KEMPER Corp: Form 10-Q for the period ended Mar 31, 2025
Filed with the SEC on May 7, 2025 and accepted by EDGAR at May 7, 2025, 20:13 ET.
Management's discussion and analysis
As filed, 55,279 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Non-GAAP Financial Measures
In this report, the Company presents certain measures of its performance on a consolidated and segment basis that are not calculated in accordance with GAAP. We believe that these non-GAAP financial measures enhance the understanding for the Company and our investors of our performance by highlighting the results of operations and the underlying profitability drivers of our business. Segment-specific financial measures are calculated using only the portion of consolidated results attributable to that specific segment.
Adjusted Consolidated Net Operating Income
The Company believes that the non-GAAP financial measure of Adjusted 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. The most directly comparable GAAP financial measure is Net Income attributable to Kemper Corporation.
Adjusted Consolidated Net Operating Income is an after-tax, non-GAAP financial measure and is computed by excluding from Net Income attributable to Kemper Corporation the after-tax impact of:
(i) Change in Fair Value of Equity and Convertible Securities;
(ii) Net Realized Investment Gains;
(iii) Impairment Losses;
(iv) Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs;
(v) Debt Extinguishment, Pension Settlement and Other Charges;
(vi) Goodwill Impairment Charges;
(vii) Non-Core Operations; and
(viii) 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. There were no applicable significant non-recurring items that the Company excluded from the calculation of Adjusted Consolidated Net Operating Income for the three months ended March 31, 2025 or 2024.
Change in Fair Value of Equity and Convertible Securities, Net Realized Investment Gains and Impairment Losses 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. Acquisition and Disposition Related Transaction Costs, Integration Costs, and 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 Settlement and Other Charges relate to (i) loss from early extinguishment of debt, which 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; (ii) settlement of pension plan obligations which are business decisions made by the Company, 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. Non-Core Operations includes the results of our Preferred Insurance business which we expect to fully exit. These results are excluded because they are irrelevant to our ongoing operations and do not qualify for Discontinued Operations under GAAP. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.
Underlying Losses and Loss Adjustment Expenses (“LAE”) and Underlying Combined Ratio
The following discussion uses the non-GAAP financial measures of (i) Underlying Losses and LAE and (ii) Underlying Combined Ratio. Underlying Losses and LAE (also referred to in the discussion as “Current Year Non-catastrophe Losses and
Non-GAAP Financial Measures (Continued)
LAE”) exclude the impact of catastrophe losses and loss and LAE reserve development from prior years from the Company’s Incurred Losses and LAE, which is the most directly comparable GAAP financial measure.
The Underlying Combined Ratio 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.
The Company believes Underlying Losses and LAE and the Underlying Combined Ratio are useful to investors and uses these financial measures to reveal the trends in the Company’s Property & Casualty Insurance segment that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses may cause the Company’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 the Company’s insurance products in the current period. The Company believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing the Company’s underwriting performance.
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 overall profitability of the Company’s businesses.
Summary of Results
Net Income attributable to Kemper Corporation was $99.7 million ($1.56 per unrestricted common share) for the three months ended March 31, 2025, compared to Net Income attributable to Kemper Corporation of $71.3 million ($1.11 per unrestricted common share) for the same period in 2024.
A reconciliation of Net Income attributable to Kemper Corporation to Adjusted Consolidated Net Operating Income (a non-GAAP financial measure) for the three months ended March 31, 2025 and 2024 is presented below.
(Dollars in Millions)
| Three Months Ended Mar 31, 2025 | Mar 31, 2024 | Change | |
|---|---|---|---|
| Net Income attributable to Kemper Corporation | 99.7 | 71.3 | 28.4 |
| Less: | |||
| Change in Fair Value of Equity and Convertible Securities | 0.1 | 2.7 | (2.6) |
| Net Realized Investment Gains | 0.7 | 5.2 | (4.5) |
| Impairment Losses | 0.2 | (1.2) | 1.4 |
| Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs | (4.2) | (10.1) | 5.9 |
| Debt Extinguishment, Pension Settlement, and Other Charges | 0.4 | — | 0.4 |
| Non-Core Operations | (3.9) | 5.0 | (8.9) |
| Adjusted Consolidated Net Operating Income | $106.4 | $69.7 | $36.7 |
| Components of Adjusted Consolidated Net Operating Income: | |||
| Segment Adjusted Net Operating Income: | |||
| Specialty Property & Casualty Insurance | $97.9 | $69.2 | $28.7 |
| Life Insurance | 17.2 | 11.9 | 5.3 |
| Total Segment Adjusted Net Operating Income | 115.1 | 81.1 | 34.0 |
| Corporate and Other Adjusted Net Operating Loss | (11.4) | (12.5) | 1.1 |
| Less: Net (Loss) Income attributable to Noncontrolling Interest | (2.7) | (1.1) | (1.6) |
| Adjusted Consolidated Net Operating Income | $106.4 | $69.7 | $36.7 |
44
Summary of Results (Continued)
Net Income attributable to Kemper Corporation
Net Income attributable to Kemper Corporation increased by $28.4 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to higher Adjusted Consolidated Net Operating Income.
Adjusted Consolidated Net Operating Income increased by $36.7 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to an improvement in the Specialty Property & Casualty Insurance segment profitability driven higher average earned premiums per exposure resulting from rate increases and higher business volumes, partially offset by higher underlying claim severity.
The loss from Non-Core Operations increased by $8.9 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to reduced earned premiums outpacing reduced expenses as well as a reduction in net investment income due to lower levels of Fixed Income securities related to the run-off of the business.
Corporate and Other Adjusted Net Operating Loss decreased by $1.1 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily driven by lower interest expense due to the redemption of $450 million of 4.350% senior notes.
Revenues
Total Revenues increased by $50.0 million to $1,193.0 million for the three months ended March 31, 2025, compared to $1,143.0 million for the same period in 2024. The increase was primarily driven by higher earned premiums.
Earned Premiums increased by $56.0 million to $1,087.9 million for the three months ended March 31, 2025, compared to $1,031.9 million for the same period in 2024, primarily driven by a $122.2 million increase from the Specialty Property & Casualty Insurance segment due to higher average earned premium per exposure resulting from rate increases and higher business volumes. This was partially offset by a $68.6 million reduction in premiums from our Preferred Insurance business, reported as Non-Core Operations, due primarily to lower volumes resulting from the exit and run-off of the business.
