- Increased earned premiums by $54 million in the quarter
- Improved quarter-to-date legacy Property & Casualty underlying loss
and LAE ratio 1.3 percentage points
- Generated investment portfolio pre-tax equivalent annualized book
yield of 5.0 percent in the quarter
CHICAGO--(BUSINESS WIRE)--
Kemper Corporation (NYSE: KMPR)
reported today net income of $4.0 million, or $0.08 per diluted share,
for the second quarter of 2016, compared to $29.7 million, or $0.57 per
share, for the second quarter of 2015. Consolidated net operating income1
was $4.6 million, or $0.09 per diluted share, for the second quarter of
2016, compared to $6.7 million, or $0.13 per share, for the second
quarter of 2015. Net operating income decreased primarily from the
performance of Alliance United and higher catastrophe losses, partially
offset by higher levels of favorable reserve development and the
software write-off that occurred in 2015.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(Dollars in Millions, Except Per Share Amounts) (Unaudited)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
|
Consolidated Net Operating Income 1 | |
$
|
4.6
| | |
$
|
6.7
| | |
$
|
4.0
| | |
$
|
28.5
| |
|
Income from Continuing Operations
| |
4.1
| | |
27.4
| | |
1.9
| | |
40.9
| |
|
Net Income
| |
4.0
| | |
29.7
| | |
1.9
| | |
43.2
| |
| | | | | | | |
|
| Impact of Catastrophe Losses and Related Loss Adjustment Expense
(LAE) on Net Income | | $ | (33.0 | ) | | $ | (24.2 | ) | | $ | (58.4 | ) | | $ | (30.9 | ) |
| | | | | | | |
|
|
Diluted Net Income Per Share From:
| | | | | | | | |
|
Consolidated Net Operating Income 1 | |
$
|
0.09
| | |
$
|
0.13
| | |
$
|
0.08
| | |
$
|
0.55
| |
|
Continuing Operations
| |
0.08
| | |
0.53
| | |
0.04
| | |
0.79
| |
|
Net Income
| |
0.08
| | |
0.57
| | |
0.04
| | |
0.83
| |
| | | | | | | |
|
| Impact of Catastrophe Losses and Related LAE on Net Income Per
Share | | $ | (0.64 | ) | | $ | (0.46 | ) | | $ | (1.13 | ) | | $ | (0.59 | ) |
| | | | | | | | | | | | | | | |
|
1 Consolidated net operating income is an after-tax,
non-GAAP financial measure. See “Use of Non-GAAP Financial
Measures” for additional information.
|
“We were pleased with the improved underlying results in our legacy
nonstandard auto and homeowners lines, however, the bottom line remains
pressured with the same two drivers we saw in the first quarter —
elevated catastrophes and challenges in the Alliance United business. We
continue to implement aggressive rate, underwriting and agency
management actions as well as focus on increasing claims staffing levels
and reducing cycle times,” said Joseph P. Lacher, Jr., Kemper’s
President and Chief Executive Officer. “The Life & Health Division’s
underlying results remained stable. Excluding normal volatility in our
alternative investment portfolio, net investment income increased
slightly.
“I’m pleased we now have our Division Presidents in place as we finalize
our strategy. We plan to update the market in mid-September with the
details,” concluded Lacher.
Capital
During the second quarter of 2016, Kemper paid dividends of $12.3
million. For the year, Kemper returned $28.3 million of capital to
shareholders through $24.5 million of dividends and $3.8 million of
share repurchases.
Kemper ended the quarter with a book value per share of $41.17, up 6
percent from $38.82 at the end of 2015, largely from the impact of lower
yields on the fixed maturities portfolio, partially offset by dividends
paid. Book value per share excluding net unrealized gains on fixed
maturities was $34.78, down 1 percent from $35.13 at the end of 2015,
primarily from dividends paid.
