- Increased Property & Casualty earned premiums by 11 percent, or $45
million in the quarter
- Improved nonstandard personal automobile’s underlying combined
ratio 4.7 percentage points in the quarter
- Generated investment portfolio pre-tax equivalent annualized book
yield of 5.0 percent in the quarter
CHICAGO--(BUSINESS WIRE)--
Kemper Corporation (NYSE: KMPR)
reported net income of $53.8 million, or $1.02 per diluted share, for
the first quarter of 2018, compared to a loss of $0.3 million, or $0.01
per diluted share, for the first quarter of 2017. Adjusted consolidated
net operating income1 was $57.5 million, or $1.10 per diluted
share, for the first quarter of 2018, compared to a loss of $3.9
million, or $0.08 per diluted share, for the first quarter of 2017.
These results increased primarily from a lower level of catastrophe
losses and improved underlying performance in the Property & Casualty
division.
“Our transformation continues as our results indicate we’re increasing
the value we deliver to our stakeholders,” said Joseph P. Lacher, Jr.,
Kemper’s President and Chief Executive Officer. “This quarter was
highlighted by sustained growth in our nonstandard auto franchise, where
earned premiums grew 23 percent while improving underwriting margins.
Our pending acquisition of Infinity Property and Casualty will further
increase our scale and improve our ability to provide valuable products
at reasonable prices to better serve our combined customer base.”
|
| |
| |
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions, Except Per Share Amounts) (Unaudited)
| |
2018
| |
2017
|
|
Adjusted Consolidated Net Operating Income (Loss)1 | |
$
|
57.5
| | |
$
|
(3.9
|
)
|
|
Income (Loss) from Continuing Operations
| |
53.6
| | |
(0.4
|
)
|
|
Net Income (Loss)
| |
53.8
| | |
(0.3
|
)
|
| | | |
|
| Impact of Catastrophe Losses and Related Loss Adjustment Expense
(LAE) on Net Income (Loss) | | $ | (6.1 | ) | | $ | (42.7 | ) |
| | | |
|
|
Diluted Net Income (Loss) Per Share From:
| | | | |
|
Adjusted Consolidated Net Operating Income (Loss)1 | |
$
|
1.10
| | |
$
|
(0.08
|
)
|
|
Income (Loss) from Continuing Operations
| |
1.02
| | |
(0.01
|
)
|
|
Net Income (Loss)
| |
1.02
| | |
(0.01
|
)
|
| | | |
|
| Impact of Catastrophe Losses and Related LAE on Net Income (Loss)
Per Share | | $ | (0.12 | ) | | $ | (0.83 | ) |
| | | | | | | |
|
| 1 Adjusted consolidated net operating income is an
after-tax, non-GAAP financial measure. See “Use of Non-GAAP
Financial Measures” for additional information.
| | | | | | | | |
| | | | | | | |
|
Capital
Total Shareholders’ Equity at the end of the quarter was $2,063.8
million, a decrease of $51.8 million, or 2 percent, since year-end 2017
driven by the impact of higher market yields on the value of our fixed
maturity portfolio, partially offset by net income. Kemper ended the
year with cash and investments at the holding company of $184.4 million,
and the $225 million revolving credit agreement was undrawn.
During the first quarter of 2018, Kemper paid dividends of $12.5 million.
Kemper ended the quarter with a book value per share of $40.05, down 3
percent from $41.11 at the end of 2017. Book value per share excluding
net unrealized gains on fixed maturities was $36.35, up 2 percent from
$35.57 at the end of 2017, driven by net income, partially offset by
dividends paid to shareholders.
Revenues
Total revenues for the first quarter of 2018 increased $41.6 million, or
6 percent, to $693.0 million, compared to the first quarter of 2017,
driven by $49.8 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
decreased $2.4 million to $79.2 million in the first quarter of 2018,
primarily from $4.3 million lower net investment income on the
alternative investments portfolio. Net realized investment gains were
$2.6 million in the first quarter of 2018, compared to $10.5 million
last year.
The investment portfolio in total generated a pre-tax equivalent
annualized book yield of 5.0 percent for the first quarter of 2018,
compared to 5.4 percent in 2017.