Net Investment Income increased by $0.8 million to $101.2 million for the three months ended March 31, 2025, compared to $100.4 million for the same period in 2024, mostly driven by higher rate earned on Company-Owned Life Insurance and higher average levels of Short-term Investments, partially offset by lower levels and a decrease in yields from Fixed Income securities.
Net Realized Investment Gains decreased by $5.7 million to $0.9 million for the three months ended March 31, 2025, compared to $6.6 million for the same period in 2024, due primarily to decreased gains on sales of fixed maturity investments, partially offset by the absence of net realized losses on ultra-long treasury future derivative transactions that did not qualify for hedge accounting.
Specialty Property & Casualty Insurance
Selected financial information for the Specialty Property & Casualty Insurance segment is presented below.
(Dollars in Millions)
| Three Months Ended Mar 31, 2025 | Mar 31, 2024 | |
|---|---|---|
| Net Premiums Written | $1,068.8 | $864.6 |
| Earned Premiums | $962.2 | $840.0 |
| Net Investment Income | 50.5 | 41.1 |
| Other Income | 1.3 | 1.4 |
| Total Revenues | 1,014.0 | 882.5 |
| Incurred Losses and LAE related to: | ||
| Current Year: | ||
| Non-catastrophe Losses and LAE | 682.3 | 609.0 |
| Catastrophe Losses and LAE | 3.8 | 4.1 |
| Prior Years: | ||
| Non-catastrophe Losses and LAE | 0.5 | 5.3 |
| Catastrophe Losses and LAE | 0.2 | 0.7 |
| Total Incurred Losses and LAE | 686.8 | 619.1 |
| Insurance Expenses | 205.1 | 176.9 |
| Segment Adjusted Operating Income | 122.1 | 86.5 |
| Income Tax Expense | 24.2 | 17.3 |
| Total Segment Adjusted Net Operating Income | $97.9 | $69.2 |
| Ratios Based On Earned Premiums | ||
| Current Year Non-catastrophe Losses and LAE Ratio | 70.9% | 72.5% |
| Current Year Catastrophe Losses and LAE Ratio | 0.4 | 0.5 |
| Prior Years Non-catastrophe Losses and LAE Ratio | 0.1 | 0.6 |
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 |
| Total Incurred Loss and LAE Ratio | 71.4 | 73.7 |
| Insurance Expense Ratio | 21.3 | 21.1 |
| Combined Ratio | 92.7% | 94.8% |
| Underlying Combined Ratio | ||
| Current Year Non-catastrophe Losses and LAE Ratio | 70.9% | 72.5% |
| Insurance Expense Ratio | 21.3 | 21.1 |
| Underlying Combined Ratio | 92.2% | 93.6% |
| Non-GAAP Measure Reconciliation | ||
| Combined Ratio | 92.7% | 94.8% |
| Less: | ||
| Current Year Catastrophe Losses and LAE Ratio | 0.4 | 0.5 |
| Prior Years Non-catastrophe Losses and LAE Ratio | 0.1 | 0.6 |
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 |
| Underlying Combined Ratio | 92.2% | 93.6% |
46
Specialty Property & Casualty Insurance (Continued)
Insurance Reserves
(Dollars in Millions)
| Insurance Reserves: | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|
| Personal Automobile | $1,640.3 | $1,626.0 |
| Commercial Automobile | 771.5 | 721.9 |
| Total Insurance Reserves | $2,411.8 | $2,347.9 |
| Insurance Reserves: | ||
| Loss and Allocated LAE Reserves: | ||
| Case and Allocated LAE | $930.1 | $921.8 |
| Incurred But Not Reported | 1,300.5 | 1,250.6 |
| Total Loss and LAE Reserves | 2,230.6 | 2,172.4 |
| Unallocated LAE Reserves | 181.2 | 175.5 |
| Total Insurance Reserves1 | $2,411.8 | $2,347.9 |
| 1Includes $14.7 million and $9.4 million attributable to Kemper Reciprocal as of March 31, 2025 and December 31, 2024, respectively, which is reported as a consolidated variable interest entity. |
See MD&A, “Critical Accounting Estimates,” of the 2024 Annual Report for additional information pertaining to the Company’s process of estimating property and casualty insurance reserves for losses and LAE, development of property and casualty insurance losses and LAE from prior accident years, also referred to as “reserve development” in the discussion of segment results, estimated variability of property and casualty insurance reserves for losses and LAE, and a discussion of some of the variables that may impact development of property and casualty insurance losses and LAE and the estimated variability of property and casualty insurance reserves for losses and LAE.
Overall
Three Months Ended March 31, 2025 Compared to the Same Period in 2024
The Specialty Property & Casualty Insurance segment reported Total Segment Adjusted Net Operating Income of $97.9 million for the three months ended March 31, 2025, compared to Total Segment Adjusted Net Operating Income of $69.2 million for the same period in 2024. Segment adjusted net operating results improved by $28.7 million that included a $25.4 million and $3.3 million increase from personal automobile and commercial vehicle insurance, respectively, due primarily to higher average earned premiums per exposure resulting from rate increases, partially offset by increased underlying claim severity.
Earned Premiums in the Specialty Property & Casualty Insurance segment increased by $122.2 million for the three months ended March 31, 2025, compared to the same period in 2024, due to higher average earned premium per exposure resulting from rate increases and higher business volumes.
Net Investment Income in the Specialty Property & Casualty Insurance segment increased by $9.4 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to higher levels of Fixed Income securities, higher rate earned on Company-Owned Life Insurance, and higher average levels of Short-term Investments.
Incurred losses and LAE were $686.8 million, or 71.4% of earned premiums for the three months ended March 31, 2025, compared to $619.1 million, or 73.7% of earned premiums, for the same period in 2024. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss and LAE ratio. Underlying losses and LAE as a percentage of earned premiums were 70.9% for the three months ended March 31, 2025, an improvement of 1.6 percentage points, compared to the same period in 2024, driven by higher average earned premium per exposure (12.6% increase year over year) resulting from rate increases and lower underlying claims frequency, partially offset by higher claims average severity. Underlying losses and LAE exclude the impact of catastrophes and loss and LAE reserve development. Adverse loss and LAE reserve development (including catastrophe reserve development) was $0.7 million for the three months ended March 31, 2025, compared to adverse development of $6.0 million for the same period in 2024, an improvement of $5.3 million due primarily to normalization in loss patterns within property damage coverages. Catastrophe losses and LAE (excluding reserve development) were $3.8 million for the three months ended March 31, 2025 compared to $4.1 million for the same period in 2024, an improvement of $0.3 million due to fewer catastrophe events in the quarter.
