Kemper Corporation · NYSE:KMPR
Kemper — Q2 2018 Earnings Presentation
22 slides from Kemper's earnings presentation, Jul 30, 2018
Slide 1: Second Quarter 2018 Earnings
Second Quarter 2018 Earnings July 30, 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
Slide 3: Kemper Is a Leading Multi-Line Insurer
Kemper Is a Leading Multi‐Line Insurer • Multi‐line national insurance company Key Metrics – Post Infinity Acquisition – Provide specialty auto and preferred personal insurance (auto, home & umbrella) Market Cap (7/26/18) $4.9 Billion – Provide basic life, accident & health products Debt‐to‐Capital
Slide 4: 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 5: Second Quarter 2018 Highlights
Second Quarter 2018 Highlights • Net Income increased from $36.6 million to $37.6 million resulting in EPS of $0.71 and $0.73, respectively 2Q18 • Adj Consolidated Net Operating EPS increased from $0.41 to $0.70 vs • Earned Premiums increased $76 million, or 13 percent; improvements continue to be d
Slide 6: Second Quarter & YTD 2018 Highlights – Strong Results
Second Quarter & YTD 2018 Highlights – Strong Results Three Months Ended Six Months Ended (Dollars in millions, except per share amounts) Jun. 30, Jun. 30, Variance Jun. 30, Jun. 30, Variance 2018 2017 2018 2017 Net Income $ 37.6 $ 36.6 $ 1.0 $ 91.4 $ 36.3 $ 55.1 Net Income Per Share ‐ Diluted $ 0.7
Slide 7: Improving Underlying Operating Performance
Improving Underlying Operating Performance Three Months Ended Dollars per Unrestricted Share ‐ Diluted Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Variance 2018 2018 2017 2017 2017 QoQ Income from Continuing Operations $ 0.73 $ 1.02 $ 0.69 $ 0.92 $ 0.71 0.02 1 Investment Related (Gains)/Losses (0.0
Slide 8: Stable Life & Health Earnings
Stable Life & Health Earnings (MM) Revenues1 Revenues $208 $211 $211 $208 $211 • Earned premiums grew at a modest pace, $55 $56 $58 $53 $54 driven by an 11 percent increase in A&H • Portfolio composition led to continued stable investment income; a 5.5 percent to $153 $155 $153 $155 $157 5.1 percent
Slide 9: Profitably Growing Nonstandard Auto
Profitably Growing Nonstandard Auto (MM) Earned Premiums Revenues • Direct written premiums grew $88 million or 37 percent; Access accounted for roughly $30 million; results highlight our $308 strong NSA market positioning $234 $247 $258 $266 • 2Q18 to 2Q17, earned premiums increased $74 million, or
Slide 10: Preferred Lines Showing Improvement
Preferred Lines Showing Improvement (MM) $184 Earned Premiums by Line $181 Preferred Auto $185 $183 $177 • Underlying combined ratio improved 4.9 $11 $11 $11 $10 $10 percentage points over 2Q17 due to $67 $67 $65 $62 $62 increased rate and moderating market loss trends $106 $107 $107 $105 $109 • Und
Slide 11: Consistent Portfolio Returns: High Quality, Moderate Risk
Consistent Portfolio Returns: High Quality, Moderate Risk Strong Investment Income Despite Low Rates Overview • Investment portfolio produced a pre‐tax (MM) $77 $86 $83 $79 $78 equivalent annualized book yield of 5.0 $18 $13 $11 $7 percent in 2Q18 compared to 5.2 percent $9 in 2Q17 • After‐tax yield
Slide 12: Strong Current Capital Position with Ample Liquidity
Strong Current Capital Position with Ample Liquidity Strong Parent Company Liquidity Risk‐Based Capital Ratios (%) (MM) Life & Health Legacy P&C¹ $1,059 $734 $741 $684 $350 $582 $494 $404 $400 $385 415 335 430 $385 $709 $350 330 310 375 290 360 $330 $341 $299 $197 $144 1 2014 2015 2016 2017 2Q18 Tod
Slide 13: Acquisition of Infinity
Acquisition of Infinity Consummation of Transaction • Acquisition of Infinity ‐ July 2, 2018, completed acquisition of Infinity o Issued 13.2 million shares of Kemper Stock o Paid $564.6 million in cash consideration, partially funded by $250 million 2‐year term loan $110 million of FHLB borrowi
Slide 14: Infinity 2Q 2018 Performance – Not Included in Kemper's 2Q18 Results
Infinity 2Q 2018 Performance – Not Included in Kemper’s 2Q18 Results (MM) Earned Premiums Revenues • Earned premiums increased 10 percent over the 2Q17, driven by: $374 ‐ 5 percent growth of policy‐in‐force $339 $345 $346 $354 ‐ Higher average premiums • Written premium increased in all states as we
Slide 15: y KEMPER
y KEMPER
Slide 16: Appendix
Appendix
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 Diluted Adjusted Consolidated Net Operating Income (Loss) Per Unrestricted Share ‐ Continued For the Six Months Ended Per Unrestricted Share 2Q18 2Q17 Adj. Consolidated Net Operating Income ‐ Diluted $ 1.80 $ 0.34 Net Income From: Income from Change in Fair Value of Equit
Slide 21: 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 22: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Underlying Combined Ratio ‐ Continued For the Three Months Ended 2Q17 3Q17 4Q17 1Q18 2Q18 Preferred Personal Automobile Underlying Combined Ratio 103.1% 99.3% 104.3% 100.3% 98.2% Current Year Catastrophe Loss and LAE Ratio 3.7% 2.6% (0.1%) 0.6% 3.6% Prior Years Non‐Catast