Revenues
Total revenues for the second quarter of 2016 increased $18.0 million,
or 3 percent, to $627.2 million, driven by $53.2 million higher earned
premiums from the Property & Casualty segment, partially offset by $28.4
million lower net realized gains on sales of investments. Earned
premiums in the Property & Casualty segment increased $64.3 million from
Alliance United. Excluding Alliance United, earned premiums in the
Property & Casualty segment decreased $11.1 million, as the company had
fewer policies in force, partially offset by higher average premium
rates.
Net investment income was $73.7 million in the second quarter of 2016,
compared to $76.7 million in 2015. The change was driven by performance
in the alternative investments portfolio, which primarily consists of
limited partnerships, limited liability companies (both equity method
investments and other equity interests) and hedge funds, which are
accounted for using the fair value option. Net investment income from
the alternative investment portfolio was $6.5 million in the second
quarter of 2016, compared to $10.2 million in 2015. Alternative net
investment income decreased $0.7 million for the Property & Casualty
segment, $1.4 million for the Life and Health segment and $1.6 million
for Corporate and Other.
The investment portfolio in total generated a pre-tax equivalent
annualized book yield of 5.0 percent for the second quarter of 2016,
compared to 5.4 percent in 2015.
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
|
|
Six Months Ended
|
|
(Dollars in Millions) (Unaudited)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
|
Segment Net Operating Income (Loss):
| | | | | | | | |
| Property & Casualty Insurance | |
$
|
(8.9
|
)
| |
$
|
(2.6
|
)
| |
$
|
(22.0
|
)
| |
$
|
10.8
| |
| Life & Health Insurance | |
16.4
|
| |
14.3
|
| |
36.7
|
| |
30.4
|
|
|
Total Segment Net Operating Income
| |
7.5
| | |
11.7
| | |
14.7
| | |
41.2
| |
|
Corporate and Other Net Operating Loss
| |
(2.9
|
)
| |
(5.0
|
)
| |
(10.7
|
)
| |
(12.7
|
)
|
|
Consolidated Net Operating Income
| |
4.6
| | |
6.7
| | |
4.0
| | |
28.5
| |
|
Net Income (Loss) From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
3.7
| | |
22.1
| | |
8.1
| | |
24.3
| |
|
Net Impairment Losses Recognized in Earnings
| |
(4.2
|
)
| |
(1.4
|
)
| |
(10.2
|
)
| |
(6.0
|
)
|
|
Loss from Early Extinguishment of Debt
| |
—
|
| |
—
|
| |
—
|
| |
(5.9
|
)
|
|
Income from Continuing Operations
| |
$
|
4.1
|
| |
$
|
27.4
|
| |
$
|
1.9
|
| |
$
|
40.9
|
|
The Property & Casualty Insurance segment reported a net operating loss
of $8.9 million in the second quarter of 2016, compared to a loss of
$2.6 million in 2015. Results in both quarters were impacted by high
levels of catastrophes, $31.9 million in 2016, compared to $23.0 million
last year. Additionally, Alliance United’s results were well below
expectations. Favorable development on the legacy lines was $8.6 million
higher this year and in the second quarter of last year, Kemper incurred
a charge of $7.2 million to write off capitalized software.
Alliance United reported a net operating loss of $12.0 million, compared
to net operating income of $1.5 million last year. The second quarter of
2016 underlying loss ratio was 100.8 percent, which included $5.7
million pre-tax, or 4.5 percentage points, of adverse development
related to the first quarter of 2016. Additionally, Alliance United
continues to be in a premium deficiency position since the fourth
quarter of 2015, which requires earlier recognition of policy
acquisition costs that would be typically deferred.
Alliance United continued to experience higher frequency trends during
the second quarter of 2016 and accordingly continues to aggressively
seek rate increases. In the first quarter of 2016, Alliance United
received approval for a 6.9 percent rate increase on its Millennium
product, which represents approximately 50 percent of the book. The new
rates were placed into production on new and renewal business starting
April 1, 2016.
Alliance United has filed for a rate increase on its Gold product
covering the remaining portion of the book of business and is expecting
to implement the rate change in the fourth quarter of 2016. Recently,
Alliance United filed for another rate increase on its Millennium
product and expects to implement that rate increase in late 2016, or
early 2017. Given recent loss cost trends, the company expects to
continue to file for additional rate increases on both books of business
until they reach rate adequacy.