Specialty Property & Casualty Insurance (Continued)
Insurance Expenses were $205.1 million, or 21.3% of earned premiums, for the three months ended March 31, 2025, compared to $176.9 million, or 21.1% of earned premiums for the same period in 2024. Insurance Expenses increased $28.2 million due to higher volume-related expenses associated with increased business volumes.
The Specialty Property & Casualty Insurance segment’s first quarter of 2025 effective income tax rate was 19.8% compared to 19.9% for the same period in 2024. The effective income tax rate for the first quarters of 2025 and 2024 differs from the federal statutory income tax rate primarily due to investments in Company-Owned Life Insurance, Tax-Exempt Investment Income and Dividends Received Deductions. The change in the effective tax rate from the first quarter of 2024 is driven by an increased benefit from Company-Owned Life Insurance.
Specialty Personal Automobile Insurance
Selected financial information for the specialty personal automobile insurance product line is presented below.
(Dollars in Millions)
| Three Months Ended Mar 31, 2025 | Mar 31, 2024 | |
|---|---|---|
| Net Premiums Written | $823.9 | $672.5 |
| Earned Premiums | $753.7 | $675.3 |
| Incurred Losses and LAE related to: | ||
| Current Year: | ||
| Non-catastrophe Losses and LAE | $528.4 | $485.7 |
| Catastrophe Losses and LAE | 2.7 | 3.5 |
| Prior Years: | ||
| Non-catastrophe Losses and LAE | (4.7) | 6.5 |
| Catastrophe Losses and LAE | 0.1 | 0.6 |
| Total Incurred Losses and LAE | $526.5 | $496.3 |
| Ratios Based On Earned Premiums | ||
| Current Year Non-catastrophe Losses and LAE Ratio | 70.1% | 71.9% |
| Current Year Catastrophe Losses and LAE Ratio | 0.4 | 0.5 |
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.6) | 1.0 |
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 |
| Total Incurred Loss and LAE Ratio | 69.9% | 73.5% |
| Insurance Expense Ratio | 22.1% | 21.6% |
| Combined Ratio | 92.0% | 95.1% |
| Underlying Combined Ratio | ||
| Current Year Non-catastrophe Losses and LAE Ratio | 70.1% | 71.9% |
| Insurance Expense Ratio | 22.1 | 21.6 |
| Underlying Combined Ratio | 92.2% | 93.5% |
| Non-GAAP Measure Reconciliation | ||
| Combined Ratio | 92.0% | 95.1% |
| Less: | ||
| Current Year Catastrophe Losses and LAE Ratio | 0.4 | 0.5 |
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.6) | 1.0 |
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 |
| Underlying Combined Ratio | 92.2% | 93.5% |
48
Specialty Property & Casualty Insurance (Continued)
Three Months Ended March 31, 2025 Compared to the Same Period in 2024
Earned Premiums on personal automobile insurance increased by $78.4 million for the three months ended March 31, 2025, compared to the same period in 2024, due to higher average earned premium per exposure resulting from rate increases and higher business volumes. Incurred losses and LAE were $526.5 million, or 69.9% of earned premiums for the three months ended March 31, 2025, compared to $496.3 million, or 73.5% of earned premiums, for the same period in 2024. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss and LAE ratio. Underlying losses and LAE as a percentage of related earned premiums were 70.1% for the three months ended March 31, 2025, compared to 71.9% for the same period in 2024, an improvement of 1.8 percentage points primarily driven by higher average earned premiums per exposure resulting from rate increases, partially offset by higher claims average severity trends. Favorable loss and LAE reserve development was $4.6 million for the three months ended March 31, 2025, compared to adverse development of $7.1 million for the same period in 2024, an improvement of $11.7 million due primarily to stabilization of loss patterns in bodily injury and property damage coverages. Catastrophe losses and LAE (excluding reserve development) were $2.7 million for the three months ended March 31, 2025, compared to $3.5 million for the same period in 2024, an improvement of $0.8 million mainly due to few catastrophe events in the quarter.
Specialty Property & Casualty Insurance (Continued)
Commercial Automobile Insurance
Selected financial information for the commercial automobile insurance product line is presented below.
(Dollars in Millions)
| Three Months Ended Mar 31, 2025 | Mar 31, 2024 | |
|---|---|---|
| Net Premiums Written | $244.9 | $192.1 |
| Earned Premiums | $208.5 | $164.7 |
| Incurred Losses and LAE related to: | ||
| Current Year: | ||
| Non-catastrophe Losses and LAE | $153.9 | $123.3 |
| Catastrophe Losses and LAE | 1.1 | 0.6 |
| Prior Years: | ||
| Non-catastrophe Losses and LAE | 5.2 | (1.2) |
| Catastrophe Losses and LAE | 0.1 | 0.1 |
| Total Incurred Losses and LAE | $160.3 | $122.8 |
| Ratios Based On Earned Premiums | ||
| Current Year Non-catastrophe Losses and LAE Ratio | 73.9% | 74.8% |
| Current Year Catastrophe Losses and LAE Ratio | 0.5 | 0.4 |
| Prior Years Non-catastrophe Losses and LAE Ratio | 2.5 | (0.7) |
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 |
| Total Incurred Loss and LAE Ratio | 76.9% | 74.6% |
| Insurance Expense Ratio | 18.4% | 19.0% |
| Combined Ratio | 95.3% | 93.6% |
| Underlying Combined Ratio | ||
| Current Year Non-catastrophe Losses and LAE Ratio | 73.9% | 74.8% |
| Insurance Expense Ratio | 18.4 | 19.0 |
| Underlying Combined Ratio | 92.3% | 93.8% |
| Non-GAAP Measure Reconciliation | ||
| Combined Ratio | 95.3% | 93.6% |
| Less: | ||
| Current Year Catastrophe Losses and LAE Ratio | 0.5 | 0.4 |
| Prior Years Non-catastrophe Losses and LAE Ratio | 2.5 | (0.7) |
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 |
| Underlying Combined Ratio | 92.3% | 93.8% |
Three Months Ended March 31, 2025 Compared to the Same Period in 2024
Earned Premiums from commercial automobile insurance increased by $43.8 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to higher average earned premium per exposure resulting from rate increases and targeted mix shifts, and higher business volumes. Incurred losses and LAE were $160.3 million, or 76.9% of earned premiums in 2025, compared to $122.8 million, or 74.6% of earned premiums in 2024. Incurred losses and LAE as a percentage of earned premiums increased primarily due to higher claims average severity trends. Underlying losses and LAE as a percentage of earned premiums were 73.9% for the three months ended March 31, 2025, compared to 74.8% during the same time period in 2024, an improvement of 0.9 percentage points due primarily to higher average earned premiums per exposure resulting from rate increases and mix shifts and a lower frequency of claims, partially offset by higher claims average severity trends. Adverse loss and LAE reserve development was $5.3 million for the three months ended March 31, 2025, compared to favorable development of $1.1 million for the same period in 2024, a deterioration of $6.4 million due primarily to evolving loss patterns in bodily injury coverages.
