- Increased Property & Casualty earned premiums by 11 percent, or $44
million in the quarter and 8 percent, or $121 million in the year
- Improved nonstandard personal automobile’s underlying combined
ratio 4.3 percentage points in the quarter and 9.9 percentage points
in the year
- Generated investment portfolio pre-tax equivalent annualized book
yield of 5.5 percent in the quarter and 5.4 percent in the year
- Recognized $7.4 million benefit from the Tax Cuts and Jobs Act of
2017
CHICAGO--(BUSINESS WIRE)--
Kemper Corporation (NYSE: KMPR)
reported net income of $36.9 million, or $0.71 per diluted share, for
the fourth quarter of 2017, compared to $31.2 million, or $0.60 per
share, for the fourth quarter of 2016. Consolidated net operating income1
was $31.0 million, or $0.60 per diluted share, for the fourth quarter of
2017, compared to $28.8 million, or $0.56 per share, for the fourth
quarter of 2016. Net operating results increased primarily from improved
underlying performance in the Property & Casualty division and the
impact of tax reform, mostly offset by higher catastrophe losses.
|
|
Three Months Ended
|
|
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions, Except Per Share Amounts) (Unaudited)
| |
2017
| |
2016
| |
2017
| |
2016
|
|
Consolidated Net Operating Income1 | |
$
|
31.0
| | |
$
|
28.8
| | |
$
|
92.5
| | |
$
|
12.4
| |
|
Income from Continuing Operations
| |
35.9
| | |
29.1
| | |
119.9
| | |
12.7
| |
|
Net Income
| |
36.9
| | |
31.2
| | |
120.9
| | |
16.8
| |
| | | | | | | |
|
| Impact of Catastrophe Losses and Related Loss Adjustment Expense
(LAE) on Net Income (Loss) | | $ | (33.0 | ) | | $ | (8.2 | ) | | $ | (120.2 | ) | | $ | (74.8 | ) |
| | | | | | | |
|
|
Diluted Net Income Per Share From:
| | | | | | | | |
|
Consolidated Net Operating Income1 | |
$
|
0.60
| | |
$
|
0.56
| | |
$
|
1.78
| | |
$
|
0.25
| |
|
Continuing Operations
| |
0.69
| | |
0.56
| | |
2.31
| | |
0.25
| |
|
Net Income
| |
0.71
| | |
0.60
| | |
2.33
| | |
0.33
| |
| | | | | | | |
|
| Impact of Catastrophe Losses and Related LAE on Net Income Per
Share | | $ | (0.64 | ) | | $ | (0.16 | ) | | $ | (2.32 | ) | | $ | (1.45 | ) |
1Consolidated net operating income is an after-tax, non-GAAP
financial measure. See “Use of Non-GAAP Financial Measures” for
additional information.
“Kemper’s solid performance this quarter demonstrates meaningful
progress on execution of our strategy to rebuild Kemper and deliver
value for our stakeholders,” said Joseph P. Lacher, Jr., Kemper’s
President and Chief Executive Officer. “The strength of our nonstandard
auto franchise was evident this quarter with earned premium growth of
over 20 percent and improved profitability. Though the industry was hard
hit by catastrophe losses from the California wildfires in the fourth
quarter, the impact was more than offset by our underwriting
improvements and solid investment results.”
Capital
Total Shareholders’ Equity at the end of the year was $2,115.6 million,
an increase of $140.4 million, or 7 percent, since year-end 2016. Kemper
ended the year with cash and investments at the holding company of
$197.3 million, and the $225 million revolving credit agreement was
undrawn.
During the fourth quarter of 2017, Kemper paid dividends of $12.4
million, bringing total capital returned to shareholders in 2017 to
$49.5 million.
Kemper ended the year with a book value per share of $41.11, up 7
percent from $38.52 at the end of 2016, driven by net income and the
impact of lower market yields on the value of our fixed maturity
portfolio, partially offset by dividends paid to shareholders. Book
value per share excluding net unrealized gains on fixed maturities was
$35.57, up 2 percent from $35.00 at the end of 2016, driven by net
income, partially offset by dividends paid to shareholders and the tax
reform impact on unrealized gains.