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
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2018
| |
2017
|
|
Segment Net Operating Income (Loss):
| | | | |
| Property & Casualty Insurance | |
$
|
36.0
| | |
$
|
(22.1
|
)
|
| Life & Health Insurance | |
23.8
|
| |
21.5
|
|
|
Total Segment Net Operating Income (Loss)
| |
59.8
| | |
(0.6
|
)
|
|
Corporate and Other Net Operating Income (Loss)
| |
(2.3
|
)
| |
(3.3
|
)
|
|
Adjusted Consolidated Net Operating Income (Loss)
| |
57.5
| | |
(3.9
|
)
|
|
Net Income (Loss) From:
| | | | |
|
Change in Fair Value of Equity Securities | |
0.6
| | |
—
| |
|
Net Realized Gains on Sales of Investments
| |
2.1
| | |
6.8
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.4
|
)
| |
(3.3
|
)
|
|
Acquisition Related Transaction and Integration Costs
| |
(6.2
|
)
| |
—
|
|
|
Income (Loss) from Continuing Operations
| |
$
|
53.6
|
| |
$
|
(0.4
|
)
|
| | | | | | | |
|
The Property & Casualty Insurance segment reported net operating income
of $36.0 million in the first quarter of 2018, compared to a loss of
$22.1 million in 2017. Results increased primarily from lower
catastrophe losses, a favorable change in loss and LAE reserve
development and strong nonstandard personal auto growth and
profitability. Catastrophe losses were $6.1 million in the first quarter
of 2018, compared to $42.7 million last year.
The Property & Casualty Insurance segment’s underlying combined ratio
improved 2.7 percentage points to 94.1 percent in the first quarter of
2018. The underlying loss ratio improved 1.9 percentage points to 71.8
percent, primarily from improvement in nonstandard personal auto and
preferred personal auto partially offset by the performance of
homeowners. Nonstandard auto improved 5.3 percentage points to 76.2
percent in the quarter, as average earned premium outpaced loss cost
trends. Preferred personal auto’s underlying loss ratio improved 3.6
percentage points to 70.1 percent, driven by improved frequency and
higher average earned premium slightly offset by higher severity. The
homeowners underlying loss ratio increased 6.1 percentage points to 57.0
percent. About a third of the increase was related to the cost of our
aggregate catastrophe program which will help reduce the volatility of
our earnings.
The Property & Casualty Insurance segment’s expense ratio improved 0.8
percentage points as an even larger percentage of earned premiums were
generated by the nonstandard auto business, which grew at 23 percent and
runs at a lower expense ratio. The larger premium base in general and
continued execution on cost initiatives also contributed to the
improvement.
The Life & Health Insurance segment reported net operating income of
$23.8 million for the first quarter of 2018, compared to $21.5 million
in 2017, primarily due to the impact of tax code changes and growth in
supplemental A&H business. These gains were partially offset by higher
policyholders’ benefits in both supplemental A&H and Life products.
The Corporate & Other net operating loss decreased $1.0 million,
primarily from lower interest expense due to a lower level of
outstanding debt.
Unaudited condensed consolidated statements of operations for the
three months ended March 31, 2018 and 2017 are presented below.
|
| |
| |
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions, Except Per Share Amounts)
| |
2018
| |
2017
|
| Revenues: | | | | |
|
Earned Premiums
| |
$
|
609.8
| | |
$
|
563.4
| |
|
Net Investment Income
| |
79.2
| | |
81.6
| |
|
Other Income
| |
1.2
| | |
0.9
| |
|
Income from Change in Fair Value of Equity Securities | |
0.7
| | |
—
| |
|
Net Realized Gains on Sales of Investments