Excluding Alliance United, the second quarter underlying loss ratio
improved 1.3 percentage points, to 65.8 percent, largely from
improvement in nonstandard auto and homeowners, partially offset by
preferred auto. Legacy nonstandard auto improved 6.4 percentage points
from continued rate, underwriting and agency management actions.
Homeowners improved 5.3 percentage points primarily from lower
frequency, while preferred auto’s underlying loss ratio increased 2.4
percentage points as loss cost trends outpaced rate actions.
The Life & Health Insurance segment reported net operating income of
$16.4 million for the second quarter of 2016, compared to $14.3 million
in 2015. Results increased primarily from lower legal expenses at the
Kemper Home Service Companies, partially offset by lower net investment
income.
Corporate and Other net operating loss improved $2.1 million, compared
to the second quarter of 2015, as lower retirement benefits more than
offset lower net investment income and a tax benefit in the second
quarter of 2015.
Unaudited condensed consolidated statements of income for the three
and six months ended June 30, 2016 and 2015 are presented below.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(Dollars in Millions, Except Per Share Amounts)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
| Revenues: | | | | | | | | |
|
Earned Premiums
| |
$
|
553.7
| | |
$
|
500.1
| | |
$
|
1,099.7
| | |
$
|
931.4
| |
|
Net Investment Income
| |
73.7
| | |
76.7
| | |
140.7
| | |
147.3
| |
|
Other Income
| |
0.6
| | |
0.6
| | |
1.4
| | |
1.5
| |
|
Net Realized Gains on Sales of Investments
| |
5.6
| | |
34.0
| | |
12.4
| | |
37.4
| |
|
Other-than-temporary Impairment Losses:
| | | | | | | | |
|
Total Other-than-temporary Impairment Losses
| |
(6.4
|
)
| |
(2.2
|
)
| |
(16.0
|
)
| |
(9.2
|
)
|
|
Portion of Losses Recognized in Other Comprehensive Income
| |
—
|
| |
—
|
| |
0.3
|
| |
—
|
|
|
Net Impairment Losses Recognized in Earnings
| |
(6.4
|
)
| |
(2.2
|
)
| |
(15.7
|
)
| |
(9.2
|
)
|
| Total Revenues | |
627.2
|
| |
609.2
|
| |
1,238.5
|
| |
1,108.4
|
|
| Expenses: | | | | | | | | |
|
Policyholders’ Benefits and Incurred Losses and Loss Adjustment
Expenses
| |
436.1
| | |
375.1
| | |
872.3
| | |
672.8
| |
|
Insurance Expenses
| |
167.8
| | |
162.1
| | |
327.1
| | |
307.0
| |
|
Write-off of Long-lived Asset
| |
—
| | |
11.1
| | |
—
| | |
11.1
| |
|
Loss from Early Extinguishment of Debt
| |
—
| | |
—
| | |
—
| | |
9.1
| |
|
Interest and Other Expenses
| |
20.7
|
| |
26.6
|
| |
43.0
|
| |
56.3
|
|
| Total Expenses | |
624.6
|
| |
574.9
|
| |
1,242.4
|
| |
1,056.3
|
|
|
Income (Loss) from Continuing Operations before Income Taxes
| |
2.6
| | |
34.3
| | |
(3.9
|
)
| |
52.1
| |
|
Income Tax Benefit (Expense)
| |
1.5
|
| |
(6.9
|
)
| |
5.8
|
| |
(11.2
|
)
|
| Income from Continuing Operations | |
4.1
| | |
27.4
| | |
1.9
| | |
40.9
| |
|
Income (Loss) from Discontinued Operations
| |
(0.1
|
)
| |
2.3
|
| |
—
|
| |
2.3
|
