Kemper Corporation · NYSE:KMPR
Kemper — Q4 2023 Earnings Presentation
22 slides from Kemper's earnings presentation, Feb 1, 2024
Slide 1: Fourth Quarter 2023 Earnings
Fourth Quarter 2023 Earnings February 1, 2024 Earnings Call Presentation – 4Q 2023
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: Leading Insurer Empowering Specialty and Underserved Markets
Leading Insurer Empowering Specialty and Underserved Markets Enabled by a dynamic, diverse and innovative team who act like owners Delivering appropriate and affordable insurance and financial solutions Specialty auto insurance1 for Life insurance2 for underserved markets; Latino, low/modest income
Slide 4: Fourth Quarter 2023 Summary
Fourth Quarter 2023 Summary Achieved underwriting profit as earned rate exceeding loss inflation drove margin improvement Return to profitability driven by rate and non-rate actions, and cost structure initiatives • Net income attributable to Kemper Corporation of $51.4 million or $0.80/sh • Adjuste
Slide 5: Fourth Quarter 2023 Financial Summary
Fourth Quarter 2023 Financial Summary Delivered third consecutive quarter of underlying improvement Quarter Ended Year Ended Dec 31, Dec 31, Dec 31, Dec 31, ($ in millions, except per share amounts) 2023 2022 2023 2022 Net Income (Loss) Attributable to Kemper Corporation – $0.80 $(0.84) $(4.25) $(4.
Slide 6: Strategic Initiatives Summary
Strategic Initiatives Summary Significant benefits realized during the quarter from completed initiatives Completed Initiatives 1. Bermuda Optimization: • Enabled approximately $330 million in dividends to parent in 4Q’23, exceeding last quarter’s estimate of $250+ million 2. Streamlining Cost Struc
Slide 7: Expense Savings Exceed $150 Million Target
Expense Savings Exceed $150 Million Target Advancing differentiated capabilities to strengthen systematic, sustainable competitive advantages • Restructuring and integration pre-tax charges Run-Rate Program Savings ($ millions) of $150 – $200 million will produce an 137 153 150 + annualized savings
Slide 8: Well-Capitalized Insurance Subsidiaries
Well-Capitalized Insurance Subsidiaries Continued access to significant sources of liquidity Parent Company Liquidity Risk-Based Capital Ratios¹ HoldCo Cash & Investments $1,433 Life2 Borrowings Available $1,336 P&C (ex. AACC) Under Credit Agreement & from Subs $1,148 $418 (%) $733 $938 $867 ($ in m
Slide 9: Diversified Investment Portfolio with Consistent Returns
Diversified Investment Portfolio with Consistent Returns Net Investment Income1 Highlights $107 • High-quality portfolio provides consistent ($ in millions) $106 $102 $106 $105 $11 $4 $9 $10 $7 net investment income; 72% of fixed income portfolio rated A or higher • Strong ALM philosophy that mitiga
Slide 10: Specialty Property & Casualty Insurance Segment
Specialty Property & Casualty Insurance Segment Underlying combined ratio improved 9.6% year-over-year and 2.3% sequentially Highlights Cumulative PPA Rate Activity Since 2Q’211 • Sequential improvement driven by additional earned rate in excess of loss trend Filed Rate ~60% Written Rate ~59% • Seve
Slide 11: Life Insurance Segment
Life Insurance Segment Business trends remain stable Highlights • Consumer demand for products is consistent: – New business levels remain solid – Persistency in line with historical trends; modest pressure from inflationary environment • Quarterly results include the annual actuarial assumption upd
Slide 12: Key Takeaways
Key Takeaways • Achieved underwriting profit in the quarter; sequential underlying results improved for the third consecutive quarter • Expect to reach Specialty P&C target margins in 2024 • Completed significant strategic initiatives, outperforming expectations: – Bermuda optimization enabled appro
Slide 13: Appendix
Appendix Earnings Call Presentation – 4Q 2023 13
Slide 14: 2024 Reinsurance Program
2024 Reinsurance Program Renewed Catastrophe XoL Reinsurance Catastrophe Reinsurance Program Highlights Catastrophe Excess of Loss Program (XOL): 5% co-participation 3-Year Term 1-Year Term Placed 1/1/22 Placed 1/1/24 • Program consists of two towers: Layer 2: o 3-year term placed in 2022: $100M xs
Slide 15: Auto Inflation Pressures Remain Elevated
Auto Inflation Pressures Remain Elevated Pace of increase moderated in second half of 2023 Price Indices (Indexed to Q4 2018) 160 150 140 136 135 130 120 120 114 110 100 90 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 2023 Bodywork Used Car & Truck Medical Care Cor
Slide 16: Illustrative Earned Rate vs. Loss Trend Comparison
Illustrative Earned Rate vs. Loss Trend Comparison Pre-Pandemic Lockdowns Re-Opening / Future Prior to 2020 2Q’20 – 1Q’21 Current+ Δ Earned Rate Significant, rapid Loss Trend (frequency & severity) rise in loss trend Predictable loss trend Earned Rate and Loss Trend offset by rate Rate to zero Rate
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures Book Value Per Share Excluding Goodwill is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity excluding goodwill by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP f
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Consolidated Net Operating Income (Loss) is an after-tax, non-GAAP financial measure and is computed by excluding from Net Income (Loss) the after-tax impact of: (i) (Loss) income from Change in Fair Value of Equity and Convertible Securities; (ii) Net Realized I
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures Book Value Per Share As of ($ per share) Dec 31, 2023 Dec 31, 2022 Book Value Per Share $39.08 $41.79 Less: Net Unrealized Losses on Fixed Maturities 5.82 7.44 Book Value Per Share Excluding Net Unrealized Losses on Fixed Maturities and Changes in the $44.90 $49.23 Di
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Return on Tangible Shareholders’ Equity Three Months Ended Year Ended ($ in millions) Dec 31, 2023 Dec 31, 2022 Dec 31, 2023 Dec 31, 2022 Annualized Net Income (Loss) Attributable to Kemper $205.6 $(213.2) $(272.1) $(286.6) Corporation Average Shareholders’ Equity1 $2,
Slide 21: 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 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Underlying Combined Ratio Three Months Ended 4Q'23 3Q'23 2Q'23 1Q’23 4Q'22 Specialty P&C Insurance Combined Ratio as Reported 98.5% 109.9% 106.5% 112.1% 108.8% Current Year Catastrophe Losses and LAE Ratio (0.3) (0.7) (1.9) (0.9) 0.0 Prior Years Non-Catastrophe Losses and