Kemper Corporation (NYSE: KMPR) reported a net loss of $97.1
million, or $(1.52) per share, for the second quarter of 2023,
compared to a net loss of $72.2 million, or $(1.13) per share, for
the second quarter of 2022. Net loss for second quarter 2023
included a $45.5 million after-tax charge from the impairment of
the goodwill asset related to the Preferred Property and Casualty
Insurance segment.
Adjusted Consolidated Net Operating Loss1 was $16.9 million, or
$(0.26) per share, for the second quarter of 2023, compared to
Adjusted Consolidated Net Operating Loss1 of $37.2 million, or
$(0.58) per share, for the second quarter of 2022.
Key themes of the quarter include:
- Specialty P&C reflects a six point Underlying Combined
Ratio improvement
- Excess mortality at or near pre-pandemic levels
- Specialty Auto received second rate approval in California
“The benefits of the profit actions taken to date are starting
to take hold and are generating notable improvements in our
underlying performance,” said Joseph P. Lacher, Jr., President, CEO
and Chairman. “We are increasingly confident these actions are
driving the intended outcomes. Further, we are making significant
progress on our key strategic initiatives including our reciprocal
program, Bermuda optimization, expense initiatives and completion
of our Kemper Personal Insurance review. In the second half of
2023, we anticipate continued improvement in underwriting
performance. For 2024, we plan to generate a return on equity equal
to or greater than 10%. I am deeply proud of the Kemper team and
the efforts they have extended and continue to extend to enable
these results.”
1 Non-GAAP financial measure. All Non-GAAP
financial measures are denoted with footnote 1 throughout this
release. See “Use of Non-GAAP Financial Measures” for additional
information.
Three Months Ended
Six Months Ended
(Dollars in Millions, Except Per Share
Amounts) (Unaudited)
Jun 30, 2023
Jun 30, 20222
Jun 30, 2023
Jun 30, 20222
Net Loss
$
(97.1
)
$
(72.2
)
$
(177.2
)
$
(158.5
)
Adjusted Consolidated Net Operating Loss
1
$
(16.9
)
$
(37.2
)
$
(82.1
)
$
(88.8
)
Impact of Catastrophe Losses and Related
Loss Adjustment Expense (LAE) on Net Loss
$
(31.2
)
$
(23.9
)
$
(51.7
)
$
(34.9
)
Diluted Net Loss Per Share From:
Net Loss
$
(1.52
)
$
(1.13
)
$
(2.77
)
$
(2.49
)
Adjusted Consolidated Net Operating
Loss1
$
(0.26
)
$
(0.58
)
$
(1.28
)
$
(1.39
)
Impact of Catastrophe Losses and Related
LAE on Net Loss Per Share
$
(0.70
)
$
(0.38
)
$
(1.02
)
$
(0.55
)
2 This press release recasts previously
reported financial information for the provisions of Accounting
Standards Update No. 2018-12, “Targeted Improvements to the
Accounting for Long-Duration Contracts and related amendments”
(“LDTI”) adopted as of January 1, 2023, with a transition date of
January 1, 2021 under the modified retrospective method.
Revenues
Total revenues for the second quarter of 2023 decreased $154.9
million, or 10.9 percent, to $1,262.8 million, compared to the
second quarter of 2022, mostly driven by $111.4 million of lower
Specialty P&C earned premiums due to a decrease in new business
resulting from targeted underwriting actions to improve
profitability, partially offset by higher average earned premium
per exposure from rate increases. The decrease in total revenues
was also driven by $41.8 million of lower Life & Health earned
premiums mostly due to the disposition of Kemper Health that was
completed in December 2022, and a $25.4 million increase in Net
Realized Investment Losses, partially offset by favorable changes
in the Change in Fair Value of Equity and Convertible Securities
from second quarter of 2022.
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) loss ratio includes loss and LAE, and (v) all
comparisons are made to the prior year quarter unless otherwise
stated.