Revenues
Total revenues for the fourth quarter of 2017 increased $54.6 million,
or 8 percent, to $697.3 million, compared to the fourth quarter of 2016,
driven by $47.2 million higher nonstandard personal auto earned
premiums. Nonstandard personal auto earned premiums increased from both
higher policies in force and higher premium rates. Net investment income
increased $2.7 million to $82.6 million in the fourth quarter of 2017,
primarily from $1.9 million higher net investment income on the
alternative investments portfolio. Net realized investment gains were
$7.7 million in the fourth quarter of 2017, compared to $0.4 million
last year.
The investment portfolio in total generated a pre-tax equivalent
annualized book yield of 5.5 percent for the fourth quarter of 2017, and
5.4 percent for the year, compared to 5.4 percent and 5.1 percent,
respectively, in 2016.
Segment Results
Unless otherwise noted, (i) the segment results discussed below are
presented on an after-tax basis, (ii) prior-year development includes
both catastrophe and non-catastrophe losses and LAE, (iii) catastrophe
losses and LAE exclude the impact of prior-year development, (iv)
underlying loss ratio includes loss and LAE, and (v) all comparisons are
made to the prior year quarter unless otherwise stated.
|
|
Three Months Ended
|
|
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2017
| |
2016
| |
2017
| |
2016
|
|
Segment Net Operating Income (Loss):
| | | | | | | | |
| Property & Casualty Insurance | |
$
|
2.1
| | |
$
|
7.0
| | |
$
|
7.8
| | |
$
|
(2.9
|
)
|
| Life & Health Insurance | |
25.3
|
| |
23.0
|
| |
90.8
|
| |
30.3
|
|
|
Total Segment Net Operating Income (Loss)
| |
27.4
| | |
30.0
| | |
98.6
| | |
27.4
| |
|
Corporate and Other Net Operating Income (Loss)
| |
3.6
|
| |
(1.2
|
)
| |
(6.1
|
)
| |
(15.0
|
)
|
|
Consolidated Net Operating Income
| |
31.0
| | |
28.8
| | |
92.5
| | |
12.4
| |
|
Net Income (Loss) From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
7.4
| | |
5.9
| | |
36.7
| | |
21.5
| |
|
Net Impairment Losses Recognized in Earnings
| |
(2.5
|
)
| |
(5.6
|
)
| |
(9.3
|
)
| |
(21.2
|
)
|
|
Income from Continuing Operations
| |
$
|
35.9
|
| |
$
|
29.1
|
| |
$
|
119.9
|
| |
$
|
12.7
|
|
The Property & Casualty Insurance segment reported net operating income
of $2.1 million in the fourth quarter of 2017, compared to $7.0 million
in 2016. Results decreased primarily from higher catastrophe losses,
driven by the California wildfires, partially offset by improved
underlying performance and slightly higher net investment income.
Catastrophe losses were $33.0 million in the fourth quarter of 2017,
compared to $7.6 million last year.
The Property & Casualty Insurance segment’s underlying combined ratio
improved 6.3 percentage points to 93.3 percent in the fourth quarter of
2017. The underlying loss ratio improved 3.7 percentage points to 72.2
percent, primarily from improvement in nonstandard personal auto,
homeowners and preferred personal auto. Nonstandard auto improved 3.4
percentage points to 79.3 percent in the quarter, as average earned
premium outpaced loss cost trends. The homeowners underlying loss ratio
improved 7.8 percentage points to 40.3 percent. About half of the
improvement was related to adverse current-year development in 2016,
that did not recur in 2017. The remaining improvement came from lower
frequency and slightly higher average earned premiums, partially offset
by higher severity. Preferred personal auto’s underlying loss ratio
improved 4.2 percentage points to 76.2 percent, driven by the impact of
adverse current-year development in 2016. Excluding current-year
development, the preferred personal auto underlying loss ratio increased
slightly as higher severity, mostly from liability coverages,
overshadowed improved frequency and higher average earned premium.
