Slide 1: First Quarter 2022 Earnings
First Quarter 2022 Earnings May 2, 2022 Earnings Call Presentation – 1Q 2022
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 Grow returns Strong capital/liquidity advantages and build and book value per positions; core capabilities share over time Disciplined appro
Slide 4: First Quarter 2022 Highlights
First Quarter 2022 Highlights Auto margins improved despite persistent environmental challenges Environmental challenges continued to impact segments of the insurance market Macroeconomic • Broad market inflation due to supply chain issues and labor shortages continue to drive up loss costs Environm
Slide 5: First Quarter Financial Highlights
First Quarter Financial Highlights Key business metrics improving, but still impacted by environmental challenges As Reported As Adjusted1 Quarter Ended Quarter Ended Mar 31, Mar 31, Mar 31, Mar 31, (Dollars in millions, except per share amounts) 2022 2021 2022 2021 Net Income (Loss) – Per Diluted S
Slide 6: First Quarter Debt Offerings
First Quarter Debt Offerings Refinanced 2022 maturity and diversified capital structure at attractive rates Highlights 1Q22 debt offerings: Debt Maturity • Raised $400M of 3.80% Senior Notes due in 2032 • Raised $150M of 5.875% Fixed Rate Reset Junior Subordinated Debentures due in 2062 • Upsized cr
Slide 7: Strong Balance Sheet with Well-Funded Insurance Entities
Strong Balance Sheet with Well-Funded Insurance Entities Significant capital and liquidity positions Parent Company Liquidity Risk-Based Capital Ratios¹ (MM) (%) $1,433 $1,221 $867 $700 $938 $684 $641 415 430 410 $582 $903 355 365 340 330 355 385 $660 $704 335 290 285 $385 $385 220 240 $540 $733 $29
Slide 8: Diversified Investment Portfolio with Consistent Returns
Diversified Investment Portfolio with Consistent Returns Net Investment Income¹ Overview • 4.2% PTE annualized book yield (MM) $114 $108 $103 $102 $100 • New investment yields up ~100 bps relative $32 $22 $23 $27 $21 to prior-year • The quality of our Fixed Maturity portfolio $76 $82 $80 $85 $79 rem
Slide 9: Specialty Property & Casualty Insurance Segment
Specialty Property & Casualty Insurance Segment1 Significant sequential quarter-over-quarter combined ratio improvement Highlights Specialty PPA (Rate Change Activity Since 2Q21) • Profit restoration actions led to a significant Rate Actions3 Overall Impact improvement in underlying combined ratio F
Slide 10: Preferred Property & Casualty Insurance Segment
Preferred Property & Casualty Insurance Segment Profitability actions taking hold Highlights Preferred Personal Auto (Rate Change Activity Since 2Q21) • Performance improved sequentially Rate Actions2 Overall Impact Filed Effective3 Written Earned • Margins continued to be impacted by % Prem Wtd Avg
Slide 11: Life & Health Insurance Segment
Life & Health Insurance Segment In line with national mortality trends, Pandemic continued to impact operating income Highlights • Life Earned Premium increased by $3.2 million or 3.3% in Q122 to $101.3 million • Persistency increased over pre-Pandemic levels (2017-2019) • Annualized Life new busine
Slide 12: Appendix
Appendix Earnings Call Presentation – 1Q 2022 12
Slide 13: 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 ~$15B ~6.4M ~35,500 ~10,400 Assets Policies Agents/Brokers Employees Specialty P&C insurance providing Preferred
Slide 14: Inflationary Pressures Remain Persistent
Inflationary Pressures Remain Persistent Subcomponents of inflation continue to disproportionately impact insurers, driving up loss costs • Insurers continue to face increased auto body work prices due to labor shortage and supply chain issues • Auto body work prices rose by 3.4% from last quarter;
Slide 15: 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 the business and meet or exceed our ROE targets over time 2. Return capi
Slide 16: Solar Energy Investment: In Line with Environmental Impact Goals
Solar Energy Investment: In Line with Environmental Impact Goals $100 million commitment to solar energy investment generating attractive returns • In conjunction with Sunrun, invested in a diversified group of residential solar energy projects • Opportunity to provide renewable energy solutions for
Slide 17: 2022 Reinsurance Program
2022 Reinsurance Program Renewed programs and upsized our catastrophe reinsurance program Catastrophe Reinsurance Program (Multi-Year) Aggregate Catastrophe Program • Increased retention vs. 2021 program – Intended to reduce volatility from high- frequency, low severity events • Coverage – $50 milli
Slide 18: Net Operating Income Review
Net Operating Income Review Financial results continue to be pressured by environmental challenges Three Months Ended, As Reported Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Variance Dollars per Unrestricted Share - Diluted 2022 2021 2021 2021 2021 YoY Net Income (Loss) $ (1.49) $ (1.66) $ (1.18)
Slide 19: 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 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Return on Equity For the Periods Ended 1Q'22 2021 2020 2019 2018 2017 2016 Rolling 12 Month Return on Average Shareholders' Equity (5 Point Avg) (8.4)% (2.8)% 9.8% 14.8% 7.7% 5.9% 0.8% Less: Net Unrealized (Gains) Losses on Fixed Maturities (0.9)% (0.4)% 1.5% 1.5% 0.6% 0.
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Kemper believes that Adjusted Consolidated Net Operating Income (Loss) provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded.
Slide 22: 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 23: 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 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Underlying Combined Ratio – Continued 1Q22 4Q21 3Q21 2Q21 1Q21 Specialty P&C Insurance Combined Ratio as Reported 108.6% 118.9% 111.6% 116.1% 93.5% Current Year Catastrophe Loss and LAE Ratio (0.2)% (0.2)% (0.3)% (0.8)% (0.2)% Prior Years Non-Catastrophe Losses and LAE 0.
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition amounts are non-GAAP financial measures. Subsequent to the applicable acquisitions, the As Adjusted for Acquisitions amounts are computed by subtracting the impact of purchase accounting adjustments from the comparable consolidated GAAP financi
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued ($ in millions, except per share data) Three Months Ended 31-Mar-22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 Earned Premiums Kemper - GAAP As Reported $ 1,338.6 $ 1,359.1 $ 1,356.1 $ 1,337.7 $ 1,200.8 AAC - Prior to Acquisition - - -
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued Specialty P&C Insurance Segment ($ in millions) Three Months Ended 31-Mar-22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 Earned Premiums Kemper Specialty P&C - GAAP As Reported $ 1,021.6 $ 1,032.3 $ 1,028.3 $ 1,010.3 $ 877.6 AAC - Prior
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures As Adjusted for Acquisition – Continued Specialty Personal Automobile Insurance ($ in millions) Three Months Ended 31-Mar-22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 Earned Premiums Kemper Specialty P&C - GAAP As Reported $ 901.7 $ 918.1 $ 920.6 $ 909.6 $ 785.4 AAC - Prior