Three Months Ended
Six Months Ended
(Dollars in Millions) (Unaudited)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
Segment Net Operating (Loss) Income:
Specialty Property & Casualty
Insurance
$
(10.8
)
$
(38.9
)
$
(69.2
)
$
(83.6
)
Preferred Property & Casualty
Insurance
(2.7
)
(16.8
)
(12.2
)
(22.9
)
Life & Health Insurance
8.9
20.2
22.1
31.8
Total Segment Net Operating Loss
(4.6
)
(35.5
)
(59.3
)
(74.7
)
Corporate and Other Net Operating Loss
(12.3
)
(1.7
)
(22.8
)
(14.1
)
Adjusted Consolidated Net Operating
Loss1
(16.9
)
(37.2
)
(82.1
)
(88.8
)
Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
1.9
(32.0
)
3.2
(54.3
)
Net Realized Investment (Losses) Gains
(12.5
)
8.7
(7.4
)
9.9
Impairment (Losses) Gains
(0.8
)
(3.9
)
0.9
(10.9
)
Acquisition and Disposition Related
Transaction, Integration, Restructuring and Other Costs
(23.3
)
(7.8
)
(46.3
)
(11.5
)
Loss from Early Extinguishment of Debt
—
—
—
(2.9
)
Goodwill Impairment Charge
(45.5
)
—
(45.5
)
—
Net Loss
$
(97.1
)
$
(72.2
)
$
(177.2
)
$
(158.5
)
The Specialty Property and Casualty Insurance segment reported
net operating loss of $10.8 million for the second quarter of 2023,
compared to net operating loss of $38.9 million in the second
quarter of 2022. Results improved due primarily to a lower
underlying loss ratio, partially offset by adverse prior year loss
and LAE development and higher catastrophe losses. The segment’s
Underlying Combined Ratio1 was 102.0 percent, compared to 108.8
percent in the second quarter of 2022. The improvement was
primarily driven by higher average earned premiums per exposure
resulting from rate increases and lower underlying claim
frequency.
The Preferred Property and Casualty Insurance segment reported
net operating loss of $2.7 million for the second quarter of 2023,
compared to a net operating loss of $16.8 million in the second
quarter of 2022. Results improved due primarily to a lower
underlying loss ratio. The segment’s Underlying Combined Ratio1 was
95.6 percent, compared to 105.3 percent in the second quarter of
2022. This improvement is driven by rate increases and other
targeted underwriting actions to improve profitability.
The Life and Health Insurance segment reported net operating
income of $8.9 million for the second quarter of 2023, compared to
a net operating income of $20.2 million in the second quarter of
2022. The decrease in net operating income was primarily due to
lower Net Investment Income driven by lower returns from Equity
Method Limited Liability Investments, partially offset by higher
rate earned on Fixed Income Securities.
Capital
Total Shareholders’ Equity at the end of the quarter was
$2,512.2 million, a decrease of $158.4 million, or 6 percent, since
year-end 2022 primarily driven by the net loss for the year. Kemper
and its direct non-insurance subsidiaries ended the quarter with
cash and investments of $220.3 million, and $460.0 million of
available borrowing capacity under the revolving credit
agreement.
On May 3, 2023, Kemper announced that its Board of Directors
declared a quarterly dividend of $0.31 per share, or $20.2 million.
The dividend was paid on May 30, 2023 to its shareholders of record
as of May 15, 2023.
Kemper ended the quarter with a book value per share of $39.22,
a decrease of 6 percent from $41.79 at the end of 2022. Book Value
Per Share Excluding Net Unrealized Losses and Changes in the
Discount Rate on Future Life Policyholder Benefits1 was $46.18,
compared to $49.23 at the end of 2022.
Unaudited condensed Consolidated
Statements of Loss for the three and six months ended June 30, 2023
and 2022 are presented below.