The Property & Casualty Insurance segment’s expense ratio improved 2.6
percentage points as a larger percentage of earned premiums were
generated by the nonstandard auto business, which runs at a lower
expense ratio. The larger premium base and cost initiatives also
contributed to the improvement.
The Life & Health Insurance segment reported net operating income of
$25.3 million for the fourth quarter of 2017, compared to $23.0 million
in 2016, primarily from higher net investment income.
The Corporate & Other net operating results improved $4.8 million,
primarily from the impacts of tax reform and lower expenses, partially
offset by lower net investment income.
Unaudited condensed consolidated statements of operations for
the three months and year ended December 31, 2017 and 2016 are
presented below. |
|
| |
| |
| |
Three Months Ended
| |
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions, Except Per Share Amounts)
| |
2017
| |
2016
| |
2017
| |
2016
|
| Revenues: | | | | | | | | |
|
Earned Premiums
| |
$
|
605.9
| | |
$
|
561.4
| | |
$
|
2,350.0
| | |
$
|
2,220.0
| |
|
Net Investment Income
| |
82.6
| | |
79.9
| | |
327.2
| | |
298.3
| |
|
Other Income
| |
1.1
| | |
1.0
| | |
4.0
| | |
3.2
| |
|
Net Realized Gains on Sales of Investments
| |
11.5
| | |
9.1
| | |
56.5
| | |
33.1
| |
|
Other-than-temporary Impairment Losses:
| | | | | | | | |
|
Total Other-than-temporary Impairment Losses
| |
(3.7
|
)
| |
(8.7
|
)
| |
(14.4
|
)
| |
(33.0
|
)
|
|
Portion of Losses Recognized in Other Comprehensive Income
| |
(0.1
|
)
| |
—
|
| |
0.1
|
| |
0.3
|
|
|
Net Impairment Losses Recognized in Earnings
| |
(3.8
|
)
| |
(8.7
|
)
| |
(14.3
|
)
| |
(32.7
|
)
|
| Total Revenues | |
697.3
|
| |
642.7
|
| |
2,723.4
|
| |
2,521.9
|
|
| Expenses: | | | | | | | | |
|
Policyholders’ Benefits and Incurred Losses and Loss Adjustment
Expenses
| |
472.5
| | |
418.3
| | |
1,837.4
| | |
1,780.8
| |
|
Insurance Expenses
| |
159.1
| | |
158.5
| | |
644.3
| | |
647.3
| |
|
Interest and Other Expenses
| |
21.5
|
| |
25.3
|
| |
80.6
|
| |
90.3
|
|
| Total Expenses | |
653.1
|
| |
602.1
|
| |
2,562.3
|
| |
2,518.4
|
|
|
Income from Continuing Operations before Income Taxes
| |
44.2
| | |
40.6
| | |
161.1
| | |
3.5
| |
|
Income Tax Benefit (Expense)
| |
(8.3
|
)
| |
(11.5
|
)
| |
(41.2
|
)
| |
9.2
|
|
| Income from Continuing Operations | |
35.9
| | |
29.1
| | |
119.9
| | |
12.7
| |
|
Income from Discontinued Operations
| |
1.0
|
| |
2.1
|
| |
1.0
|
| |
4.1
|
|
| Net Income | |
$
|
36.9
|
| |
$
|
31.2
|
| |
$
|
120.9
|
| |
$
|
16.8
|
|
| | | | | | | |
|
| Income from Continuing Operations Per Unrestricted Share: | | | | | | | | |
|
Basic
| |
$
|
0.69
|
| |
$
|
0.56
|
| |
$
|
2.32
|
| |
$
|
0.25
|
|
|
Diluted
| |
$
|
0.69
|
| |
$
|
0.56
|
| |
$
|
2.31
|
| |
$
|
0.25
|
|
| | | | | | | |
|
| Net Income Per Unrestricted Share: | | | | | | | | |
|
Basic
