Kemper Corporation · NYSE:KMPR
Kemper — Raymond James 33rd Annual Institutional Investor Conference (March 2012)
37 slides from Kemper's conference presentation, Mar 5, 2012
Slide 1: Raymond James 33rd Annual Institutional Investor Conference
Raymond James 33rd Annual Institutional Investor Conference March 5, 2012
Slide 2: Caution Regarding Forward-Looking Statements
2 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Caution Regarding Forward-Looking Statements This report 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 Pr
Slide 3: Kemper Overview
3 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Kemper Overview Multi-line national insurer • Top 25 personal lines property & casualty writer in United States • Auto, home & basic protection products • Multi-channel distribution network Conservative balance sheet with s
Slide 4: Business Profile: Kemper Family of Companies
4 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Business Profile: Kemper Family of Companies Property & Casualty Insurance $845MM1 statutory surplus Life & Health Insurance $475MM1 statutory surplus Overall Business Preferred Specialty Direct Home Service Companies Reser
Slide 5: Management
5 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Management Life & Health Group Ed Konar President Property & Casualty Group Jim Schulte President Chairman, President & CEO Don Southwell Corporate Operations Preferred Denise Lynch President Ron Greco Corporate Actuary Sco
Slide 6: Earned Premiums
6 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Earned Premiums ($ M M ) Accident & Health Fire & Other Commercial Auto Homeowners 298 Life 397 Personal Auto 1,249 44 162 139 Personal Auto 1,130 Life 395 Homeowners 304 Accident & Health 166 Fire & Other 139 Commercial Au
Slide 7: The Kemper Brand
7 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 The Kemper Brand A unifying approach for the company & its businesses to leverage a well-recognized name, build on the best aspects of our heritage & grow our businesses. Acquired ownership rights to Kemper name June 2010 B
Slide 8: Kemper Property & Casualty Group Earned Premiums
8 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Kemper Property & Casualty Group Earned Premiums 56% 15% 29% $1,528MM¹ 1 P&C Group includes Preferred, Specialty and Direct. See Non-GAAP measures for more information. Specialty Preferred Direct
Slide 9: Preferred
9 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Preferred Headquartered in Jacksonville, FL Products sold: • Personal auto (59% of sales ) • Homeowners/other (41% of sales) Lead product: Package Plus 2,700 independent agents in 38 states Top premium states: NY, NC, CA &
Slide 10: Preferred Advantages
10 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Preferred Advantages Strong brand name well-recognized by agents and target market Auto and home package policies specifically designed for target market Proprietary multi-variant pricing model Automation and service built
Slide 11: Specialty
11 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Specialty Headquartered in Dallas, TX Non-standard auto —personal & commercial ~8,000 independent agents in 21 states Target market is top tier of insureds ineligible for Preferred &/or Standard Focused on automation & age
Slide 12: Specialty Advantages
12 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Specialty Advantages Recognized carrier in the non-standard auto market for over 60 years Strong regional presence expandable to more states Point of sale systems designed for ease of placement Proprietary multivariate pri
Slide 13: Direct
13 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Direct Headquartered in Chicago, IL Direct to consumer auto, homeowners and renters Recent enhancements: • Redesigned customer website • New proprietary product (now active in 14 states) • Expanding social networking insur
Slide 14: Direct Advantages
14 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Direct Advantages Experienced in the direct, worksite & affinity marketplace Complete on-line life cycle access for ease of doing business • Targeting middle market to standard consumers—renters with above average underwri
Slide 15: Life & Health Insurance Group
15 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Life & Health Insurance Group ~2,600 career agents Target modest income consumers Basic protection for individuals and families Leading product is ordinary life insurance, including permanent & term insurance No exposure t
Slide 16: Home Service Companies
16 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Home Service Companies Career agency-driven home service life insurance business Competitive advantages: • Leader in moderate income segment • Significant scale • Limited sensitivity to interest rate or stock market volati
Slide 17: Reserve National
17 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Reserve National ~275 exclusive independent agents supporting underserved rural markets 2011 Total earned premium: $135MM Earned premiums by product Other / Supplemental Medicare Supplement Hospitalization 22% 25% 53% Prod
Slide 18: Kemper Investment Portfolio