Three Months Ended
Six Months Ended
(Dollars in Millions, Except Per Share
Amounts)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
Revenues:
Earned Premiums
$
1,166.9
$
1,337.6
$
2,347.8
$
2,657.6
Net Investment Income
106.3
118.5
208.1
218.5
Change in Value of Alternative Energy
Partnership Investments2
0.8
(4.9
)
1.5
(21.6
)
Other Income
1.7
0.9
2.9
3.3
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
2.4
(40.5
)
4.1
(68.7
)
Net Realized Investment (Losses) Gains
(14.4
)
11.0
(8.0
)
12.5
Impairment (Losses) Gains
(0.9
)
(4.9
)
1.2
(13.8
)
Total Revenues
1,262.8
1,417.7
2,557.6
2,787.8
Expenses:
Policyholders’ Benefits and Incurred
Losses and Loss Adjustment Expenses
984.7
1,151.1
2,036.7
2,274.3
Insurance Expenses
266.1
307.7
535.4
612.5
Loss from Early Extinguishment of Debt
—
—
—
3.7
Interest and Other Expenses
78.3
53.5
155.7
107.6
Goodwill Impairment
49.6
—
49.6
—
Total Expenses
1,378.7
1,512.3
2,777.4
2,998.1
Loss before Income Taxes
(115.9
)
(94.6
)
(219.8
)
(210.3
)
Income Tax Benefit
18.8
22.4
42.6
51.8
Net Loss
$
(97.1
)
$
(72.2
)
$
(177.2
)
$
(158.5
)
Net Loss Per Unrestricted
Share:
Basic
$
(1.52
)
$
(1.13
)
$
(2.77
)
$
(2.49
)
Diluted
$
(1.52
)
$
(1.13
)
$
(2.77
)
$
(2.49
)
Weighted-average Outstanding (Shares in
Thousands):
Unrestricted Shares - Basic
64,008.5
63,815.6
63,977.7
63,779.9
Unrestricted Shares and Equivalent Shares
- Diluted
64,008.5
63,815.6
63,977.7
63,779.9
Dividends Paid to Shareholders Per
Share
$
0.31
$
0.31
$
0.62
$
0.62
2 Income related to Changes in Value of
Alternative Energy Partnership Investments was $0.8 million for the
three months ended June 30, 2023, compared to a loss of $4.9
million for the same period in 2022. Tax expense related to the
Alternative Energy Partnership Investments was $0.1 million for the
three months ended June 30, 2023, compared to tax benefit of $1.1
million for the same period in 2022. This resulted in net income of
$0.7 million and a net loss of $3.8 million attributable to
Alternative Energy Partnership Investments for the three months
ended June 30, 2023 and 2022, respectively.
2Income related to Changes in Value of
Alternative Energy Partnership Investments was $1.5 million for the
six months ended June 30, 2023, compared to a loss of $21.6 million
for the same period in 2022. Tax expense related to the Alternative
Energy Partnership Investments was $0.4 million for the six months
ended June 30, 2023, compared to tax benefit of $8.1 million for
the same period in 2022. This resulted in net income of $1.1
million and a net loss of $13.5 million attributable to Alternative
Energy Partnership Investments for the six months ended June 30,
2023 and 2022, respectively.
Unaudited business segment revenues for
the three and six months ended June 30, 2023 and 2022 are presented
below.