| |
$
|
0.71
|
| |
$
|
0.60
|
| |
$
|
2.34
|
| |
$
|
0.33
|
|
|
Diluted
| |
$
|
0.71
|
| |
$
|
0.60
|
| |
$
|
2.33
|
| |
$
|
0.33
|
|
| | | | | | | |
|
| Weighted-average Outstanding (Shares in Thousands): | | | | | | | | |
|
Unrestricted Shares - Basic
| |
51,456.3
|
| |
51,202.6
|
| |
51,345.6
|
| |
51,156.1
|
|
|
Unrestricted Shares and Equivalent Shares - Diluted
| |
51,870.8
|
| |
51,350.4
|
| |
51,577.9
|
| |
51,214.7
|
|
| | | | | | | |
|
| Dividends Paid to Shareholders Per Share | |
$
|
0.24
|
| |
$
|
0.24
|
| |
$
|
0.96
|
| |
$
|
0.96
|
|
Unaudited business segment revenues for the three months and
year ended December 31, 2017 and 2016 are presented below. |
|
| |
| |
| |
Three Months Ended
| |
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions)
| |
2017
| |
2016
| |
2017
| |
2016
|
| REVENUES: | | | | | | | | |
| Property & Casualty Insurance: | | | | | | | | |
|
Earned Premiums:
| | | | | | | | |
|
Personal Automobile
| |
$
|
364.3
| | |
$
|
317.2
| | |
$
|
1,377.1
| | |
$
|
1,244.6
| |
|
Homeowners
| |
65.2
| | |
67.7
| | |
264.8
| | |
271.9
| |
|
Other Personal
| |
10.5
|
| |
11.1
|
| |
42.7
|
| |
45.0
|
|
|
Total Personal
| |
440.0
| | |
396.0
| | |
1,684.6
| | |
1,561.5
| |
|
Commercial Automobile
| |
12.9
|
| |
13.1
|
| |
51.4
|
| |
53.3
|
|
|
Total Earned Premiums
| |
452.9
| | |
409.1
| | |
1,736.0
| | |
1,614.8
| |
|
Net Investment Income
| |
21.8
| | |
20.4
| | |
94.3
| | |
72.4
| |
|
Other Income
| |
0.2
|
| |
0.1
|
| |
1.1
|
| |
0.5
|
|
| Total Property & Casualty Insurance | |
474.9
|
| |
429.6
|
| |
1,831.4
|
| |
1,687.7
|
|
| Life & Health Insurance: | | | | | | | | |
|
Earned Premiums:
| | | | | | | | |
|
Life
| |
94.1
| | |
95.9
| | |
379.7
| | |
381.6
| |
|
Accident and Health
| |
41.1
| | |
38.2
| | |
161.7
| | |
149.4
| |
|
Property
| |
17.8
|
| |
18.2
|
| |
72.6
|
| |
74.2
|
|
|
Total Earned Premiums
| |
153.0
| | |
152.3
| | |
614.0
| | |
605.2
| |
|
Net Investment Income
| |
57.7
| | |
53.6
| | |
221.5
| | |
213.2
| |
|
Other Income
| |
0.7
|
| |
0.9
|
| |
2.6
|
| |
2.8
|
|
| Total Life & Health Insurance | |
211.4
|
| |
206.8
|
| |
838.1
|
| |
821.2
|
|
| Total Segment Revenues | |
686.3
| | |
636.4
| | |
2,669.5
| | |
2,508.9
| |
|
Net Realized Gains on Sales of Investments
| |
11.5
| | |
9.1
| | |
56.5
| | |
33.1
| |
|
Net Impairment Losses Recognized in Earnings
| |
(3.8
|
)
| |
(8.7
|
)
| |
(14.3
|
)
| |
(32.7
|
)
|
|
Other
| |
3.3
|
| |
5.9
|
| |
11.7
|
| |
12.6
|
|
| Total Revenues | |
$
|
697.3
|
| |
$
|
642.7
|
| |
$
|
2,723.4
|
| |
$
|
2,521.9
|
|
| KEMPER CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Dollars in Millions) |
|
| Dec 31,
|
| Dec 31,
|
| |
2017
| |
2016
|
| Assets: | |
(Unaudited)
| | |
|
Investments:
| | | | |
|
Fixed Maturities at Fair Value
| |
$
|
5,382.7
| | |
$
|
5,124.9
|
| Equity Securities at Fair Value
| |
526.0
| | |
481.7
|
|