| |
2.6
| | |
10.5
| |
|
Other-than-temporary Impairment Losses:
| | | | |
|
Total Other-than-temporary Impairment Losses
| |
(0.5
|
)
| |
(5.2
|
)
|
|
Portion of Losses Recognized in Other Comprehensive Income
| |
—
|
| |
0.2
|
|
|
Net Impairment Losses Recognized in Earnings
| |
(0.5
|
)
| |
(5.0
|
)
|
| Total Revenues | |
693.0
|
| |
651.4
|
|
| Expenses: | | | | |
|
Policyholders’ Benefits and Incurred Losses and Loss Adjustment
Expenses
| |
436.9
| | |
477.4
| |
|
Insurance Expenses
| |
160.1
| | |
158.0
| |
|
Interest and Other Expenses
| |
29.0
|
| |
19.5
|
|
| Total Expenses | |
626.0
|
| |
654.9
|
|
|
Income (Loss) from Continuing Operations before Income Taxes
| |
67.0
| | |
(3.5
|
)
|
|
Income Tax Benefit (Expense)
| |
(13.4
|
)
| |
3.1
|
|
| Income (Loss) from Continuing Operations | |
53.6
| | |
(0.4
|
)
|
|
Income from Discontinued Operations
| |
0.2
|
| |
0.1
|
|
| Net Income (Loss) | |
$
|
53.8
|
| |
$
|
(0.3
|
)
|
| | | |
|
| Income (Loss) from Continuing Operations Per Unrestricted Share: | | | | |
|
Basic
| |
$
|
1.03
|
| |
$
|
(0.01
|
)
|
|
Diluted
| |
$
|
1.02
|
| |
$
|
(0.01
|
)
|
| | | |
|
| Net Income (Loss) Per Unrestricted Share: | | | | |
|
Basic
| |
$
|
1.03
|
| |
$
|
(0.01
|
)
|
|
Diluted
| |
$
|
1.02
|
| |
$
|
(0.01
|
)
|
| | | |
|
| Weighted-average Outstanding (Shares in Thousands): | | | | |
|
Unrestricted Shares - Basic
| |
51,502.9
|
| |
51,273.1
|
|
|
Unrestricted Shares and Equivalent Shares - Diluted
| |
51,868.2
|
| |
51,273.1
|
|
| | | |
|
| Dividends Paid to Shareholders Per Share | |
$
|
0.24
|
| |
$
|
0.24
|
|
| | | | | | | |
|
Unaudited business segment revenues for the three months ended
March 31, 2018 and 2017 are presented below.
|
| |
| |
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2018
| |
2017
|
| REVENUES: | | | | |
| Property & Casualty Insurance: | | | | |
|
Earned Premiums:
| | | | |
|
Personal Automobile
| |
$
|
371.1
| | |
$
|
320.7
| |
|
Homeowners
| |
61.8
| | |
66.3
| |
|
Other Personal
| |
10.1
|
| |
10.7
|
|
|
Total Personal
| |
443.0
| | |
397.7
| |
|
Commercial Automobile
| |
12.2
|
| |
12.7
|
|
|
Total Earned Premiums
| |
455.2
| | |
410.4
| |
|
Net Investment Income
| |
22.5
| | |
24.1
| |
|
Other Income
| |
0.3
|
| |
0.2
|
|
| Total Property & Casualty Insurance | |
478.0
|
| |
434.7
|
|
| Life & Health Insurance: | | | | |
|
Earned Premiums:
| | | | |
|
Life
| |
93.7
| | |
95.7
| |
|
Accident & Health
| |
43.3
| | |
39.1
| |
|
Property
| |
17.6
|
| |
18.2
|
|
|
Total Earned Premiums
| |
154.6
| | |
153.0
| |
|
Net Investment Income
| |
53.3
| | |
53.0
| |
|
Other Income
| |
0.8
|
| |
0.6
|
|
| Total Life & Health Insurance | |
208.7
|
| |
206.6
|
|
| Total Segment Revenues | |
686.7
| | |
641.3
| |
|
Income from Change in Fair Value of Equity Securities | |
0.7
| | |
—
| |
|
Net Realized Gains on Sales of Investments
| |
2.6
| | |
10.5
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.5
|
)
| |
(5.0
|
)
|
|
Other
| |
3.5
|
| |
4.6
|
|
| Total Revenues | |
$
|
693.0
|
| |
$
|
651.4
|
|
| | | | | | | |
|
|
|
| KEMPER CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Dollars in Millions) |
| Mar 31,
|
| Dec 31,
|
|
2018
| |
2017
|
| Assets: |
(Unaudited)
| | |
|
Investments:
| | | |
|
Fixed Maturities at Fair Value
|
$
|
5,301.2
| | |
$
|
5,382.7
|
| Equity Securities at Fair Value
|
568.2
| | |
526.0
|
| Equity Securities at Modified Cost
|
59.3
| | |
—
|
|
Equity Method Limited Liability Investments at Cost Plus Cumulative
Undistributed Earnings
|
168.8
| | |
161.0
|
|
Fair Value Option Investments
|
—
| | |
77.5
|
|
Short-term Investments at Cost which Approximates Fair Value
|
188.8