Three Months Ended
Six Months Ended
(Dollars in Millions)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
REVENUES:
Specialty Property & Casualty
Insurance:
Earned Premiums:
Personal Automobile
$
766.6
$
905.8
$
1,554.5
$
1,807.5
Commercial Automobile
165.7
137.9
322.0
257.8
Total Earned Premiums
932.3
1,043.7
1,876.5
2,065.3
Net Investment Income
44.5
34.0
83.0
68.9
Change in Value of Alternative Energy
Partnership Investments
0.4
(2.5
)
0.8
(10.9
)
Other Income
0.7
1.0
1.6
2.7
Total Specialty Property & Casualty
Insurance Revenues
977.9
1,076.2
1,961.9
2,126.0
Preferred Property & Casualty
Insurance:
Earned Premiums:
Personal Automobile
75.7
94.0
153.9
190.0
Homeowners
50.0
47.7
102.2
99.0
Other Personal
6.7
8.2
13.7
16.5
Total Earned Premiums
132.4
149.9
269.8
305.5
Net Investment Income
13.1
11.9
23.6
24.4
Change in Value of Alternative Energy
Partnership Investments
0.2
(1.1
)
0.3
(5.0
)
Total Preferred Property & Casualty
Insurance Revenues
145.7
160.7
293.7
324.9
Life & Health Insurance:
Earned Premiums:
Life
84.8
86.8
167.0
169.5
Accident & Health
5.8
45.1
11.7
90.9
Property
11.6
12.1
22.8
26.4
Total Earned Premiums
102.2
144.0
201.5
286.8
Net Investment Income
47.1
61.9
96.9
111.3
Change in Value of Alternative Energy
Partnership Investments
0.2
(1.3
)
0.4
(5.7
)
Other Income (Loss)
0.1
(0.8
)
(0.3
)
(0.8
)
Total Life & Health Insurance
Revenues
149.6
203.8
298.5
391.6
Total Segment Revenues
1,273.2
1,440.7
2,554.1
2,842.5
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities
2.4
(40.5
)
4.1
(68.7
)
Net Realized Investment (Losses) Gains
(14.4
)
11.0
(8.0
)
12.5
Impairment (Losses) Gains
(0.9
)
(4.9
)
1.2
(13.8
)
Other
2.5
11.4
6.2
15.3
Total Revenues
$
1,262.8
$
1,417.7
$
2,557.6
$
2,787.8
KEMPER CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in Millions)
(Unaudited)
Jun 30, 2023
Dec 31, 2022
Assets:
Investments:
Fixed Maturities at Fair Value
$
6,943.8
$
6,894.8
Equity Securities at Fair Value
247.0
243.2
Equity Method Limited Liability
Investments
225.1
217.0
Alternative Energy Partnership
Investments
16.8
16.3
Short-term Investments at Cost which
Approximates Fair Value
406.3
278.4
Company-Owned Life Insurance
500.5
586.5
Loans to Policyholders
281.6
283.4
Other Investments
275.6
269.9
Total Investments
8,896.7
8,789.5
Cash
73.6
212.4
Receivables from Policyholders
1,246.3
1,286.6
Other Receivables
262.0
262.6
Deferred Policy Acquisition Costs
646.2
635.6
Goodwill
1,250.7
1,300.3
Current Income Tax Assets
9.0
167.6
Deferred Income Tax Assets
208.0
129.0
Other Assets
503.8
530.0
Total Assets
$
13,096.3
$
13,313.6
Liabilities and Shareholders’
Equity:
Insurance Reserves:
Life & Health
$
3,363.8
$
3,276.2
Property & Casualty
2,680.1
2,756.9
Total Insurance Reserves
6,043.9
6,033.1
Unearned Premiums
1,665.2
1,704.4
Policyholder Contract Liabilities
700.2
701.3
Accrued Expenses and Other Liabilities
786.7
817.3
Long-term Debt, Current and Non-current,
at Amortized Cost
1,388.1
1,386.9
Total Liabilities
10,584.1
10,643.0
Shareholders’ Equity:
Common Stock
6.4
6.4
Paid-in Capital
1,837.6
1,812.7
Retained Earnings
1,149.0
1,366.4
Accumulated Other Comprehensive Loss
(480.8
)
(514.9
)
Total Shareholders’ Equity
2,512.2
2,670.6
Total Liabilities and Shareholders’
Equity
$
13,096.3
$
13,313.6
Unaudited selected financial
information for the Specialty Property & Casualty Insurance
segment follows.