Equity Method Limited Liability Investments at Cost Plus Cumulative
Undistributed Earnings
| |
161.0
| | |
175.9
|
|
Fair Value Option Investments
| |
77.5
| | |
111.4
|
|
Short-term Investments at Cost which Approximates Fair Value
| |
235.5
| | |
273.7
|
|
Other Investments
| |
422.2
|
| |
439.9
|
|
Total Investments
| |
6,804.9
|
| |
6,607.5
|
|
Cash
| |
45.7
| | |
115.7
|
|
Receivables from Policyholders
| |
366.0
| | |
336.5
|
|
Other Receivables
| |
194.3
| | |
198.6
|
|
Deferred Policy Acquisition Costs
| |
365.3
| | |
332.0
|
| Goodwill | |
323.0
| | |
323.0
|
|
Current Income Tax Assets
| |
6.1
| | |
15.5
|
|
Deferred Income Tax Assets
| |
—
| | |
25.8
|
|
Other Assets
| |
270.9
|
| |
255.9
|
|
Total Assets
| |
$
|
8,376.2
|
| |
$
|
8,210.5
|
| Liabilities and Shareholders’ Equity: | | | | |
|
Insurance Reserves:
| | | | |
|
Life and Health
| |
$
|
3,521.0
| | |
$
|
3,475.3
|
|
Property and Casualty
| |
1,016.8
|
| |
931.4
|
|
Total Insurance Reserves
| |
4,537.8
|
| |
4,406.7
|
|
Unearned Premiums
| |
653.9
| | |
618.7
|
|
Deferred Income Tax Liabilities
| |
14.8
| | |
—
|
|
Liabilities for Unrecognized Tax Benefits
| |
8.1
| | |
5.1
|
|
Long-term Debt, Current and Non-current, at Amortized Cost
| |
592.3
| | |
751.6
|
|
Accrued Expenses and Other Liabilities
| |
453.7
|
| |
453.2
|
|
Total Liabilities
| |
6,260.6
|
| |
6,235.3
|
| Shareholders’ Equity: | | | | |
|
Common Stock
| |
5.1
| | |
5.1
|
| Paid-in Capital | |
673.1
| | |
660.3
|
|
Retained Earnings
| |
1,243.0
| | |
1,172.8
|
|
Accumulated Other Comprehensive Income
| |
194.4
|
| |
137.0
|
|
Total Shareholders’ Equity
| |
2,115.6
|
| |
1,975.2
|
|
Total Liabilities and Shareholders’ Equity
| |
$
|
8,376.2
|
| |
$
|
8,210.5
|
Unaudited selected financial information for the Property &
Casualty Insurance segment follows. |
|
| |
| |
| |
Three Months Ended
| |
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions)
| |
2017
| |
2016
| |
2017
| |
2016
|
Results of Operations |
|
Net Premiums Written
| |
$
|
433.3
|
| |
$
|
390.1
|
| |
$
|
1,769.6
|
| |
$
|
1,620.9
|
|
| | | | | | | |
|
|
Earned Premiums
| |
$
|
452.9
| | |
$
|
409.1
| | |
$
|
1,736.0
| | |
$
|
1,614.8
| |
|
Net Investment Income
| |
21.8
| | |
20.4
| | |
94.3
| | |
72.4
| |
|
Other Income
| |
0.2
|
| |
0.1
|
| |
1.1
|
| |
0.5
|
|
|
Total Revenues
| |
474.9
|
| |
429.6
|
| |
1,831.4
|
| |
1,687.7
|
|
|
Incurred Losses and LAE related to:
| | | | | | | | |
|
Current Year:
| | | | | | | | |
|
Non-catastrophe Losses and LAE
| |
327.0
| | |
310.6
| | |
1,251.5
| | |
1,223.9
| |
|
Catastrophe Losses and LAE
| |
50.8
| | |
11.7
| | |
179.0
| | |
109.6
| |
| Prior Years:
| | | | | | | | |
|
Non-catastrophe Losses and LAE
| |
1.5
| | |
6.2
| | |
24.5
| | |
4.9
| |
|
Catastrophe Losses and LAE
| |
(0.6
|
)
| |
(3.0
|
)
| |
(5.0
|
)
| |
(19.2
|
)
|
|
Total Incurred Losses and LAE
| |
378.7
| | |
325.5
| | |
1,450.0
