105006869/en/
Kemper Corporation
Investors:
Diana Hickert-Hill, 312-661-4930
investor.relations@kemper.com
Source: Kemper Corporation