Three Months Ended
Six Months Ended
(Dollars in Millions)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
Results
of Operations
Net Premiums Written
$
830.6
$
1,019.9
$
1,852.7
$
2,043.6
Earned Premiums
$
932.3
$
1,043.7
$
1,876.5
$
2,065.3
Net Investment Income
44.5
34.0
83.0
68.9
Change in Value of Alternative Energy
Partnership Investments
0.4
(2.5
)
0.8
(10.9
)
Other Income
0.7
1.0
1.6
2.7
Total Revenues
977.9
1,076.2
1,961.9
2,126.0
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE
763.9
930.2
1,589.3
1,841.9
Catastrophe Losses and LAE
17.4
6.2
25.8
8.3
Prior Years:
Non-catastrophe Losses and LAE
25.0
(14.4
)
56.6
(18.2
)
Catastrophe Losses and LAE
(0.9
)
(0.2
)
(1.4
)
0.5
Total Incurred Losses and LAE
805.4
921.8
1,670.3
1,832.5
Insurance Expenses
187.5
205.4
381.3
404.7
Operating Loss
(15.0
)
(51.0
)
(89.7
)
(111.2
)
Income Tax Benefit
4.2
12.1
20.5
27.6
Segment Net Operating Loss
$
(10.8
)
$
(38.9
)
$
(69.2
)
$
(83.6
)
Ratios
Based On Earned Premiums
Current Year Non-catastrophe Losses and
LAE Ratio
81.9
%
89.1
%
84.7
%
89.2
%
Current Year Catastrophe Losses and LAE
Ratio
1.9
0.6
1.4
0.4
Prior Years Non-catastrophe Losses and LAE
Ratio
2.7
(1.4
)
3.0
(0.9
)
Prior Years Catastrophe Losses and LAE
Ratio
(0.1
)
—
(0.1
)
—
Total Incurred Loss and LAE Ratio
86.4
88.3
89.0
88.7
Insurance Expense Ratio
20.1
19.7
20.3
19.6
Combined Ratio
106.5
%
108.0
%
109.3
%
108.3
%
Underlying Combined Ratio1
Current Year Non-catastrophe Losses and
LAE Ratio
81.9
%
89.1
%
84.7
%
89.2
%
Insurance Expense Ratio
20.1
19.7
20.3
19.6
Underlying Combined Ratio1
102.0
%
108.8
%
105.0
%
108.8
%
Non-GAAP
Measure Reconciliation
Combined Ratio
106.5
%
108.0
%
109.3
%
108.3
%
Less:
Current Year Catastrophe Losses and LAE
Ratio
1.9
0.6
1.4
0.4
Prior Years Non-catastrophe Losses and LAE
Ratio
2.7
(1.4
)
3.0
(0.9
)
Prior Years Catastrophe Losses and LAE
Ratio
(0.1
)
—
(0.1
)
—
Underlying Combined Ratio1
102.0
%
108.8
%
105.0
%
108.8
%
Unaudited selected financial
information for the Preferred Property & Casualty Insurance
segment follows.