| | |
1,319.2
| |
|
Insurance Expenses
| |
95.4
|
| |
96.9
|
| |
382.8
|
| |
385.7
|
|
|
Operating Income (Loss)
| |
0.8
| | |
7.2
| | |
(1.4
|
)
| |
(17.2
|
)
|
|
Income Tax Benefit (Expense)
| |
1.3
|
| |
(0.2
|
)
| |
9.2
|
| |
14.3
|
|
|
Segment Net Operating Income (Loss)
| |
$
|
2.1
|
| |
$
|
7.0
|
| |
$
|
7.8
|
| |
$
|
(2.9
|
)
|
| | | | | | | |
|
Ratios Based On Earned Premiums |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
72.2
|
%
| |
75.9
|
%
| |
72.1
|
%
| |
75.8
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
11.2
| | |
2.9
| | |
10.3
| | |
6.8
| |
| Prior Years Non-catastrophe Losses and LAE Ratio
| |
0.3
| | |
1.5
| | |
1.4
| | |
0.3
| |
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(0.1
|
)
| |
(0.7
|
)
| |
(0.3
|
)
| |
(1.2
|
)
|
|
Total Incurred Loss and LAE Ratio
| |
83.6
| | |
79.6
| | |
83.5
| | |
81.7
| |
|
Insurance Expense Ratio
| |
21.1
|
| |
23.7
|
| |
22.1
|
| |
23.9
|
|
|
Combined Ratio
| |
104.7
|
%
| |
103.3
|
%
| |
105.6
|
%
| |
105.6
|
%
|
| | | | | | | |
|
Underlying Combined Ratio |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
72.2
|
%
| |
75.9
|
%
| |
72.1
|
%
| |
75.8
|
%
|
|
Insurance Expense Ratio
| |
21.1
|
| |
23.7
|
| |
22.1
|
| |
23.9
|
|
|
Underlying Combined Ratio
| |
93.3
|
%
| |
99.6
|
%
| |
94.2
|
%
| |
99.7
|
%
|
| | | | | | | |
|
Non-GAAP Measure Reconciliation |
|
Underlying Combined Ratio
| |
93.3
|
%
| |
99.6
|
%
| |
94.2
|
%
| |
99.7
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
11.2
| | |
2.9
| | |
10.3
| | |
6.8
| |
| Prior Years Non-catastrophe Losses and LAE Ratio
| |
0.3
| | |
1.5
| | |
1.4
| | |
0.3
| |
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(0.1
|
)
| |
(0.7
|
)
| |
(0.3
|
)
| |
(1.2
|
)
|
|
Combined Ratio as Reported
| |
104.7
|
%
| |
103.3
|
%
| |
105.6
|
%
| |
105.6
|
%
|
Unaudited selected financial information for the Life & Health
Insurance segment follows. |
|
| |
| |
| |
Three Months Ended
| |
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions)
| |
2017
| |
2016
| |
2017
| |
2016
|
Results of Operations |
|
Earned Premiums
| |
$
|
153.0
| | |
$
|
152.3
| | |
$
|
614.0
| | |
$
|
605.2
| |
|
Net Investment Income
| |
57.7
| | |
53.6
| | |
221.5
| | |
213.2
| |
|
Other Income
| |
0.7
|
| |
0.9
|
| |
2.6
|
| |
2.8
|
|
|
Total Revenues
| |
211.4
|
| |
206.8
|
| |
838.1
|
| |
821.2
|
|
|
Policyholders’ Benefits and Incurred Losses and LAE
| |
93.8
| | |
92.8
| | |
387.4
| | |
461.6
| |
|
Insurance Expenses
| |
78.9
|
| |
78.9
|
| |
312.2
|
| |
313.9
|
|
|
Operating Profit
| |
38.7
| | |
35.1
| | |
138.5
| | |
45.7
| |
|
Income Tax Benefit
| |
(13.4
|
)
| |
(12.1
|
)
| |
(47.7
|
)
| |
(15.4
|
)
|
|
Segment Net Operating Income
| |
$
|
25.3
|
| |
$
|
23.0
|
| |
$
|
90.8
|
| |
$
|
30.3
|
|
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 months and year ended December 31,
2017 and 2016 is presented below.