Life Insurance
Selected financial information for the Life Insurance segment is presented below.
(Dollars in Millions)
| Three Months Ended Mar 31, 2025 | Mar 31, 2024 | |
|---|---|---|
| Earned Premiums | $99.7 | $97.3 |
| Net Investment Income | 48.4 | 44.3 |
| Other Income | 0.7 | 0.3 |
| Total Revenues | 148.8 | 141.9 |
| Policyholders’ Benefits and Incurred Losses and LAE | 62.2 | 63.0 |
| Insurance Expenses | 66.4 | 64.9 |
| Segment Adjusted Operating Income | 20.2 | 14.0 |
| Income Tax Expense | 3.0 | 2.1 |
| Total Segment Adjusted Net Operating Income | $17.2 | $11.9 |
Insurance Reserves
(Dollars in Millions)
| Insurance Reserves: | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|
| Future Policyholder Benefits | $3,186.0 | $3,154.3 |
| Incurred Losses and LAE Reserves: | ||
| Life | 39.0 | 40.8 |
| Accident and Health | 4.5 | 4.6 |
| Property | 2.1 | 2.7 |
| Total Incurred Losses and LAE Reserves | 45.6 | 48.1 |
| Total Insurance Reserves | $3,231.6 | $3,202.4 |
Overall
Three Months Ended March 31, 2025 Compared to the Same Period in 2024
The Life Insurance segment reported Total Segment Adjusted Net Operating Income of $17.2 million for the three months ended March 31, 2025, compared to $11.9 million for the same period in 2024. The increase in segment net operating results was primarily due to higher net investment income.
Earned Premiums increased $2.4 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to higher average rates on life insurance products.
Net investment income increased by $4.1 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to lower losses on alternative investments and higher rate earned on Company-Owned Life Insurance.
The Life Insurance segment’s first quarter 2025 effective income tax rate was 15.0% compared to 15.2% for the same period in 2024. The effective income tax rate for the first quarters of 2025 and 2024 differs from the federal statutory income tax rate primarily due to investments in Company-Owned Life Insurance and Tax-Exempt Investment Income. The decrease in the effective tax rate from the first quarter of 2024 is driven by an increased benefit from Company-Owned Life Insurance.
Investment Results
Net Investment Income
Net Investment Income for the three months ended March 31, 2025 and 2024 is presented below:
(Dollars in Millions)
| Investment Income: | Three Months Ended Mar 31, 2025 | Mar 31, 2024 |
|---|---|---|
| Interest on Fixed Income Securities1 | $76.4 | $79.8 |
| Dividends on Equity Securities Excluding Alternative Investments | 0.8 | 2.8 |
| Alternative Investments: | ||
| Equity Method Limited Liability Investments | (0.7) | (2.1) |
| Limited Liability Investments Included in Equity Securities | 3.7 | 3.4 |
| Total Alternative Investments | 3.0 | 1.3 |
| Short-term Investments | 8.6 | 7.3 |
| Loans to Policyholders | 5.3 | 5.2 |
| Real Estate | 2.2 | 2.3 |
| Company-Owned Life Insurance | 10.2 | 7.1 |
| Other | 2.0 | 2.5 |
| Total Investment Income | 108.5 | 108.3 |
| Investment Expenses: | ||
| Real Estate | 2.1 | 2.2 |
| Other Investment Expenses | 5.2 | 5.7 |
| Total Investment Expenses | 7.3 | 7.9 |
| Net Investment Income | $101.2 | $100.4 |
| 1Reduced by interest expense incurred on FHLB borrowings used for spread lending purposes of $4.8 million and $5.2 million for the three months ended March 31, 2025 and 2024, respectively. |
Net Investment Income was $101.2 million and $100.4 million for the three months ended March 31, 2025 and 2024, respectively. Net Investment Income increased by $0.8 million in 2025 mostly driven by higher rate earned on Company-Owned Life Insurance and higher levels of Short-term Investments, partially offset by lower levels and a decrease in yields from Fixed Income securities. Net Investment Income from equity securities was $3.8 million for the three months ended March 31, 2025, compared to $4.1 million for the same period in 2024, mostly driven by a decrease from dividends, partially offset by income from alternative investments.
Change in Unrealized Gains and Losses on Investments
The change in unrealized losses on investments for the three months ended March 31, 2025 was a decrease of $70.5 million, primarily attributable to decreases in interest rates.
Investment Results (Continued)
Change in Fair Value of Equity and Convertible Securities
The components of Change in Fair Value of Equity and Convertible Securities for the three months ended March 31, 2025 and 2024 are presented below:
(Dollars in Millions)
| Three Months Ended Mar 31, 2025 | Mar 31, 2024 | |
|---|---|---|
| Preferred Stocks | $0.8 | $0.2 |
| Common Stocks | 0.3 | 0.1 |
| Other Equity Interests: | ||
| Limited Liability Companies and Limited Partnerships | (1.0) | 3.1 |
| Total Other Equity Interests | (1.0) | 3.1 |
| Change in Fair Value of Equity Securities | 0.1 | 3.4 |
| Change in Fair Value of Convertible Securities | — | — |
| Change in Fair Value of Equity and Convertible Securities | $0.1 | $3.4 |
Net Realized Gains on Sales of Investments
The components of Net Realized Investment Gains for the three months ended March 31, 2025 and 2024 are presented below:
(Dollars in Millions)
| Fixed Maturities: | Three Months Ended Mar 31, 2025 | Mar 31, 2024 |
|---|---|---|
| Gains on Sales | $1.3 | $12.8 |
| Losses on Sales | (0.5) | (2.3) |
| Gains (Losses) on Hedging Activity | — | (7.9) |
| Equity Securities: | ||
| Gains on Sales | — | 4.1 |
| Losses on Sales | — | (0.1) |
| Other Investments: | ||
| Gains on Sales | 0.1 | — |
| Losses on Sales | — | — |
| Net Realized Investment Gains | $0.9 | $6.6 |
| Gross Gains on Sales | $1.4 | $16.9 |
| Gross Losses on Sales | (0.5) | (2.4) |
| Gains (Losses) on Hedging Activity | — | (7.9) |
| Net Realized Investment Gains | $0.9 | $6.6 |
Fixed Maturities
Net realized gains and losses on sales of fixed maturities for the three months ended March 31, 2025 and 2024 primarily relate to normal portfolio management.
