Slide 1: Third Quarter 2018 Earnings
Third Quarter 2018 Earnings November 5, 2018 Earnings Call Presentation – 3Q 2018
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: Kemper Is a Leading Specialized Multi-Line Insurer
Kemper Is a Leading Specialized Multi-Line Insurer Taking advantage of the benefits of a diversified platform • Multi-line national insurance company Key Metrics – Post Infinity Acquisition – Provide specialty auto and preferred personal insurance (auto, home & umbrella) Market Cap (11/2/18) $4.9 Bi
Slide 4: Create Long-Term Shareholder Value
Create Long-Term Shareholder Value Leverage competitive advantages to grow returns and BVPS 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 app
Slide 5: Kemper's New Brand Identity
Kemper’s New Brand Identity Powerful brand is foundational to unlock future value • Rationale – Previous architecture had over 20 consumer-facing brands with inconsistent identities hindering ability to leverage brand to enhance performance – Unified purpose, brand architecture and positioning incre
Slide 6: Infinity Update – Transaction Rationale
Infinity Update – Transaction Rationale Significant Value Creation Through Combination In addition to scale benefits of a larger specialty player, each side brings complementary skills to the combined entity ✓ Strong product and claim capabilities ✓ Strong product and claim capabilities ✓ Low cost a
Slide 7: Infinity Update – Integration
Infinity Update – Integration Focused integration teams charged with delivery of best-in-class capabilities • Legacy Infinity leadership remains highly involved, adding additional depth and breadth People & Culture • Retained vast majority of product management, claims, sales and customer service em
Slide 8: Third Quarter 2018 Highlights
Third Quarter 2018 Highlights Specialty Auto growth is driving the strong performance • Net Income increased from $47.7 million to $92.2 million, as reported, or $131.7 million, as adjusted1, resulting in EPS of $0.92, $1.40 and $2.01, respectively 3Q18 • Adj Consolidated Net Operating EPS1 increase
Slide 9: Third Quarter Highlights
Third Quarter Highlights Strong financial results on both an as reported and as adjusted basis Three Months Ended, as Reported Three Months Ended, as Adjusted 1 (Dollars in millions, except per share amounts) Sep. 30, Sep. 30, Variance Sep. 30, Sep. 30, Variance 2018 2017 2018 2017 Net Income $ 92.2
Slide 10: Improving Underlying Operating Performance
Improving Underlying Operating Performance Three Months Ended, As Reported Dollars per Unrestricted Share - Diluted Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Variance 2018 2018 2018 2017 2017 QoQ Income from Continuing Operations $ 1.40 $ 0.73 $ 1.02 $ 0.69 $ 0.92 0.48 Income from Change in FV of
Slide 11: Stable Life & Health Earnings
Stable Life & Health Earnings Life & Health continues to provide a diversification benefit and capital for growth (MM) Revenues1 Revenues $211 $211 $208 $211 $208 • Earned premiums continued to show $56 $58 $53 $54 $51 modest growth, reversing years of decline • Investment portfolio delivered a cons
Slide 12: Profitably Growing Specialty Auto
Profitably Growing Specialty Auto1 Strong Specialty Auto franchise continues to deliver significant profitable growth (MM) Earned Premiums $554 $565 $580 $641 $655 Revenues • Earned premiums grew $101 million or 18 $333 percent compared to an as adjusted 3Q17; $307 $307 $314 results highlight the co
Slide 13: Preferred Lines Showing Improvement
Preferred Lines Showing Improvement Continued progress on improving underlying profitability in Auto (MM) Earned Premiums by Line Preferred Auto $185 $183 $177 $181 $184 • Current year non-cat loss ratio improved 2.5 $11 $11 $10 $10 $10 $63 percentage points due to increased rate and $67 $65 $62 $62
Slide 14: Consistent Portfolio Returns: High Quality, Moderate Risk
Consistent Portfolio Returns: High Quality, Moderate Risk Strong Investment Income Despite Low Rates Overview • Investment portfolio produced pre-tax (MM) $86 $83 $79 $78 $92 equivalent annualized book yield of 5.2 $13 $18 $13 $11 $7 percent in 3Q18 compared to 5.8 percent in 3Q17 - Reduction primar
Slide 15: 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 $582 $404 $400 $385 $391 $385 $300 415 335 430 $341 330 400 $33
Slide 16: Appendix
Appendix Earnings Call Presentation – 3Q 2018 16
Slide 17: 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) income (loss) from change in fair value of equ
Slide 18: 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 securities, 2) net realized gains
Slide 19: 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 20: 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 21: Non-GAAP Financial Measures – Underlying Combined Ratio
Non-GAAP Financial Measures Underlying Combined Ratio – Continued Specialty Auto For the Three Months Ended 3Q17 4Q17 1Q18 2Q18 3Q18 1 Earned Premiums: Kemper NSA - As Reported $ 246.5 $ 257.8 $ 266.2 $ 307.5 $ 655.4 Infinity Personal Auto & Classic Car 307.4 307.2 314.2 332.6 - As Adjusted Earned P
Slide 22: Non-GAAP Financial Measures – Underlying Combined Ratio
Non-GAAP Financial Measures Underlying Combined Ratio – Continued For the Three Months Ended 3Q17 4Q17 1Q18 2Q18 3Q18 Preferred Personal Auto Underlying Combined Ratio 99.3% 104.3% 100.3% 98.2% 97.7% Current Year Catastrophe Loss and LAE Ratio 2.6% (0.1%) 0.6% 3.6% 2.1% Prior Years Non-Catastrophe L
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition amounts are non-GAAP financial measures. For three months ended September 30, 2018, 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 – As Adjusted for Acquisition
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued Consolidated Three Months Ended 30-Sep-18 30-Sep-17 Purchase As Accounting As As (Dollars in millions, except per share amounts) Reported Adjustments Adjusted 1 Adjusted 1 Revenues: Earned Premiums $ 1,052.9 $ - $ 1,052.9 $ 943.2 Ne
Slide 25: Non-GAAP Financial Measures – As Adjusted for Acquisition
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued Property & Casualty Insurance Segment Specialty Auto Three Months Ended Three Months Ended 30-Sep-18 30-Sep-17 30-Sep-18 30-Sep-17 Purchase Purchase As Accounting As As As Accounting As As 1 1 (Dollars in millions, except per share