18 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Kemper Investment Portfolio Total return investment strategy with an emphasis on yield No direct exposure to: • Enhanced money market funds • Commercial paper investments • Sovereign governments • Securities lending • Cred
Slide 19: Fixed Income Portfolio
19 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Fixed Income Portfolio 492 1,853 2,342 87 U.S. Government & Agencies Muni's Corporate Bonds & Notes Corporate Redeemable Preferred & Other Fair Value: $4,774 MM ($507 MM unrealized gain) Rating Fair Value % AAA, AA, A $3,5
Slide 20: Financial Results
Financial Results
Slide 21: Consolidated Results of Operations
21 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 (Millions) 2011 2010 Change Revenues: Earned Premiums: Property & Casualty Group¹ 1,528$ 1,645$ -7.1% Focus on preserving margins Life and Health 646 644 0.3% Net Investment Income 298 326 -8.6% Equity method fluctuations
Slide 22: Consolidated Balance Sheet
22 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Consolidated Balance Sheet Kemper Corporation & subsidiaries (Millions) 2011 2010 Change Assets: Cash and Investments: Fixed Maturities at Fair Value $ 4,774 $ 4,475 6.7% Equity Method LLC/LP 306 328 -6.7% Equity Securitie
Slide 23: Strong Liquidity & Capital Profiles
23 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 0.6 0.6 0.6 1.9 2.1 2.2 2009 2010 2011 Strong Liquidity & Capital Profiles Max ordinary dividend capacity1 (Insurance Companies) ¹ Calculated as the greater of 10% of insurance statutory surplus or insurance statutory net
Slide 24: Shareholders' Equity, BVPS, EPS and Dividends
24 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 2009 2010 2011 Shareholders’ Equity ¹ Accumulated Other Comprehensive Income 2 $1.76 EPS impact from 2011 catastrophes vs. $0.83 and $0.64 in 2010 and 2009, respectively ³Computed by annualizing 4th quarter dividend and di
Slide 25: Capital Redeployment Priorities
25 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 1. Fund organic growth—improve margins in all lines 2. Acquisitions—bolt-on standard & preferred opportunities, geographic expansion of non-standard auto and leverage scale in life operations 3. Maintain competitive divide
Slide 26: Operating Results
Operating Results
Slide 27: Property & Casualty Group Results
27 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Property & Casualty Group¹ Results Premium decline largely due to margin improvement actions & slow economy 2011 Net Operating Income adversely impacted by catastrophes and Direct’s results Earned Premiums Net Operating In
Slide 28: Preferred Results
28 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Preferred Results Net Operating Income (Loss) varied based on weather, investment income and loss development 2011 Net Operating Loss driven by catastrophes Earned Premiums Net Operating Income (Loss) GAAP Combined Ratio 0
Slide 29: Specialty Results
29 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Specialty Results Driven by margin preservation efforts & shrinking commercial vehicle market Current actions focused on improving private passenger automobile loss ratio to improve 2011 combined ratio Earned Premiums Net
Slide 30: Direct Results
30 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Direct Results Earned Premium reduction from corrective actions implemented Net operating results improved in 2009 & 2010; 2011 experienced unusual loss activity and $9MM impairment Underlying combined in 2011 increased pr
Slide 31: Life & Health Insurance
31 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Life & Health Insurance 2011 net operating income included $4.3MM loss from equity method investments; Full year 2010 Net Operating Income included $10.3MM income from equity method investments 2010 net operating income in
Slide 32: Fireside Bank
32 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Fireside Bank • Wind-down plan nearing completion and ahead of schedule • Sale of active loan receivables closed 9/14/2011 • $250MM of capital returned to parent October 2011; ~$15MM to be returned in the first half of 201
Slide 33: Kemper
IY KEMPER
Slide 34: Appendix
Appendix
Slide 35: Kemper Board Of Directors
35 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Kemper Board Of Directors Board Member Executive Committee Audit Committee Compensation Committee Corporate Governance Committee Investment Committee Donald G. Southwell Chairman, President & Chief Executive Officer Kemper
Slide 36: Organizational Chart
36 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Organizational Chart Reserve National Ins. Co. Union National Life Ins. Co. The Reliable Life Ins. Co. Mutual Savings Life Ins. Co. Mutual Savings Fire Ins. Co. Kemper Corporation Other entities Fireside Securities Corpora
Slide 37: Non-GAAP Measures
37 Raymond James 33rd Annual Institutional Investor Conference– March 5, 2012 Non-GAAP1 Measures Underlying Combined Ratio is a non-GAAP measure, which is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Incurred Expense Ratio. The most directly comparable GAAP finan
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