Impairment Losses
The Company regularly reviews its investment portfolio to determine whether a decline in the fair value of an investment has occurred from credit or other, non-credit related factors. If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the Condensed Consolidated Statements of Income in the period that the declines are evaluated. Conversely, an increase in the fair
Investment Results (Continued)
value or disposal of an investment with a previously established credit allowance will result in the reversal of impairment losses reported in the Condensed Consolidated Statements of Income in the period.
The components of Impairment Losses in the Condensed Consolidated Statements of Income for the three months ended March 31, 2025 and 2024 were:
(Dollars in Millions)
| Three Months Ended Mar 31, 2025 Amount | Number of Issuers | Mar 31, 2024 Amount | Number of Issuers | |
|---|---|---|---|---|
| Fixed Maturities | $0.3 | 18 | $(1.0) | 16 |
| Equity Securities at Modified Cost | — | — | (0.4) | 1 |
| Real Estate | — | — | — | — |
| Other | — | — | (0.1) | 7 |
| Impairment Losses1 | $0.3 | $(1.5) |
1 Includes losses from intent-to-sell securities and direct write-down securities of $1.2 million and $1.5 million for the three months ended March 31, 2025 and 2024, respectively.
Investment Quality and Concentrations
The Company’s fixed maturity investment portfolio is comprised primarily of high-grade corporate, municipal and agency bonds. At March 31, 2025, approximately 94.5% of the Company’s fixed maturity investment portfolio was rated investment-grade, which the Company defines as a security issued by a high quality obligor with at least a relatively stable credit profile and where it is highly likely that all contractual payments of principal and interest will timely occur and carry a rating from the National Association of Insurance Commissioners (“NAIC”) of 1 or 2. Securities with a rating of 1 or 2 from the NAIC typically are rated by one or more Nationally Recognized Statistical Rating Organizations and either have a rating of AAA, AA, A or BBB from Standard & Poor’s (“S&P”); a rating of Aaa, Aa, A or Baa from Moody’s Investors Service (“Moody’s”); or a rating of AAA, AA, A or BBB from Fitch Ratings.
The following table summarizes the credit quality of the Company’s fixed maturity investment portfolio at March 31, 2025 and December 31, 2024:
(Dollars in Millions)
| NAIC Rating Rating | Mar 31, 2025 Amortized Cost | Fair Value | Percentage of Total | Dec 31, 2024 Amortized Cost | Fair Value | Percentage of Total |
|---|---|---|---|---|---|---|
| 1 AAA, AA, A | $5,295.6 | $4,670.1 | 71.2% | $5,253.1 | $4,576.4 | 71.4% |
| 2 BBB | 1,696.4 | 1,526.2 | 23.3 | 1,749.3 | 1,557.6 | 24.3 |
| 3-4 BB, B | 318.0 | 310.1 | 4.7 | 233.0 | 221.7 | 3.5 |
| 5-6 CCC or Lower | 62.2 | 52.2 | 0.8 | 59.6 | 53.9 | 0.8 |
| Total Investments in Fixed Maturities | $7,372.2 | $6,558.6 | 100.0% | $7,295.0 | $6,409.6 | 100.0% |
Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $14.0 million and $14.2 million at March 31, 2025 and December 31, 2024, respectively.
Investment Quality and Concentrations (Continued)
The following table summarizes the fair value of the Company’s investments in governmental fixed maturities at March 31, 2025 and December 31, 2024:
(Dollars in Millions)
| Mar 31, 2025 Fair Value | Percentage of Total Investments | Dec 31, 2024 Fair Value | Percentage of Total Investments | |
|---|---|---|---|---|
| U.S. Government and Government Agencies and Authorities | $511.9 | 6.0% | $486.8 | 5.5% |
| States and Political Subdivisions: | ||||
| Revenue Bonds | 1,100.2 | 12.8 | 1,105.7 | 12.4 |
| States | 74.1 | 0.9 | 72.4 | 0.8 |
| Political Subdivisions | 57.7 | 0.7 | 55.1 | 0.6 |
| Foreign Governments | 6.6 | 0.1 | 6.6 | 0.1 |
| Total Investments in Governmental Fixed Maturities | $1,750.5 | 20.5% | $1,726.6 | 19.4% |
The following table summarizes the fair value of the Company’s investments in non-governmental fixed maturities by industry at March 31, 2025 and December 31, 2024.
(Dollars in Millions)
| Mar 31, 2025 Fair Value | Percentage of Total Investments | Dec 31, 2024 Fair Value | Percentage of Total Investments | |
|---|---|---|---|---|
| Finance, Insurance and Real Estate | $2,094.1 | 24.4% | $1,969.1 | 22.2% |
| Manufacturing | 1,014.5 | 11.8 | 1,014.3 | 11.4 |
| Transportation, Communication and Utilities | 797.9 | 9.3 | 793.0 | 8.9 |
| Services | 589.0 | 6.9 | 582.9 | 6.6 |
| Mining | 156.1 | 1.8 | 153.3 | 1.7 |
| Retail Trade | 130.0 | 1.5 | 125.7 | 1.4 |
| Construction | 9.8 | 0.1 | 11.7 | 0.1 |
| Other | 26.1 | 0.3 | 33.0 | 0.4 |
| Total Investments in Non-governmental Fixed Maturities | $4,817.5 | 56.1% | $4,683.0 | 52.7% |
The following table summarizes the fair value of the Company’s investments in non-governmental fixed maturities by range of amounts invested at March 31, 2025.