|
| Net Income | |
$
|
4.0
|
| |
$
|
29.7
|
| |
$
|
1.9
|
| |
$
|
43.2
|
|
| | | | | | | |
|
| Income from Continuing Operations Per Unrestricted Share: | | | | | | | | |
|
Basic
| |
$
|
0.08
|
| |
$
|
0.53
|
| |
$
|
0.04
|
| |
$
|
0.79
|
|
|
Diluted
| |
$
|
0.08
|
| |
$
|
0.53
|
| |
$
|
0.04
|
| |
$
|
0.79
|
|
| | | | | | | |
|
| Net Income Per Unrestricted Share: | | | | | | | | |
|
Basic
| |
$
|
0.08
|
| |
$
|
0.57
|
| |
$
|
0.04
|
| |
$
|
0.83
|
|
|
Diluted
| |
$
|
0.08
|
| |
$
|
0.57
|
| |
$
|
0.04
|
| |
$
|
0.83
|
|
| | | | | | | |
|
| Weighted-average Outstanding (Shares in Thousands): | | | | | | | | |
|
Unrestricted Shares - Basic
| |
51,107.7
|
| |
51,728.1
|
| |
51,149.6
|
| |
51,800.5
|
|
|
Unrestricted Shares and Equivalent Shares - Diluted
| |
51,119.0
|
| |
51,806.1
|
| |
51,159.2
|
| |
51,887.7
|
|
| | | | | | | |
|
| Dividends Paid to Shareholders Per Share | |
$
|
0.24
|
| |
$
|
0.24
|
| |
$
|
0.48
|
| |
$
|
0.48
|
|
Unaudited business segment revenues for the three and six months
ended June 30, 2016 and 2015 are presented below.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(Dollars in Millions)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
| REVENUES: | | | | | | | | |
| Property & Casualty Insurance: | | | | | | | | |
|
Earned Premiums:
| | | | | | | | |
|
Personal Automobile
| |
$
|
310.3
| | |
$
|
252.6
| | |
$
|
613.6
| | |
$
|
442.4
| |
|
Homeowners
| |
67.6
| | |
71.6
| | |
135.7
| | |
144.2
| |
|
Other Personal
| |
11.3
|
| |
11.7
|
| |
22.6
|
| |
23.4
|
|
|
Total Personal
| |
389.2
| | |
335.9
| | |
771.9
| | |
610.0
| |
|
Commercial Automobile
| |
13.4
|
| |
13.5
|
| |
26.9
|
| |
27.0
|
|
|
Total Earned Premiums
| |
402.6
| | |
349.4
| | |
798.8
| | |
637.0
| |
|
Net Investment Income
| |
19.7
| | |
18.6
| | |
31.6
| | |
33.4
| |
|
Other Income
| |
0.1
|
| |
0.1
|
| |
0.3
|
| |
0.4
|
|
| Total Property & Casualty Insurance | |
422.4
|
| |
368.1
|
| |
830.7
|
| |
670.8
|
|
| Life & Health Insurance: | | | | | | | | |
|
Earned Premiums:
| | | | | | | | |
|
Life
| |
95.5
| | |
96.0
| | |
189.9
| | |
184.0
| |
|
Accident and Health
| |
36.7
| | |
35.7
| | |
73.6
| | |
72.5
| |
|
Property
| |
18.9
|
| |
19.0
|
| |
37.4
|
| |
37.9
|
|
|
Total Earned Premiums
| |
151.1
| | |
150.7
| | |
300.9
| | |
294.4
| |
|
Net Investment Income
| |
50.1
| | |
53.5
| | |
105.1
| | |
103.9
| |
|
Other Income
| |
0.6
|
| |
0.2
|
| |
1.2
|
| |
1.0
|
|
| Total Life & Health Insurance | |
201.8
|
| |
204.4
|
| |
407.2
|
| |
399.3
|
|
| Total Segment Revenues | |
624.2
| | |
572.5
| | |
1,237.9
| | |
1,070.1
| |
|
Net Realized Gains on Sales of Investments
| |
5.6
| | |
34.0
| | |
12.4
| | |
37.4
| |
|
Net Impairment Losses Recognized in Earnings
| |
(6.4
|
)
| |
(2.2
|
)
| |
(15.7
|
)
| |
(9.2
|
)
|
|
Other
| |
3.8
|
| |
4.9
|
| |
3.9
|
| |
10.1
|
|
| Total Revenues | |
$
|
627.2
|
| |
$
|
609.2
|
| |
$
|
1,238.5
|
| |
$
|
1,108.4
|
|
| KEMPER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Millions) |