Three Months Ended
Six Months Ended
(Dollars in Millions)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
Results
of Operations
Net Premiums Written
$
130.2
$
141.3
$
254.2
$
278.7
Earned Premiums
$
132.4
$
149.9
$
269.8
$
305.5
Net Investment Income
13.1
11.9
23.6
24.4
Change in Value of Alternative Energy
Partnership Investments
0.2
(1.1
)
0.3
(5.0
)
Total Revenues
145.7
160.7
293.7
324.9
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE
87.9
110.5
178.3
222.7
Catastrophe Losses and LAE
21.2
23.5
38.2
34.9
Prior Years:
Non-catastrophe Losses and LAE
7.3
1.8
14.2
3.9
Catastrophe Losses and LAE
(5.6
)
(0.8
)
(2.7
)
(4.0
)
Total Incurred Losses and LAE
110.8
135.0
228.0
257.5
Insurance Expenses
38.6
47.3
81.6
98.5
Operating Loss
(3.7
)
(21.6
)
(15.9
)
(31.1
)
Income Tax Benefit
1.0
4.8
3.7
8.2
Segment Net Operating Loss
$
(2.7
)
$
(16.8
)
$
(12.2
)
$
(22.9
)
Ratios
Based On Earned Premiums
Current Year Non-catastrophe Losses and
LAE Ratio
66.4
%
73.7
%
66.0
%
72.9
%
Current Year Catastrophe Losses and LAE
Ratio
16.0
15.7
14.2
11.4
Prior Years Non-catastrophe Losses and LAE
Ratio
5.5
1.2
5.3
1.3
Prior Years Catastrophe Losses and LAE
Ratio
(4.2
)
(0.5
)
(1.0
)
(1.3
)
Total Incurred Loss and LAE Ratio
83.7
90.1
84.5
84.3
Insurance Expense Ratio
29.2
31.6
30.2
32.2
Combined Ratio
112.9
%
121.7
%
114.7
%
116.5
%
Underlying Combined Ratio1
Current Year Non-catastrophe Losses and
LAE Ratio
66.4
%
73.7
%
66.0
%
72.9
%
Insurance Expense Ratio
29.2
31.6
30.2
32.2
Underlying Combined Ratio1
95.6
%
105.3
%
96.2
%
105.1
%
Non-GAAP
Measure Reconciliation
Combined Ratio
112.9
%
121.7
%
114.7
%
116.5
%
Less:
Current Year Catastrophe Losses and LAE
Ratio
16.0
15.7
14.2
11.4
Prior Years Non-catastrophe Losses and LAE
Ratio
5.5
1.2
5.3
1.3
Prior Years Catastrophe Losses and LAE
Ratio
(4.2
)
(0.5
)
(1.0
)
(1.3
)
Underlying Combined Ratio1
95.6
%
105.3
%
96.2
%
105.1
%
Unaudited selected financial
information for the Life & Health Insurance segment
follows.
Three Months Ended
Six Months Ended
(Dollars in Millions)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
Results
of Operations
Earned Premiums
$
102.2
$
144.0
$
201.5
$
286.8
Net Investment Income
47.1
61.9
96.9
111.3
Change in Value of Alternative Energy
Partnership Investments
0.2
(1.3
)
0.4
(5.7
)
Other Income (Loss)
0.1
(0.8
)
(0.3
)
(0.8
)
Total Revenues
149.6
203.8
298.5
391.6
Policyholders’ Benefits and Incurred
Losses and LAE
68.3
94.3
138.2
184.2
Insurance Expenses
71.2
85.6
135.4
171.5
Operating Income
10.1
23.9
24.9
35.9
Income Tax Expense
(1.2
)
(3.7
)
(2.8
)
(4.1
)
Segment Net Operating Income
$
8.9
$
20.2
$
22.1
$
31.8
Use of Non-GAAP Financial Measures
Adjusted Consolidated Net Operating
Loss1 is an after-tax, non-GAAP financial measure and is
computed by excluding from Net Loss the after-tax impact of:
(i) Income (Loss) from Change in Fair Value
of Equity and Convertible Securities; (ii) Net Realized Investment
(Losses) Gains; (iii) Impairment (Losses) Gains; (iv) Acquisition
and Disposition Related Transaction, Integration, Restructuring and
Other Costs; (v) Debt Extinguishment, Pension and Other Charges;
(vi) Goodwill Impairment Charges; and (vii) 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 Net Loss. There were no applicable significant
non-recurring items that Kemper excluded from the calculation of
Adjusted Consolidated Net Operating Loss1 for the three and six
months ended June 30, 2023 or 2022.