|
|
Three Months Ended
|
|
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2017
| |
2016
| |
2017
| |
2016
|
|
Consolidated Net Operating Income
| |
$
|
31.0
| | |
$
|
28.8
| | |
$
|
92.5
| | |
$
|
12.4
| |
|
Net Income (Loss) From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
7.4
| | |
5.9
| | |
36.7
| | |
21.5
| |
|
Net Impairment Losses Recognized in Earnings
| |
(2.5
|
)
| |
(5.6
|
)
| |
(9.3
|
)
| |
(21.2
|
)
|
|
Income from Continuing Operations
| |
$
|
35.9
|
| |
$
|
29.1
|
| |
$
|
119.9
|
| |
$
|
12.7
|
|
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 months and year ended December 31, 2017
and 2016 is presented below.
|
|
Three Months Ended
|
|
Year Ended
|
| | Dec 31,
|
| Dec 31,
| | Dec 31,
|
| Dec 31,
|
|
(Unaudited)
| |
2017
| |
2016
| |
2017
| |
2016
|
|
Diluted Consolidated Net Operating Income Per Unrestricted Share
| |
$
|
0.60
| | |
$
|
0.56
| | |
$
|
1.78
| | |
$
|
0.25
| |
|
Net Income (Loss) Per Unrestricted Share From:
| | | | | | | | |
|
Net Realized Gains on Sales of Investments
| |
0.14
| | |
0.11
| | |
0.71
| | |
0.41
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.05
|
)
| |
(0.11
|
)
| |
(0.18
|
)
| |
(0.41
|
)
|
|
Diluted Income from Continuing Operations Per Unrestricted Share
| |
$
|
0.69
|
| |
$
|
0.56
|
| |
$
|
2.31
|
| |
$
|
0.25
|
|
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 trends in book value
per share, excluding the after-tax impact of net unrealized gains on
fixed income securities, in conjunction with book value per share to
identify and analyze the change in net worth attributable to management
efforts between periods. Kemper believes the non-GAAP financial measure
is useful to investors because it eliminates the effect of items that
can fluctuate significantly from period to period and are generally
driven by economic developments, primarily capital market conditions,
the magnitude and timing of which are not influenced by management.
Kemper believes it enhances understanding and comparability of
performance by highlighting underlying business activity and
profitability drivers.
A reconciliation of the numerator used in the computation of Book Value
Per Share Excluding Net Unrealized Gains on Fixed Maturities and Book
Value Per Share at December 31, 2017 and December 31, 2016 is presented
below.
|
| Dec 31,
|
| Dec 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2017
| |
2016
|
|
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed
Maturities
| |
$
|
1,830.4
| | |
$
|
1,794.6
|
|
Net Unrealized Gains on Fixed Maturities
| |
285.2
|
| |
180.6
|
|
Shareholders’ Equity
| |
$
|
2,115.6
|
| |
$
|
1,975.2
|
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 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 fourth quarter 2017 results in a conference call
on Wednesday, February 14, at 8:30 a.m. Eastern (7:30 a.m. Central)
Time. Kemper’s conference call will be accessible via the internet and
by telephone. The phone number for Kemper’s conference call is 844.826.3041.
To listen via webcast, register online at the investor
section of kemper.com at least 15 minutes prior to the webcast to
download and install any necessary software.
A replay of the call will be available online at the investor
section of kemper.com.
More detailed financial information can be found in Kemper’s Investor
Financial Supplement and Earnings Call Presentation for the fourth
quarter of 2017, 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 5,550 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/20180213006262/en/
Kemper Corporation
Investors:
Todd Barton
312.661.4930
investors@kemper.com
or
Media:
Barbara
Ciesemier
312.661.4521
media@kemper.com
Source: Kemper Corporation