|
| Jun 30,
2016
|
| Dec 31,
2015
|
| Assets: | |
(Unaudited)
| | |
|
Investments:
| | | | |
|
Fixed Maturities at Fair Value
| |
$
|
5,084.3
| | |
$
|
4,852.3
|
| Equity Securities at Fair Value
| |
509.6
| | |
523.2
|
|
Equity Method Limited Liability Investments at Cost Plus Cumulative
Undistributed Earnings
| |
182.7
| | |
190.6
|
|
Fair Value Option Investments
| |
134.1
| | |
164.5
|
|
Short-term Investments at Cost which Approximates Fair Value
| |
365.2
| | |
255.7
|
|
Other Investments
| |
440.8
|
| |
443.2
|
|
Total Investments
| |
6,716.7
|
| |
6,429.5
|
|
Cash
| |
159.8
| | |
161.7
|
|
Receivables from Policyholders
| |
337.2
| | |
332.4
|
|
Other Receivables
| |
192.7
| | |
193.2
|
|
Deferred Policy Acquisition Costs
| |
321.9
| | |
316.4
|
| Goodwill | |
323.0
| | |
323.0
|
|
Current and Deferred Income Tax Assets
| |
20.9
| | |
41.4
|
|
Other Assets
| |
233.7
|
| |
238.5
|
|
Total Assets
| |
$
|
8,305.9
|
| |
$
|
8,036.1
|
| Liabilities and Shareholders’ Equity: | | | | |
|
Insurance Reserves:
| | | | |
|
Life and Health
| |
$
|
3,376.2
| | |
$
|
3,341.0
|
|
Property and Casualty
| |
917.4
|
| |
862.8
|
|
Total Insurance Reserves
| |
4,293.6
|
| |
4,203.8
|
|
Unearned Premiums
| |
622.6
| | |
613.1
|
|
Liabilities for Income Taxes
| |
42.4
| | |
3.8
|
|
Debt at Amortized Cost
| |
751.1
| | |
750.6
|
|
Accrued Expenses and Other Liabilities
| |
491.0
|
| |
472.4
|
|
Total Liabilities
| |
6,200.7
|
| |
6,043.7
|
| Shareholders’ Equity: | | | | |
|
Common Stock
| |
5.1
| | |
5.1
|
| Paid-in Capital | |
654.6
| | |
654.0
|
|
Retained Earnings
| |
1,184.4
| | |
1,209.0
|
|
Accumulated Other Comprehensive Income
| |
261.1
|
| |
124.3
|
|
Total Shareholders’ Equity
| |
2,105.2
|
| |
1,992.4
|
|
Total Liabilities and Shareholders’ Equity
| |
$
|
8,305.9
|
| |
$
|
8,036.1
|
Unaudited selected financial information for the Property & Casualty
Insurance segment follows.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(Dollars in Millions)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
| | | | | | | |
|
Results of Operations |
|
Net Premiums Written
| |
$
|
404.7
|
| |
$
|
348.2
|
| |
$
|
808.1
|
| |
$
|
627.9
|
|
| | | | | | | |
|
|
Earned Premiums
| |
$
|
402.6
| | |
$
|
349.4
| | |
$
|
798.8
| | |
$
|
637.0
| |
|
Net Investment Income
| |
19.7
| | |
18.6
| | |
31.6
| | |
33.4
| |
|
Other Income
| |
0.1
|
| |
0.1
|
| |
0.3
|
| |
0.4
|
|
|
Total Revenues
| |
422.4
|
| |
368.1
|
| |
830.7
|
| |
670.8
|
|
|
Incurred Losses and LAE related to:
| | | | | | | | |
|
Current Year:
| | | | | | | | |
|
Non-catastrophe Losses and LAE
| |
309.2
| | |
245.5
| | |
606.6
| | |
444.0
| |
|
Catastrophe Losses and LAE
| |
49.1
| | |
35.4
| | |
86.6
| | |
45.7
| |
| Prior Years:
| | | | | | | | |
|
Non-catastrophe Losses and LAE
| |
(9.1
|
)
| |
(1.4
|
)
| |
(4.4
|
)
| |
(6.4
|
)
|
|
Catastrophe Losses and LAE
| |
(9.6
|
)
| |
(2.4
|
)
| |
(12.3
|
)
| |
(4.6
|
)
|
|
Total Incurred Losses and LAE
| |
339.6
| | |
277.1
| | |