Kemper believes that Adjusted Consolidated Net Operating Loss1
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 and
Convertible Securities, Net Realized Investment (Losses) Gains and
Impairment (Losses) Gains 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 Kemper’s investments, the timing of which is unrelated to
the insurance underwriting process. Acquisition and Disposition
Related Transaction, Integration, Restructuring and Other 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. Debt Extinguishment, Pension
and Other Charges relate to (i) loss from early extinguishment of
debt, which is driven by Kemper’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; (ii) settlement of
pension plan obligations which are business decisions made by
Kemper, the timing of which is unrelated to the underwriting
process; and (iii) other charges that are non-standard, not part of
the ordinary course of business, and unrelated to the insurance
underwriting process. Goodwill impairment charges are excluded
because they are infrequent and non-recurring charges. Significant
non-recurring items are excluded because, by their nature, they are
not indicative of Kemper’s business or economic trends.
The preceding non-GAAP financial measures should not be
considered a substitute for the comparable GAAP financial measures,
as they do not fully recognize the profitability of Kemper’s
businesses.
A reconciliation of Net Loss to Adjusted Consolidated Net
Operating Loss1 for the three and six months ended June 30, 2023
and 2022 is presented below.
Three Months Ended
Six Months Ended
(Dollars in Millions) (Unaudited)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
Net Loss
$
(97.1
)
$
(72.2
)
$
(177.2
)
$
(158.5
)
Less Net Income (Loss) From:
Change in Fair Value of Equity and
Convertible Securities
1.9
(32.0
)
3.2
(54.3
)
Net Realized Investment (Losses) Gains
(12.5
)
8.7
(7.4
)
9.9
Impairment (Losses) Gains
(0.8
)
(3.9
)
0.9
(10.9
)
Acquisition and Disposition Related
Transaction, Integration, Restructuring and Other Costs
(23.3
)
(7.8
)
(46.3
)
(11.5
)
Debt Extinguishment, Pension and Other
Charges
—
—
—
(2.9
)
Goodwill Impairment Charge
(45.5
)
—
(45.5
)
—
Adjusted Consolidated Net Operating
Loss1
$
(16.9
)
$
(37.2
)
$
(82.1
)
$
(88.8
)
Diluted Adjusted Consolidated Net
Operating Loss Per Unrestricted Share1 is a non-GAAP
financial measure computed by dividing Adjusted Consolidated Net
Operating Loss1 attributed to unrestricted shares by the
weighted-average unrestricted shares and equivalent shares
outstanding. The most directly comparable GAAP financial measure is
Diluted Net Loss Per Unrestricted Share.
A reconciliation of Diluted Net Loss Per Unrestricted Share to
Diluted Adjusted Consolidated Net Operating Loss Per Unrestricted
Share1 for the three and six months ended June 30, 2023 and 2022 is
presented below.
Three Months Ended
Six Months Ended
(Unaudited)
Jun 30, 2023
Jun 30, 2022
Jun 30, 2023
Jun 30, 2022
Diluted Net Loss Per Unrestricted
Share
$
(1.52
)
$
(1.13
)
$
(2.77
)
$
(2.49
)
Less Net Income (Loss) Per Unrestricted
Share From:
Change in Fair Value of Equity and
Convertible Securities
0.03
(0.50
)
0.05
(0.85
)
Net Realized Investment (Losses) Gains
(0.20
)
0.13
(0.12
)
0.15
Impairment (Losses) Gains
(0.02
)
(0.06
)
0.01
(0.17
)
Acquisition and Disposition Related
Transaction, Integration, Restructuring and Other Costs
(0.36
)
(0.12
)
(0.72
)
(0.18
)
Debt Extinguishment, Pension and Other
Charges
—
—
—
(0.05
)
Goodwill Impairment Charge
(0.71
)
.
—
(0.71
)
.