| | |
235.5
|
|
Other Investments
|
413.0
|
| |
422.2
|
|
Total Investments
|
6,699.3
|
| |
6,804.9
|
|
Cash
|
115.4
| | |
45.7
|
|
Receivables from Policyholders
|
386.0
| | |
366.0
|
|
Other Receivables
|
187.9
| | |
194.3
|
|
Deferred Policy Acquisition Costs
|
378.0
| | |
365.3
|
| Goodwill |
323.0
| | |
323.0
|
|
Current Income Tax Assets
|
—
| | |
6.1
|
|
Other Assets
|
281.4
|
| |
270.9
|
|
Total Assets
|
$
|
8,371.0
|
| |
$
|
8,376.2
|
| Liabilities and Shareholders’ Equity: | | | |
|
Insurance Reserves:
| | | |
|
Life & Health
|
$
|
3,534.3
| | |
$
|
3,521.0
|
|
Property & Casualty
|
1,005.1
|
| |
1,016.8
|
|
Total Insurance Reserves
|
4,539.4
|
| |
4,537.8
|
|
Unearned Premiums
|
690.2
| | |
653.9
|
|
Current Income Tax Liabilities
|
0.2
| | |
—
|
|
Deferred Income Tax Liabilities
|
1.1
| | |
14.8
|
|
Liabilities for Unrecognized Tax Benefits
|
8.1
| | |
8.1
|
|
Debt at Amortized Cost
|
592.3
| | |
592.3
|
|
Accrued Expenses and Other Liabilities
|
475.9
|
| |
453.7
|
|
Total Liabilities
|
6,307.2
|
| |
6,260.6
|
| Shareholders’ Equity: | | | |
|
Common Stock
|
5.1
| | |
5.1
|
| Paid-in Capital |
676.9
| | |
673.1
|
|
Retained Earnings
|
1,264.9
| | |
1,243.0
|
|
Accumulated Other Comprehensive Income
|
116.9
|
| |
194.4
|
|
Total Shareholders’ Equity
|
2,063.8
|
| |
2,115.6
|
|
Total Liabilities and Shareholders’ Equity
|
$
|
8,371.0
|
| |
$
|
8,376.2
|
| | | | | |
|
Unaudited selected financial information for the Property & Casualty
Insurance segment follows.
|
| |
| |
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2018
| |
2017
|
Results of Operations |
|
Net Premiums Written
| |
$
|
488.9
|
| |
$
|
428.9
|
|
| | | |
|
|
Earned Premiums
| |
$
|
455.2
| | |
$
|
410.4
| |
|
Net Investment Income
| |
22.5
| | |
24.1
| |
|
Other Income
| |
0.3
|
| |
0.2
|
|
|
Total Revenues
| |
478.0
|
| |
434.7
|
|
|
Incurred Losses and LAE related to:
| | | | |
|
Current Year:
| | | | |
|
Non-catastrophe Losses and LAE
| |
326.5
| | |
302.6
| |
|
Catastrophe Losses and LAE
| |
7.5
| | |
63.9
| |
| Prior Years:
| | | | |
|
Non-catastrophe Losses and LAE
| |
3.7
| | |
11.8
| |
|
Catastrophe Losses and LAE
| |
(5.7
|
)
| |
(1.2
|
)
|
|
Total Incurred Losses and LAE
| |
332.0
| | |
377.1
| |
|
Insurance Expenses
| |
101.5
|
| |
94.8
|
|
|
Operating Income (Loss)
| |
44.5
| | |
(37.2
|
)
|
|
Income Tax Benefit (Expense)
| |
(8.5
|
)
| |
15.1
|
|
|
Segment Net Operating Income (Loss)
| |
$
|
36.0
|
| |
$
|
(22.1
|
)
|
| | | |
|
Ratios Based On Earned Premiums |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
71.8
|
%
| |
73.7
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
1.6
| | |
15.6
| |
| Prior Years Non-catastrophe Losses and LAE Ratio
| |
0.8
| | |
2.9
| |
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(1.3
|
)
| |
(0.3
|
)
|
|
Total Incurred Loss and LAE Ratio
| |
72.9
| | |
91.9
| |
|
Insurance Expense Ratio
| |
22.3
|
| |
23.1
|
|
|
Combined Ratio
| |
95.2
|
%
| |
115.0
|
%
|
| | | |
|
Underlying Combined Ratio |
|
Current Year Non-catastrophe Losses and LAE Ratio
| |
71.8
|
%
| |
73.7
|
%
|
|
Insurance Expense Ratio
| |
22.3
|
| |
23.1
|
|
|
Underlying Combined Ratio
| |
94.1
|
%
| |
96.8
|
%
|
| | | |
|
Non-GAAP Measure Reconciliation |
|
Underlying Combined Ratio
| |
94.1
|
%
| |
96.8
|
%
|
|
Current Year Catastrophe Losses and LAE Ratio
| |
1.6
| | |
15.6
| |
| Prior Years Non-catastrophe Losses and LAE Ratio
| |
0.8
| | |
2.9
| |
|
Prior Years Catastrophe Losses and LAE Ratio
| |
(1.3
|
)
| |
(0.3
|
)
|
|
Combined Ratio as Reported
| |
95.2
|
%
| |
115.0
|
%
|
| | | | | |
|
Unaudited selected financial information for the Life & Health
Insurance segment follows.