(Dollars in Millions)
| Number of Issuers | Aggregate Fair Value | |
|---|---|---|
| Below $5 | 677 | $1,408.6 |
| $5 -$10 | 190 | 1,402.3 |
| $10 - $20 | 104 | 1,415.5 |
| $20 - $30 | 16 | 378.8 |
| Greater Than $30 | 6 | 212.3 |
| Total | 993 | $4,817.5 |
The Company’s short-term investments primarily consist of U.S. Treasury bills, short-term bonds and money market funds . At March 31, 2025, the Company had $273.3 million invested in U.S. Treasury bills and short-term bonds and $272.1 million invested in money market funds, which primarily invest in U.S. Treasury securities.
Investment Quality and Concentrations (Continued)
The following table summarizes the fair value of the Company’s ten largest investment exposures in a single issuer, excluding investments in U.S. Government and Government Agencies and Authorities and Short-term Investment, at March 31, 2025:
(Dollars in Millions)
| Fixed Maturities: States including their Political Subdivisions: | Fair Value | Percentage of Total Investments |
|---|---|---|
| California | $134.6 | 1.6% |
| Texas | 102.3 | 1.2 |
| Michigan | 83.2 | 1.0 |
| Georgia | 70.1 | 0.8 |
| New York | 60.5 | 0.7 |
| Florida | 52.8 | 0.6 |
| Pennsylvania | 47.7 | 0.6 |
| Louisiana | 38.3 | 0.4 |
| Virginia | 36.5 | 0.4 |
| Colorado | 35.1 | 0.4 |
| Total | $661.1 | 7.7% |
56
Investments in Limited Liability Companies and Limited Partnerships
The Company owns investments in various limited liability investment companies and limited partnerships that primarily invest in mezzanine debt, real estate, and senior debt. Investments in limited liability investment companies and limited partnerships are reported either as Equity Method Limited Liability Investments, Other Equity Interests included in Equity Securities at Fair Value, or Other Investments, depending on the accounting method used to report the investment. Additional information pertaining to these investments at March 31, 2025 and December 31, 2024 is presented below.
(Dollars in Millions)
| Asset Class Reported as Equity Method Limited Liability Investments: | Unfunded Commitment Mar 31, 2025 | Reported Value Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|---|
| Senior Debt | $47.6 | $21.2 | $19.1 |
| Mezzanine Debt | 41.9 | 115.1 | 116.7 |
| Secondary Transactions | 1.6 | 5.1 | 5.5 |
| Leveraged Buyout | 0.6 | 7.4 | 7.5 |
| Real Estate | — | 27.4 | 27.3 |
| Distressed Debt | — | 3.6 | 4.4 |
| Hedge Fund | — | 0.1 | 0.1 |
| Other | 0.1 | 5.2 | 5.7 |
| Total Equity Method Limited Liability Investments | 91.8 | 185.1 | 186.3 |
| Reported as Other Equity Interests at Fair Value: | |||
| Mezzanine Debt | 66.2 | 118.4 | 116.9 |
| Leveraged Buyout | 31.3 | 30.8 | 19.2 |
| Distressed Debt | 15.7 | 11.1 | 11.7 |
| Senior Debt | 7.7 | 26.3 | 26.3 |
| Growth Equity | 7.2 | 7.7 | 7.0 |
| Secondary Transactions | 1.6 | 2.2 | 2.4 |
| Other | 0.2 | 0.1 | 0.1 |
| Total Reported as Other Equity Interests at Fair Value | 129.9 | 196.6 | 183.6 |
| Reported as Other Investments: | |||
| Alternative Energy Partnership Investments | — | 17.3 | 17.6 |
| Equity Securities at Modified Cost | — | 1.8 | 1.8 |
| Total Reported as Other Investments | — | 19.1 | 19.4 |
| Total Investments in Limited Liability Companies and Limited Partnerships | $221.7 | $400.8 | $389.3 |
The Company expects that it will be required to fund its commitments over the next several years. The Company expects that the proceeds from distributions from these investments will be the primary source of funding of such commitments.
Insurance, Interest, and Other Expenses
Expenses for the three months ended March 31, 2025 and 2024 were:
(Dollars in Millions)
| Insurance and Other Expenses: Insurance Expenses: | Three Months Ended Mar 31, 2025 | Mar 31, 2024 |
|---|---|---|
| Policy Acquisition Costs | $164.3 | $154.9 |
| Business Unit Operating Costs | 75.1 | 64.3 |
| Corporate Overhead Costs | 46.7 | 48.8 |
| Insurance Expenses | 286.1 | 268.0 |
| Other Expenses: | ||
| Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs | 5.3 | 12.8 |
| Other Corporate Costs | 3.1 | 5.6 |
| Other Expenses | 8.4 | 18.4 |
| Insurance and Other Expenses | 294.5 | 286.4 |
| Interest Expense | 11.4 | 14.0 |
| Total Insurance, Interest, and Other Expenses | $305.9 | $300.4 |
Insurance and Other Expenses
Insurance Expenses were $286.1 million in 2025 compared to $268.0 million in 2024. Policy acquisition costs increased $9.4 million and business unit operating costs increased $10.8 million compared to the same period in 2024, primarily due to growth in the Specialty Property & Casualty Insurance segment from higher average earned premium per exposure resulting from rate increases and higher business volumes, partially offset by reductions due to lower volumes resulting from the exit and run-off of the Preferred Insurance business.
Other Expenses decreased by $10.0 million in 2025, compared to 2024, due primarily to lower Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs from the completion of certain strategic initiatives and lower costs in connection with investments in information technology.
Interest Expense
Interest expense decreased by $2.6 million for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to redemption of $450 million of 4.350% senior notes.
Income Taxes
The federal corporate statutory income tax rate was 21% for the three months ended March 31, 2025 and March 31, 2024. The Company’s effective income tax rate, which was 19.1% for the three months ended March 31, 2025 and 2024, differs from the federal corporate income tax rate due primarily to (1) the effects of tax-exempt investment income, (2) nontaxable income associated with the change in cash surrender value on Company-Owned Life Insurance, (3) general business tax credits, (4) a permanent difference between the amount of long-term equity-based compensation expense recognized under GAAP and the amount deductible for Federal tax purposes, (5) a permanent difference associated with nondeductible executive compensation, (6) impact of deferred taxes in foreign jurisdictions, and (7) a change in valuation allowance related to foreign deferred tax assets.
Tax-exempt investment income and dividends received deductions were $3.8 million for the three months ended March 31, 2025, compared to $5.8 million for the same period in 2024.
The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $10.2 million for the three months ended March 31, 2025, compared to $7.1 million for the same period in 2024.