676.5
| | |
478.7
| |
|
Insurance Expenses, Excluding Write-off of Long-lived Asset
| |
100.0
| | |
88.3
| | |
194.2
| | |
171.4
| |
|
Write-off of Long-lived Asset
| |
—
|
| |
11.1
|
| |
—
|
| |
11.1
|
|
|
Operating Profit (Loss)
| |
(17.2
|
)
| |
(8.4
|
)
| |
(40.0
|
)
| |
9.6
| |
|
Income Tax Benefit
| |
8.3
|
| |
5.8
|
| |
18.0
|
| |
1.2
|
|
|
Segment Net Operating Income (Loss)
| |
$
|
(8.9
|
)
| |
$
|
(2.6
|
)
| |
$
|
(22.0
|
)
| |
$
|
10.8
|
|
| | | | | | | |
|
Ratios Based On Earned Premiums |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
76.9
|
%
| |
70.3
|
%
| |
76.0
|
%
| |
69.6
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
12.2
| | |
10.1
| | |
10.8
| | |
7.2
| |
| Prior Years Non-catastrophe Losses and LAE Ratio
| |
(2.3
|
)
| |
(0.4
|
)
| |
(0.6
|
)
| |
(1.0
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(2.4
|
)
| |
(0.7
|
)
| |
(1.5
|
)
| |
(0.7
|
)
|
|
Total Incurred Loss and LAE Ratio
| |
84.4
| | |
79.3
| | |
84.7
| | |
75.1
| |
|
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset
| |
24.8
| | |
25.3
| | |
24.3
| | |
26.9
| |
|
Impact on Ratio from Write-off of Long-lived Asset
| |
—
|
| |
3.2
|
| |
—
|
| |
1.7
|
|
|
Combined Ratio
| |
109.2
|
%
| |
107.8
|
%
| |
109.0
|
%
| |
103.7
|
%
|
| | | | | | | |
|
Underlying Combined Ratio |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
76.9
|
%
| |
70.3
|
%
| |
76.0
|
%
| |
69.6
|
%
|
|
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset
| |
24.8
| | |
25.3
| | |
24.3
| | |
26.9
| |
|
Impact on Ratio from Write-off of Long-lived Asset
| |
—
|
| |
3.2
|
| |
—
|
| |
1.7
|
|
|
Underlying Combined Ratio
| |
101.7
|
%
| |
98.8
|
%
| |
100.3
|
%
| |
98.2
|
%
|
| | | | | | | |
|
Non-GAAP Measure Reconciliation |
|
Underlying Combined Ratio
| |
101.7
|
%
| |
98.8
|
%
| |
100.3
|
%
| |
98.2
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
12.2
| | |
10.1
| | |
10.8
| | |
7.2
| |
| Prior Years Non-catastrophe Losses and LAE Ratio
| |
(2.3
|
)
| |
(0.4
|
)
| |
(0.6
|
)
| |
(1.0
|
)
|
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(2.4
|
)
| |
(0.7
|
)
| |
(1.5
|
)
| |
(0.7
|
)
|
|
Combined Ratio as Reported
| |
109.2
|
%
| |
107.8
|
%
| |
109.0
|
%
| |
103.7
|
%
|
Unaudited selected financial information for the Life & Health
Insurance segment follows.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(Dollars in Millions)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
| | | | | | | |
|
Results of Operations |
| | | | | | | |
|
|
Earned Premiums
| |
$
|
151.1
| | |
$
|
150.7
| | |
$
|
300.9
| | |
$
|
294.4
| |
|
Net Investment Income
| | |
50.1
| | | |
53.5
| | | |
105.1
| | | |
103.9
| |
|
Other Income
| |
|
0.6
|
| |
|
0.2
|
| |
|
1.2
|
| |
|
1.0
|
|
|
Total Revenues
| |
|
201.8
|
| |
|
204.4
|
| |
|
407.2
|
| |
|
399.3
|
|
|
Policyholders’ Benefits and Incurred Losses and LAE
| | |
96.5
| | | |
98.0
| | | |
195.8
| | | |
194.1
| |
|
Insurance Expenses
| |
|
80.0
|
| |
|
84.2
|
| |
|
155.1
|
| |
|
158.2
|
|
|