|
| |
| |
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions)
| |
2018
| |
2017
|
Results of Operations |
|
Earned Premiums
| |
$
|
154.6
| | |
$
|
153.0
| |
|
Net Investment Income
| |
53.3
| | |
53.0
| |
|
Other Income
| |
0.8
|
| |
0.6
|
|
|
Total Revenues
| |
208.7
|
| |
206.6
|
|
|
Policyholders’ Benefits and Incurred Losses and LAE
| |
104.9
| | |
100.3
| |
|
Insurance Expenses
| |
73.9
|
| |
73.7
|
|
|
Operating Profit
| |
29.9
| | |
32.6
| |
|
Income Tax Expense
| |
(6.1
|
)
| |
(11.1
|
)
|
|
Segment Net Operating Income
| |
$
|
23.8
|
| |
$
|
21.5
|
|
| | | | | | | |
|
Use of Non-GAAP Financial Measures
Adjusted Consolidated Net Operating Income (Loss)
Adjusted Consolidated Net Operating Income (Loss) is an after-tax,
non-GAAP financial measure computed by excluding from Income (Loss) from
Continuing Operations the after-tax impact of 1) income (loss) from
change in fair value of equity securities, 2) net realized gains on
sales of investments, 3) net impairment losses recognized in earnings
related to investments, 4) acquisition related transaction and
integration costs, 5) loss from early extinguishment of debt and 6)
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 (Loss) from Continuing Operations.
Kemper believes that Adjusted Consolidated Net Operating Income (Loss)
provides investors with a valuable measure of its ongoing performance
because it reveals underlying operational performance trends that
otherwise might be less apparent if the items were not excluded. Income
(Loss) from Change in Fair Value of Equity Securities, Net Realized
Gains on Sales of Investments and Net Impairment Losses Recognized in
Earnings related to investments included in the Company’s results may
vary significantly between periods and are generally driven by business
decisions and external economic developments such as capital market
conditions that impact the values of the Company’s investments, the
timing of which is unrelated to the insurance underwriting process. 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. Acquisition
Related Transaction and Integration Costs may vary significantly between
periods and are generally driven by the timing of acquisitions and
business decisions which are unrelated to the insurance underwriting
process. Significant non-recurring items are excluded because, by their
nature, they are not indicative of the Company’s business or economic
trends.
A reconciliation of Adjusted Consolidated Net Operating Income (Loss) to
Income (Loss) from Continuing Operations for the three months ended
March 31, 2018 and 2017 is presented below.
|
| |
| |
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2018
| |
2017
|
|
Adjusted Consolidated Net Operating Income (Loss)
| |
$
|
57.5
| | |
$
|
(3.9
|
)
|
|
Net Income (Loss) From:
| | | | |
|
Income from Change in Fair Value of Equity Securities | |
0.6
| | |
—
| |
|
Net Realized Gains on Sales of Investments
| |
2.1
| | |
6.8
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.4
|
)
| |
(3.3
|
)
|
|
Acquisition Related Transaction and Integration Costs
| |
(6.2
|
)
| |
—
|
|
|
Income (Loss) from Continuing Operations
| |
$
|
53.6
|
| |
$
|
(0.4
|
)
|
| | | | | | | |
|
Diluted Adjusted Consolidated Net Operating Income
(Loss) Per Unrestricted Share
Diluted Adjusted Consolidated Net Operating Income (Loss) Per
Unrestricted Share is a non-GAAP financial measure computed by dividing
Adjusted Consolidated Net Operating Income (Loss) attributed to
unrestricted shares by the weighted-average unrestricted shares and
equivalent shares outstanding. The most directly comparable GAAP
financial measure is Diluted Income (Loss) from Continuing Operations
Per Unrestricted Share.
