Slide 1: First Quarter 2019 Earnings
First Quarter 2019 Earnings April 29, 2019 Earnings Call Presentation – 1Q 2019
Slide 2: Preliminary Matters
Preliminary Matters Cautionary Statements Regarding Forward-Looking Information This presentation 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 A
Slide 3: Create Long-Term Shareholder Value
Create Long-Term Shareholder Value Leverage competitive advantages to grow returns and BVPS1 over time Diversified sources of earnings; Sustainable competitive Growing returns Strong capital/liquidity advantages and build and book value per positions; core capabilities share over time Disciplined ap
Slide 4: A Leading Specialized Insurer
A Leading Specialized Insurer Taking advantage of a diversified portfolio of niche businesses…. Founded in 1990 and headquartered in Chicago, with subsidiaries writing policies since 1911 ~$12B ~6.3M ~30,000 ~8,100 Assets Policies Agents/Brokers Employees Specialty P&C insurance providing Preferred
Slide 5: Achieving Infinity Acquisition Financial Targets
Achieving Infinity Acquisition Financial Targets Earnings accretion, ROE accretion, and book value earnback targets met Premium Outperformance1,2 Yield Enhancement2 Cost Savings2 >$150mm of written premium above combined Net inv. income above top end of target range; Realized ~60% of revised target
Slide 6: First Quarter 2019 Highlights
First Quarter 2019 Highlights Specialty P&C growth and profitability continues to drive strong results Double-digit return on equity and book value per share (BVPS) accretion Shareholder • 28% increase in BVPS and 30% increase in BVPS ex. net unrealized gains on fixed maturities 1 Value Creation • 1
Slide 7: First Quarter Highlights
First Quarter Highlights Continued execution of strategy yielding strong results As Adjusted As Reported for Acquisition (1) Quarter Ended Quarter Ended (Dollars in millions, except per share amounts) Change Change Mar 31, from 1Q’18 Mar 31, from 1Q’18 2019 (%) 2019 (%) Earned Premiums $1,075 76.3%
Slide 8: Operating Performance
Operating Performance Continued strong operating income coupled with market recovery of equity & convertible securities Three Months Ended, As Reported Dollars per Unrestricted Share - Diluted Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Variance 2019 2018 2018 2018 2018 QoQ Income from Continuing O
Slide 9: Specialty Property & Casualty Insurance Segment
Specialty Property & Casualty Insurance Segment1 Strong, profitable Specialty P&C growth demonstrates value of operating model Key Highlights • 126% growth in policies in-force compared to 1Q’18, as reported, or 10%, as adjusted2 • Underlying combined ratio remained strong, driven by improved loss r
Slide 10: Preferred Property & Casualty Insurance Segment
Preferred Property & Casualty Insurance Segment Efforts to reposition Preferred P&C franchise are ongoing Key Highlights • Progress continues despite elevated catastrophe losses - Auto Underlying Combined Ratio improved slightly to 99.7% compared to 1Q’18 - Home & Other Underlying Combined Ratio det
Slide 11: Life & Health Insurance Segment
Life & Health Insurance Segment Life & Health Segment demonstrated solid fundamentals and modest premium growth Key Highlights • Earned premiums grew 3.4% driven by focus on agency management and process improvement • Benefits and Incurred Losses and LAE ratio within historical range - Represents 20
Slide 12: Consistent Portfolio Returns: High Quality & Diversified
Consistent Portfolio Returns: High Quality & Diversified Stable Net Investment Income Overview • Increase in core portfolio investment (MM) $79 $78 $92 $91 $83 $7 income primarily from the addition of $13 $11 $7 Infinity’s portfolio and organic growth $79 $85 $84 • Alternative investment income prod
Slide 13: Strong Current Capital Position with Ample Liquidity
Strong Current Capital Position with Ample Liquidity Capital position and liquidity resources provide significant financial flexibility Strong Parent Company Liquidity Risk-Based Capital Ratios (%) (MM) $734 $741 Life & Health P&C¹ $684 $641 $609 $582 $404 $400 $385 $385 $540 $490 415 430 410 $330 $
Slide 14: Initiated Operating Leverage Program
Initiated Operating Leverage Program Capital-efficient avenue to increase earnings and enhance shareholder value Operating Leverage Program • Access collateralized advances to invest in high-quality assets • Generate stable, risk-adjusted net investment income • Program is designed to provide enhanc
Slide 15: Appendix
Appendix Earnings Call Presentation – 1Q 2019 15
Slide 16: Capital Deployment Priorities
Capital Deployment Priorities Dedicated to being good stewards of capital 1. Investment in the business • Fund profitable organic growth at appropriate risk-adjusted returns • Strategic investments and acquisitions that enhance our business and meet or exceed our ROE targets over time 2. Return capi
Slide 17: 2019 Reinsurance Program
2019 Reinsurance Program Aggregate stop-loss program intended to reduce volatility from high-frequency, low-severity events Catastrophe Reinsurance Program (Multi-Year) Aggregate Catastrophe Program • Same coverage as 2018 program • Coverage – $50 million in excess of $60 million – $500k deductible
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 Co
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 and convertible securities, 2) ne
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 equiva
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Underlying Combined Ratio 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 addi
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Underlying Combined Ratio – Continued For the Three Months Ended 1Q18 2Q18 3Q18 4Q18 1Q19 Specialty P&C Insurance Combined Ratio as Reported 93.2% 94.5% 99.1% 94.6% 89.3% Current Year Catastrophe Loss and LAE Ratio (0.1%) (0.7%) (0.2%) (0.1%) (0.1%) Prior Years Non-Catast
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition amounts are non-GAAP financial measures. For the three months ended March 31, 2019, as adjusted amounts are computed by subtracting the impact of purchase accounting adjustments from the comparable consolidated GAAP financial measure reported b
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued Consolidated Financial Highlights Three Months Ended 31-Mar-19 31-Mar-18 Earned Premiums Kemper - GAAP As Reported $ 1,074.8 $ 609.8 Infinity - Prior to Acquisition - 354.0 As Adjusted 1 $ 1,074.8 $ 963.8 Net Investment Income Kempe
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued Specialty P&C Insurance Segment Three Months Ended 31-Mar-19 31-Dec-18 30-Sep-18 30-Jun-18 31-Mar-18 Earned Premiums Kemper Specialty P&C - GAAP As Reported $ 729.3 $ 717.8 $ 711.2 $ 320.0 $ 278.4 Infinity - Prior to Acquisition - -
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued Specialty Personal Automobile Insurance Three Months Ended 31-Mar-19 31-Dec-18 30-Sep-18 30-Jun-18 31-Mar-18 Earned Premiums Kemper Specialty P&C - GAAP As Reported $ 669.6 $ 660.5 $ 655.3 $ 307.5 $ 266.2 Infinity - Prior to Acquisi