The Company realized federal income tax credits of $0.3 million for the three months ended March 31, 2025 and 2024.
Income Taxes (Continued)
The amount of expense recognized for long-term equity-based compensation expense under GAAP was $2.0 million lower than the amount that would be deductible under the IRC for the three months ended March 31, 2025, compared to $0.7 million lower for the same period in 2024.
The amount of nondeductible executive compensation was $5.3 million for the three months ended March 31, 2025, compared to $4.2 million for the same period in 2024.
Tax expense of $0.8 million was recorded for the three months ended March 31, 2025, compared to a tax benefit of $12.8 million for the same period in 2024 related to income taxes imposed in the foreign jurisdiction in which the Company operates.
The Company recorded a decrease in valuation allowance of $0.8 million for the three months ended March 31, 2025, for those foreign deferred tax assets it determined were not more-likely-than-not to be realized, compared to an increase of $12.8 million for the same period in 2024.
Recently Issued Accounting Pronouncements
The Company has adopted all recently issued accounting pronouncements with effective dates prior to April 1, 2025.
There were no adoptions of such accounting pronouncements during the three months ended March 31, 2025 that had a material impact on the Company’s Condensed Consolidated Financial Statements.
Liquidity and Capital Resources
Amended and Extended Credit Agreement
On March 15, 2022, the Company entered into an amended and extended credit agreement. The amended and extended credit agreement increased the borrowing capacity of the existing unsecured credit agreement to $600.0 million and extended the maturity date to March 15, 2027. Furthermore, the amended and extended credit agreement provides for an accordion feature whereby the Company can increase the revolving credit borrowing capacity by an additional $200.0 million for a total of maximum capacity of $800.0 million. There were no outstanding borrowings under the credit agreement on either March 31, 2025 or December 31, 2024.
Long-term Debt
The Company designates debt obligations as either short-term or long-term based on maturity date at issuance. Total amortized cost of Long-term Debt, Current and Non-Current, outstanding on March 31, 2025 and December 31, 2024 was:
(Dollars in Millions)
| Senior Notes: Current: | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|
| 4.350% Senior Notes due February 15, 2025 | $— | $449.9 |
| Non-Current: | ||
| 2.400% Senior Notes due September 30, 2030 | 397.6 | 397.5 |
| 3.800% Senior Notes due February 23, 2032 | 396.6 | 396.5 |
| 5.875% Fixed-Rate Reset Junior Subordinated Debentures due 2062 | 147.9 | 147.7 |
| Total Long-term Debt Outstanding | $942.1 | $1,391.6 |
See Note 16, “Debt,” to the Condensed Consolidated Financial Statements for more information regarding the Company’s long-term debt.
Federal Home Loan Bank Agreements
Kemper’s subsidiaries, United Insurance, Trinity, and AAC are members of the Federal Home Loan Banks (“FHLBs”) of Chicago, Dallas and Chicago, respectively. AAC became a member of the FHLB of Chicago in May 2022. United Insurance and Trinity became members of the FHLBs of Chicago and Dallas, respectively, in 2013. Under their memberships, United Insurance, Trinity and AAC may borrow through the advance program of their respective FHLB. The Company’s investments
Liquidity and Capital Resources (Continued)
in FHLB common stock are reported at cost and included in Other Investments. The carrying value of FHLB of Chicago common stock was $17.3 million and $16.9 million at March 31, 2025 and December 31, 2024, respectively. The carrying value of FHLB of Dallas common stock was $2.5 million and $8.8 million at March 31, 2025 and December 31, 2024, respectively. The Company periodically uses short-term FHLB borrowings for a combination of cash management and risk management purposes, in addition to long-term FHLB borrowings for spread lending purposes.
During the first three months of 2025, United Insurance received advances of $20.0 million from the FHLB of Chicago and made repayments of $25.1 million. United Insurance had outstanding advances from the FHLB of Chicago totaling $536.2 million at March 31, 2025. These advances were made in connection with the Company’s spread lending program. The proceeds related to these advances were used to purchase fixed maturity securities to earn incremental net investment income.
For these advances, United Insurance held pledged securities in a custodial account with the FHLB of Chicago with a fair value of $635.0 million at March 31, 2025. The fair value of the collateral pledged must be maintained at certain specified levels above the borrowed amount, which can vary depending on the assets pledged. If the fair value of the collateral declines below these specified levels of the amount borrowed, United Insurance would be required to pledge additional collateral or repay outstanding borrowings. See Note 15, “Policyholder Obligations,” to the Condensed Consolidated Financial Statements for additional information about the United Insurance advances and related funding agreements.
Common Stock Repurchases
On May 6, 2020, Kemper’s Board of Directors authorized the repurchase of up to an additional $200.0 million of Kemper common stock, in addition to the $133.3 million remaining under the previous authorization. The Company repurchased approximately $4.0 million in 2025 so that, as of March 31, 2025, the remaining share repurchase authorization was $128.8 million under the repurchase program. The amount and timing of any future share repurchases under the authorization will depend on various factors, including market conditions, the Company’s financial condition, results of operations, available liquidity, particular circumstances and other considerations.
During the three months ended March 31, 2025 Kemper repurchased and retired approximately 64,000 shares of its common stock under its share repurchase authorization for an aggregate cost of $4.0 million and an average cost per share of $62.91. Kemper did not repurchase any shares during the three months ended March 31, 2024.
Dividends to Shareholders
Kemper paid a quarterly dividend of $0.32 and $0.31 per common share in the first quarter of 2025 and 2024, respectively. Dividends and dividend equivalents paid were $20.2 million and $19.5 million for the three months ended March 31, 2025 and 2024, respectively.
Subsidiary Dividends
Various insurance laws restrict the ability of Kemper’s insurance subsidiaries to pay dividends without regulatory approval. Such insurance laws applicable to the Company’s US based insurance subsidiaries generally restrict the amount of dividends paid in an annual period to the greater of statutory net income from the previous year or 10% of statutory capital and surplus. Kemper’s insurance subsidiaries paid $182.6 million of dividends to Kemper during the first three months of 2025. Kemper’s US based insurance subsidiaries’ remaining capacity to pay without prior regulatory approval is estimated to be $86.8 million as of the filing date.
Sources and Uses of Funds
The Company directly held cash and investments totaling $161.3 million at March 31, 2025, compared to $547.6 million at December 31, 2024.