A reconciliation of Diluted Adjusted Consolidated Net Operating Income
(Loss) Per Unrestricted Share to Diluted Income (Loss) from Continuing
Operations Per Unrestricted Share for the three months ended March 31,
2018 and 2017 is presented below.
|
| |
| |
Three Months Ended
|
| | Mar 31,
|
| Mar 31,
|
|
(Unaudited)
| |
2018
| |
2017
|
|
Diluted Adjusted Consolidated Net Operating Income (Loss) Per
Unrestricted Share
| |
$
|
1.10
| | |
$
|
(0.08
|
)
|
|
Net Income (Loss) Per Unrestricted Share From:
| | | | |
|
Income from Change in Fair Value of Equity Securities | |
0.01
| | |
—
| |
|
Net Realized Gains on Sales of Investments
| |
0.04
| | |
0.13
| |
|
Net Impairment Losses Recognized in Earnings
| |
(0.01
|
)
| |
(0.06
|
)
|
|
Acquisition Related Transaction and Integration Costs
| |
(0.12
|
)
| |
—
|
|
|
Diluted Income (Loss) from Continuing Operations Per Unrestricted
Share
| |
$
|
1.02
|
| |
$
|
(0.01
|
)
|
| | | | | | | |
|
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 March 31, 2018 and December 31, 2017 is presented
below.
|
| |
| |
| | Mar 31,
| | Dec 31,
|
|
(Dollars in Millions) (Unaudited)
| |
2018
| |
2017
|
|
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed
Maturities
| |
$
|
1,873.3
| | |
$
|
1,830.4
|
|
Net Unrealized Gains on Fixed Maturities
| |
190.5
|
| |
285.2
|
|
Shareholders’ Equity
| |
$
|
2,063.8
|
| |
$
|
2,115.6
|
| | | | | | |
|
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 first quarter 2018 results in a conference call
on Monday, April 30, at 4:15 p.m. Eastern (3:15 p.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 first
quarter of 2018, which is available at the investor
section of kemper.com.
2018 Annual Meeting of Shareholders
The Kemper Annual Meeting of Shareholders will take place on June 1,
2018, at 8:00 a.m. local time, at The Kemper Building, 20th floor, One
East Wacker Drive, Chicago, Illinois, 60601. Holders of Kemper common
stock at the close of business on April 16, 2018 will be entitled to
vote at the annual meeting. On April 27, 2018, the Securities and
Exchange Commission (the “SEC”) declared effective the registration
statement on Form S-4 initially filed by Kemper with the SEC on April 4,
2018, as amended. The registration statement, which was filed in
connection with the previously-announced proposed merger between Kemper
and Infinity Property and Casualty Corporation, contains a joint proxy
statement/prospectus of Kemper and Infinity with respect to the merger
and Kemper’s Annual Meeting of Shareholders.
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
-
Represented by more than 20,000 independent agents and brokers
-
Employ 5,550 associates dedicated to providing exceptional service
-
Licensed to sell insurance in 50 states and the District of Columbia
Learn more about Kemper.
Cautionary Statements Regarding Forward-Looking Information
This communication may contain or incorporate by reference statements or
information that are, include or are 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, intentions, beliefs or forecasts of future events or
otherwise for the future, and can be identified by the fact that they
relate to future actions, performance or results rather than relating
strictly to historical or current facts. Words such as “believe(s),”
“goal(s),” “target(s),” “estimate(s),” “anticipate(s),” “forecast(s),”
“project(s),” “plan(s),” “intend(s),” “expect(s),” “might,” “may,”
“could” and variations of such words and other words and expressions of
similar meaning are intended to identify such forward-looking
statements. However, the absence of such words or other words and
expressions of similar meaning does not mean that a statement is not
forward-looking.