—
Diluted Adjusted Consolidated Net
Operating Loss Per Unrestricted Share1
$
(0.26
)
$
(0.58
)
$
(1.28
)
$
(1.39
)
Book Value Per Share Excluding Net
Unrealized Losses on Fixed Maturities and the Change in Discount
Rate on Future Life Policyholder Benefits1 is a calculation
that uses a non-GAAP financial measure. It is calculated by
dividing shareholders’ equity after excluding the after-tax impact
of net unrealized losses on fixed income securities and the change
in discount rate on future life policyholder benefits by total
Common Shares Issued and Outstanding. Book value per share is the
most directly comparable GAAP financial measure. The Company uses
the trends in book value per share excluding the after-tax impact
of net unrealized losses on fixed income securities and the change
in discount rate on future life policyholder benefits in
conjunction with book value per share to identify and analyze the
change in net worth attributable to management efforts between
periods. The Company believes the non-GAAP financial measure is
useful to investors because it eliminates the effect of items that
can fluctuate significantly from period to period and are generally
driven by economic developments, primarily capital market
conditions, the magnitude and timing of which are not influenced by
management. The Company believes it enhances understanding and
comparability of performance by highlighting underlying business
activity and profitability drivers.
A reconciliation of the numerator used in the computation of
Book Value Per Share Excluding Net Unrealized Losses on Fixed
Maturities and the Change in Discount Rate on Future Life
Policyholder Benefits1 and Book Value Per Share at June 30, 2023
and December 31, 2022 is presented below.
(Dollars in Millions) (Unaudited)
Jun 30, 2023
Dec 31, 2022
Shareholders’ Equity
$
2,512.2
$
2,670.6
Less: Net Unrealized Losses on Fixed
Maturities
(640.5
)
(716.8
)
Less: Change in Discount Rate on Future
Life Policyholder Benefits
194.4
241.1
Shareholders’ Equity Excluding Net
Unrealized Losses on Fixed Maturities and Change in Discount Rate
on Future Life Policyholder Benefits1
$
2,958.3
$
3,146.3
Underlying Combined Ratio1 is a
non-GAAP financial measure. It 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 Ratio, including the impact of catastrophe losses
and loss and LAE reserve development from prior years, with the
Insurance Expense Ratio.
Kemper believes Underlying Losses and LAE and the Underlying
Combined Ratio are useful to investors and uses these financial
measures to reveal the trends in Kemper’s Property & Casualty
Insurance segments that may be obscured by catastrophe losses and
prior-year reserve development. These catastrophe losses may cause
Kemper’s 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 developments are 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 Kemper’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 Kemper’s underwriting performance.
Conference Call
Kemper will host its conference call to discuss second quarter
2023 results on Monday August 7th, at 5:00 p.m. Eastern (4:00 p.m.
Central). The conference call will be accessible via the internet
and by telephone at 888.259.6580, access code 65460758. 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 second quarter of 2023, which is available at the investor
section of kemper.com.
About Kemper
The Kemper family of companies is one of the nation’s leading
specialized insurers. With approximately $13 billion in assets,
Kemper is improving the world of insurance by providing affordable
and easy-to-use personalized solutions to individuals, families and
businesses through its Kemper Auto, Kemper Personal Insurance, and
Kemper Life brands. Kemper serves over 4.9 million policies, is
represented by approximately 26,000 agents and brokers, and has
approximately 8,800 associates dedicated to meeting the
ever-changing needs of its customers.
Learn more about Kemper at kemper.com.
Caution Regarding Forward-Looking Statements
This press release may contain or incorporate by reference
information that includes or is based on forward-looking statements
within the meaning of the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. We caution investors that
these forward-looking statements are not guarantees of future
performance, and actual results may differ materially. Such
statements involve known and unknown risks, uncertainties, and
other factors, including but not limited to:
- changes in the frequency and severity of insurance claims;
- claim development and the process of estimating claim
reserves;
- the impacts of inflation;
- changes in the interest rate environment;
- supply chain disruption;
- product demand and pricing;
- effects of governmental and regulatory actions;
- litigation outcomes;
- investment risks;
- cybersecurity risks;
- impact of catastrophes; and
- other risks and uncertainties detailed in Kemper’s Annual
Report on Form 10-K and subsequent filings with the Securities and
Exchange Commission (“SEC”).
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230807312879/en/
Investors: Karen Guerra 312.668.9720 or investors@kemper.com
Media: Barbara Ciesemier 312.661.4521 or bciesemier@kemper.com
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