The primary sources of funds available for repayment of Kemper’s indebtedness, repurchases of common stock, future shareholder dividend payments, and the payment of interest on Kemper’s senior notes, include cash and investments directly held by Kemper, receipt of dividends from Kemper’s insurance subsidiaries and borrowings under the credit agreement and from subsidiaries.
The primary sources of funds for Kemper’s insurance subsidiaries are premiums, investment income, proceeds from the sales and maturity of investments, advances from the FHLBs of Chicago and Dallas, and capital contributions from Kemper. The primary uses of funds are the payment of policyholder benefits under life insurance contracts, claims under property and
Liquidity and Capital Resources (Continued)
casualty insurance contracts and accident and health insurance contracts, the payment of commissions and general expenses, the purchase of investments and repayments of advances from the FHLBs of Chicago and Dallas.
Generally, there is a time lag between when premiums are collected and when policyholder benefits and insurance claims are paid. During periods of growth, property and casualty insurance companies typically experience positive operating cash flows and can invest a portion of their operating cash flows to fund future policyholder benefits and claims. During periods in which premium revenues decline, insurance companies may experience negative cash flows from operations and may need to sell investments to fund payments to policyholders and claimants. In addition, if the Company’s property and casualty insurance subsidiaries experience several significant catastrophic events over a relatively short period of time, investments may be sold to fund payments, which could result in investment gains or losses. Management believes that its property and casualty insurance subsidiaries maintain adequate levels of liquidity in the event that they were to experience several future catastrophic events over a relatively short period of time.
Information about the Company’s cash flows for three months ended March 31, 2025 and 2024 is presented below.
(Dollars in Millions)
| Mar 31, 2025 | Mar 31, 2024 | |
|---|---|---|
| Net Cash Provided by Operating Activities | $180.0 | $43.0 |
| Net Cash Provided by Investing Activities | 351.1 | 39.3 |
| Net Cash Used in Financing Activities | (481.1) | (19.7) |
Cash available for investment activities is dependent on cash flow from Operating Activities and Financing Activities and the level of cash the Company elects to maintain.
Net Cash Provided by Operating Activities
Net cash provided by Operating Activities was $180.0 million for the three months ended March 31, 2025, compared to net cash provided of $43.0 million for the same period in 2024. The increase in cash provided by Operating Activities was primarily driven by growth from our Specialty Property Casualty business resulting from higher average earned premiums per exposure resulting from rate increases, higher business volumes, and timing of claim payments.
Net Cash Provided by Investing Activities
Net cash provided by Investing Activities for the three months ended March 31, 2025 was $351.1 million, compared to net cash provided of $39.3 million for the same period in 2024. The increase in cash provided by Investing Activities was primarily due to proceeds from sales of short term investments that were primarily used to fund the redemption of the $450.0 million 4.350% Senior Notes due February 15, 2025.
Net Cash Used in Financing Activities
Net cash used in Financing Activities for the three months ended March 31, 2025 was $481.1 million, compared to net cash used of $19.7 million for the same period in 2024. This increase in net cash used by Financing Activities was primarily due to the redemption of the 2025 Senior Notes in first quarter 2025.
Critical Accounting Estimates
Kemper’s subsidiaries conduct their operations in two industries: property and casualty insurance and life insurance. Accordingly, the Company is subject to several industry-specific accounting principles under GAAP. The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The process of estimation is inherently uncertain. Accordingly, actual results could ultimately differ materially from the estimated amounts reported in a company’s financial statements. Different assumptions are likely to result in different estimates of reported amounts.
The Company’s critical accounting policies most sensitive to estimates include the valuation of investments, the valuation of life insurance reserves, the valuation of reserves for property and casualty insurance incurred losses and LAE, the assessment of recoverability of goodwill, and the recoverability of deferred tax assets. The Company’s critical accounting policies are described in the MD&A included in the 2024 Annual Report. There have been no material changes to the information disclosed
Critical Accounting Estimates (Continued)
in the 2024 Annual Report with respect to these critical accounting estimates and the Company’s significant accounting policies.
Market risk
As filed, 283 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
There have been no material changes to the Company’s disclosures about market risk in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of Part II of the 2024 Annual Report. Accordingly, no disclosures about market risk have been made in Item 3 of this Form 10-Q.
Controls and procedures
As filed, 1,634 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
(a) Evaluation of disclosure controls and procedures.
The Company’s management, with the participation of Kemper’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on such evaluation, Kemper’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by Kemper in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC’s rules and forms, and accumulated and communicated to the Company’s management, including Kemper’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Items not listed here have been omitted because they are inapplicable or the answer is negative.
Risk factors
As filed, 725 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
For a discussion of the Company’s significant risk factors, see Item 1A. of Part I of the 2024 Annual Report. Readers are also advised to consider other factors not presently known by, or considered material to, the Company that could materially affect the Company’s business, financial condition and results of operations, along with other information disclosed in the 2024 Annual Report and this Quarterly Report on Form 10-Q, including the factors set forth under the caption “Caution Regarding Forward-Looking Statements” beginning on page 1 of the 2024 Annual Report and on page 1 of this Quarterly Report on Form 10-Q, and to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-03-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2025-01-01 to 2025-03-31 | $1.19bn | us-gaap:Revenues |
| Interest expense | 3 months2025-01-01 to 2025-03-31 | $11.4m | us-gaap:InterestExpense |
| Income tax | 3 months2025-01-01 to 2025-03-31 | $22.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2025-01-01 to 2025-03-31 | $99.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2025-01-01 to 2025-03-31 | $1.54 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2025-01-01 to 2025-03-31 | $1.56 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2025-01-01 to 2025-03-31 | 64,652,800 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months2025-01-01 to 2025-03-31 | $180.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months2025-01-01 to 2025-03-31 | $7.7m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 3 months2025-01-01 to 2025-03-31 | $20.2m | us-gaap:PaymentsOfDividends |
| Share repurchases | 3 months2025-01-01 to 2025-03-31 | $4.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | At period end2025-03-31 | $12.47bn | us-gaap:Assets |
| Total liabilities | At period end2025-03-31 | $9.56bn | us-gaap:Liabilities |
| Long-term debt | At period end2025-03-31 | $942.1m | us-gaap:LongTermDebt |
| Shareholders' equity | At period end2025-03-31 | $2.92bn | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0000860748-25-000131. Last ingested by Listed: Oct 24, 2026, 14:58 ET. Listed shows no prices and gives no investment advice.