Operating Profit
| | |
25.3
| | | |
22.2
| | | |
56.3
| | | |
47.0
| |
|
Income Tax Expense
| |
|
(8.9
|
)
| |
|
(7.9
|
)
| |
|
(19.6
|
)
| |
|
(16.6
|
)
|
|
Segment Net Operating Income
| |
$
|
16.4
|
| |
$
|
14.3
|
| |
$
|
36.7
|
| |
$
|
30.4
|
|
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 six months ended June 30, 2016
and 2015 is presented below.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(Dollars in Millions) (Unaudited)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
|
Consolidated Net Operating Income
| |
$
|
4.6
| | |
$
|
6.7
| | |
$
|
4.0
| | |
$
|
28.5
| |
|
Net Income (Loss) From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
3.7
| | |
22.1
| | |
8.1
| | |
24.3
| |
|
Net Impairment Losses Recognized in Earnings
| |
(4.2
|
)
| |
(1.4
|
)
| |
(10.2
|
)
| |
(6.0
|
)
|
|
Loss from Early Extinguishment of Debt
| |
—
|
| |
—
|
| |
—
|
| |
(5.9
|
)
|
|
Income from Continuing Operations
| |
$
|
4.1
|
| |
$
|
27.4
|
| |
$
|
1.9
|
| |
$
|
40.9
|
|
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 six months ended June 30, 2016 and
2015 is presented below.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
(Unaudited)
| | Jun 30,
2016
|
| Jun 30,
2015
| | Jun 30,
2016
|
| Jun 30,
2015
|
|
Diluted Consolidated Net Operating Income Per Unrestricted Share
| |
$
|
0.09
| | |
$
|
0.13
| | |
$
|
0.08
| | |
$
|
0.55
| |
|
Net Income (Loss) Per Unrestricted Share From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
0.07
| | |
0.43
| | |
0.16
| | |
0.47
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.08
|
)
| |
(0.03
|
)
| |
(0.20
|
)
| |
(0.12
|
)
|
|
Loss from Early Extinguishment of Debt
| |
—
|
| |
—
|
| |
—
|
| |
(0.11
|
)
|
|
Diluted Income from Continuing Operations Per Unrestricted Share
| |
$
|
0.08
|
| |
$
|
0.53
|
| |
$
|
0.04
|
| |
$
|
0.79
|
|
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 June 30, 2016 and December 31, 2015 is presented
below.
|
(Dollars in Millions) (Unaudited)
|
| Jun 30,
2016
|
| Dec 31,
2015
|
|
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed
Maturities
| |
$
|
1,778.2
| | |
$
|
1,803.2
|
|
Net Unrealized Gains on Fixed Maturities
| |
327.0
|
| |
189.2
|
|
Shareholders’ Equity
| |
$
|
2,105.2
|
| |
$
|
1,992.4
|
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 the write-off of long-lived asset)
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 (including the
write-off of long-lived asset) 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 second quarter 2016 results in a conference call
on Friday, August 5, 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 August 19, 2016 at 855.859.2056
using conference ID number 47083193.
More detailed financial information can be found in Kemper’s Investor
Financial Supplement for the second quarter of 2016, 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/20160804006206/en/
Kemper Corporation
Investors:
Diana Hickert-Hill, 312.661.4930
investors@kemper.com
Source: Kemper Corporation