Slide 1: Third Quarter 2017 Earnings
Third Quarter 2017 Earnings October 30, 2017
Slide 2: Preliminary Matters: Caution Regarding Forward-Looking Statements
Preliminary Matters Caution Regarding Forward‐Looking Statements 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 Act of 1995. For
Slide 3: Create Long-term Shareholder Value
Create Long‐term Shareholder Value 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 approach to capital mgmt Strategic focus: Consumer‐related businesses
Slide 4: Continuing on Journey to Unlock Embedded Value
Continuing on Journey to Unlock Embedded Value Turnaround of Core Businesses & Build Capabilities • Continue profit restoration at Alliance United Near‐term: 2017 • Achieve target 2017 run‐rate expense savings goal • Roll‐out first wave of IT platforms Continue Turnaround & Development of Capa
Slide 5: Third Quarter 2017 Highlights – Strong Results
Third Quarter 2017 Highlights – Strong Results Three Months Ended Nine Months Ended (Dollars in millions, except per Sept. 30, Sept. 30, Variance Sept. 30, Sept. 30, Variance share amounts) 2017 2016 2017 2016 Net Income (Loss) Per Share ‐ Diluted $ 0.92 $ (0.32) $ 1.24 $ 1.62 $ (0.27) $ 1.89 Net Op
Slide 6: Improving Underlying Operating Performance
Improving Underlying Operating Performance Three Months Ended Dollars per Unrestricted Share ‐ Diluted Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, Variance 2017 2017 2017 2016 2016 QoQ Income (Loss) from Continuing Operations $ 0.92 $ 0.71 $ (0.01) $ 0.56 $ (0.36) 1.28 Net Realized Gains and Impa
Slide 7: Stable and Predictable Life & Health Earnings
Stable and Predictable Life & Health Earnings (MM) Revenues Revenues $207 $206 $206 $208 $211 • Comparing 3Q16 to 3Q17, earned $55 $54 $53 $55 $56 premiums increased $3 million driven by higher A&H earned premiums • Net investment income increased $1 $152 $152 $153 $153 $155 million over 3Q16, prima
Slide 8: Profitably Growing Nonstandard Personal Auto
Profitably Growing Nonstandard Personal Auto (MM) Earned Premiums Revenues • Comparing 3Q16 to 3Q17, earned premiums increased $40 million driven by higher volume and higher premium rates $234 $247 in California $207 $211 $216 3Q16 4Q16 1Q17 2Q17 3Q17 (%) Underlying Combined Ratio¹ Underwriting Resu
Slide 9: Preferred Auto Showing Improvement
Preferred Auto Showing Improvement (MM) $187 Earned Premiums by Line $184 Preferred Auto $186 $181 $183 • 3Q17 underlying combined ratio improved $11 $11 $11 $11 $11 1.0 percentage points $69 $68 $66 $67 $67 • Preferred auto remains challenged, but our actions are starting to turn the book; more $10
Slide 10: Consistent Portfolio Returns: High Quality, Moderate Risk
Consistent Portfolio Returns: High Quality, Moderate Risk Strong Performance Despite Low Rates Overview • Investment portfolio produced an (MM) $80 $82 $86 annualized pre‐tax equivalent book yield of $78 $77 $11 $15 $17 5.8 percent in 3Q17, compared to 5.3 $10 $9 percent in 3Q16 • Core portfolio pro
Slide 11: Strong Current Capital Position with Ample Liquidity
Strong Current Capital Position with Ample Liquidity Strong Parent Company Liquidity Risk‐Based Capital Ratios (MM) (%) $734 $741 Life & Health Legacy P&C¹ $684 $561 $572 $404 $400 $385 $404 $384 415 335 445 $341 420 335 375 330 310 $330 $299 $157 $188 2013 2014 2015 2016 3Q17 Borrowings available u
Slide 12: Capital Deployment Priorities
Capital Deployment Priorities 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 capital to shareholders • Repurchase shares oppo
Slide 13: Subsequent Events
Subsequent Events • California Wildfires – Multiple fires throughout state 2017 Reinsurance Program – Estimated insured losses (industry): $5‐8 billion $350MM – 2017 Reinsurance Program: $50 Million Retention $100M xs $250M 63.4% Placed • Successful arbitration award PML: $250MM – $84 million of dam
Slide 14: Kemper
y KEMPER
Slide 15: Appendix
Appendix
Slide 16: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Underlying Operating Performance is a non‐GAAP financial measure that is computed by excluding from the Diluted Income (Loss) from Continuing Operations Per Unrestricted Share the after‐tax per unrestricted share impact of 1) net realized gains on sales of investments, 2)
Slide 17: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Diluted Consolidated Net Operating Income (Loss) Per Unrestricted Share is an after‐tax, non‐GAAP financial measure computed by excluding from Diluted Income (Loss) from Continuing Operations Per Unrestricted Share the after‐tax per unrestricted share impact of net realiz
Slide 18: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Underlying Combined Ratio is a non‐GAAP financial measure that is computed by excluding the current year catastrophe and LAE ratio and the prior‐year reserve development ratio (both non‐catastrophe and catastrophes) from the combined ratio. The most directly comparable GA
Slide 19: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Underlying Combined Ratio ‐ Continued For the Three Months Ended 3Q16 4Q16 1Q17 2Q17 3Q17 Preferred Personal Automobile Underlying Combined Ratio 100.3% 111.5% 104.6% 103.1% 99.3% Current Year Catastrophe Loss and LAE Ratio 1.1% 0.3% 4.5% 3.7% 2.6% Prior Years Non‐Catastr
Slide 20: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Normalized Earnings is an after‐tax, non‐GAAP financial measure that is most directly comparable to the GAAP financial measure of Income from Continuing Operations. Normalized Earnings is calculated by 1) excluding the after‐tax impact of net realized gains on sales of in
Slide 21: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Normalized Earnings ‐ Continued Six Months ($ in Millions) Annualized Full Year 6/30/2016 2015 2014 2013 2012 2011 Net Income as Reported $ 3.8 $ 85.7 $ 114.5 $ 217.7 $ 103.4 $ 74.5 Less: Income from Discontinued Operations ‐ 5.5 1.9 3.2 11.6 12.8 Income from Continuing O