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. Forward-looking statements involve a number of risks and
uncertainties that are difficult to predict, and are not guarantees or
assurances of future performance. 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. Forward-looking statements involve a number of risks and
uncertainties that are difficult to predict, and can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties
that may be important in determining actual future results and financial
condition. The general factors that could cause actual results and
financial condition to differ materially from those expressed or implied
include, without limitation, the following: (a) the satisfaction or
waiver of the conditions precedent to the consummation of the proposed
merger transaction involving Kemper Corporation (the “Company”), a
wholly-owned subsidiary of the Company and Infinity Property and
Casualty Corporation (“Infinity”), including, without limitation, the
receipt of stockholder and regulatory approvals (including approvals,
authorizations and clearance by insurance regulators necessary to
complete such proposed merger transaction) on the terms desired or
anticipated (and the risk that such approvals may result in the
imposition of conditions that could adversely affect the combined
company or the expected benefits of such proposed merger transaction);
(b) unanticipated difficulties or expenditures relating to such proposed
merger transaction; (c) risks relating to the value of the shares of the
Company’s common stock to be issued in such proposed merger transaction;
(d) disruptions of the Company’s and Infinity’s current plans,
operations and relationships with third persons caused by the
announcement and pendency of such proposed merger transaction,
including, without limitation, the ability of the combined company to
hire and retain any personnel; (e) legal proceedings that may be
instituted against the Company and Infinity in connection with such
proposed merger transaction; and (f) those factors listed in annual,
quarterly and periodic reports filed by the Company and Infinity with
the Securities and Exchange Commission (the “SEC”), whether or not
related to such proposed merger transaction.
The Company assumes no, and expressly disclaims any, duty or obligation
to update or correct any forward-looking statement as a result of
events, changes, effects, states of facts, conditions, circumstances,
occurrences or developments subsequent to the date of this communication
or otherwise, except as required by law. Readers are advised, however,
to consult any further disclosures the Company makes on related subjects
in its filings with the SEC.
Additional Information About the Transaction and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. This communication relates to the proposed merger
transaction involving the Company, a wholly-owned subsidiary of the
Company and Infinity, among other things. In connection therewith, the
Company filed with the SEC a Registration Statement on Form S-4 that
includes a definitive joint proxy statement of the Company and Infinity
and also constitutes a definitive prospectus of the Company, and each of
the Company and Infinity may be filing with the SEC other documents
regarding the proposed transaction. The Company and Infinity commenced
mailing of the definitive joint proxy statement/prospectus to the
Company’s stockholders and Infinity’s shareholders on April 30, 2018.
BEFORE MAKING ANY VOTING OR ANY INVESTMENT DECISION, INVESTORS AND
SECURITYHOLDERS OF THE COMPANY AND/OR INFINITY ARE URGED TO READ THE
DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED
MERGER TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors
and securityholders may obtain free copies of the definitive joint proxy
statement/prospectus, any amendments or supplements thereto and other
documents filed with the SEC by the Company and Infinity through the
website maintained by the SEC at www.sec.gov.
Copies of the documents filed with the SEC by the Company are available
free of charge under the “Investors” section of the Company’s website
located at http://www.kemper.com or
by contacting the Company’s Investor Relations Department at
312.661.4930 or investors@kemper.com. Copies of the documents filed with
the SEC by Infinity are available free of charge under the “Investor
Relations” section of Infinity’s website located at http://www.infinityauto.com
or by contacting Infinity’s Investor Relations Department at
205.803.8186 or investor.relations@infinityauto.com.
Participants in the Solicitation
The Company and Infinity, and their respective directors and executive
officers, certain other members of their respective management and
certain of their respective employees, may be considered participants in
the solicitation of proxies in connection with the proposed merger
transaction. Information about the directors and executive officers of
the Company is set forth in the definitive joint proxy
statement/prospectus, which was filed with the SEC on April 27, 2018 and
serves as the Company’s proxy statement for its 2018 annual meeting of
stockholders, and its annual report on Form 10-K for the fiscal year
ended December 31, 2017, which was filed with the SEC on February 13,
2018. Information about the directors and executive officers of Infinity
is set forth in its annual report on Form 10-K for the fiscal year ended
December 31, 2017, which was filed with the SEC on February 15, 2018, as
amended on Form 10-K/A, filed with the SEC on April 23, 2018. Each of
the foregoing can be obtained free of charge from the sources indicated
above. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, is contained in the definitive joint
proxy statement/prospectus and other relevant materials to be filed
with the SEC.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180430005272/en/
Kemper Corporation
Investors:
Michael Marinaccio
312.661.4930
investors@kemper.com
or
Media:
Barbara
Ciesemier
312.661.4521
bciesemier@kemper.com
Source: Kemper Corporation