Kemper Corporation · NYSE:KMPR
Kemper — Q1 2024 Earnings Presentation
21 slides from Kemper's earnings presentation, May 1, 2024
Slide 1: First Quarter 2024 Earnings
First Quarter 2024 Earnings May 1, 2024 Earnings Call Presentation – 1Q 2024
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: First Quarter 2024 Summary
First Quarter 2024 Summary Specialty P&C underwriting profit further improved as earned rate exceeded loss cost inflation Achieved return on equity within low double-digit target range • ROE of 11.2% and Tangible ROE1 of 17.2% Shareholder • Net Income attributable to Kemper Corporation of $71.3 mill
Slide 5: First Quarter 2024 Financial Summary
First Quarter 2024 Financial Summary Delivered fourth consecutive quarter of underlying business improvement Quarter Ended ($ in millions, except per share amounts) Mar 31, 2024 Mar 31, 2023 Net Income (Loss) Per Diluted Share attributable to Kemper Corporation $1.10 $(1.25) Adj. Consolidated Net Op
Slide 6: 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 Life2 Borrowings Available P&C (ex. AACC) Under Credit Agreement & from Subs $1,433 $1,336 (%) $1,148 $1,109 ($ in millions) $867
Slide 7: Diversified Investment Portfolio with Consistent Returns
Diversified Investment Portfolio with Consistent Returns Net Investment Income1 Highlights $107 • High-quality portfolio provides consistent ($ in millions) $102 $106 $105 $100 $4 $9 $10 $7 net investment income; 72% of fixed income $1 portfolio rated A or higher • Strong ALM philosophy that mitigat
Slide 8: Specialty Property & Casualty Insurance Segment
Specialty Property & Casualty Insurance Segment Underlying combined ratio3 improved 14.4 pts year-over-year and 4.6 pts sequentially Highlights Cumulative PPA Rate Activity Since 2Q’212 • Rate actions continue to earn into the book Filed Rate ~60% – PPA earned ~9 pts in 1Q’24 Written Rate ~59% • New
Slide 9: Specialty Auto – Policies In Force Metrics Improving
Specialty Auto – Policies In Force Metrics Improving Early impact of new business expansion moderating sequential quarter PIF decline Commentary Year-Over-Year PIF Change • YoY PIF – Declined ~32.0% in 1Q’24 and 4Q’23 – Metric masks recent improvement in new business expansion – Rolling 4-quarter na
Slide 10: Specialty Auto – New Business Expansion Accelerating
Specialty Auto – New Business Expansion Accelerating New business apps1 are leading indicator of PIF growth Commentary • Market demand remains strong for product offerings • New business expansion initiated mid-February – New business apps1 for 1Q’24 were ~2.6x 4Q’23 – April stand-alone new business
Slide 11: Life Insurance Segment
Life Insurance Segment Business trends remain stable Highlights • Mortality in line with pre-pandemic experience • Modest pressure from inflationary environment – Overall persistency in line with historical trends – New business levels slightly below prior year Normalized Revenues2 ($ in millions) M
Slide 12: Key Takeaways
Key Takeaways Specialty P&C Profitability • Sequential underlying results improved for the fourth consecutive quarter – Strong underwriting profit in 1Q’24, exceeding 96% combined ratio target – Rate actions continue to earn into the book Specialty P&C Production • Controlled new business expansion
Slide 13: Appendix
Appendix Earnings Call Presentation – 1Q 2024 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: – 3-year term placed in 2022: $100M xs
Slide 15: Auto Inflation Pressures Remain Elevated
Auto Inflation Pressures Remain Elevated Pace of increase continues to moderate Price Indices (Indexed to Q4’18) 160 150 140 136 130 131 122 120 115 110 100 90 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2019 2020 2021 2022 2023 2024 Bodywork Used Car & Truck Medical Care Core CPI
Slide 16: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Consolidated Net Operating Income (Loss) is an after-tax, non-GAAP financial measure and is computed by excluding from Net Income (Loss) attributable to Kemper Corporation the after-tax impact of: (i) Change in Fair Value of Equity and Convertible Securities; (ii
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures Return on Tangible Shareholders’ Equity is a calculation that uses a non-GAAP financial measure. It is calculated by dividing the period’s net income attributable to Kemper Corporation by the average shareholders’ equity excluding net unrealized gains and losses on fixed
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Consolidated Net Operating Income (Loss) attributable to Kemper Corporation Three Months Ended ($ in millions) Mar 31, 2024 Mar 31, 2023 Net Income (Loss) attributable to Kemper Corporation $71.3 $(80.1) Less Net Income (Loss) From: Change in Fair Value of Equi
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures Return on Tangible Shareholders’ Equity Three Months Ended ($ in millions) Mar 31, 2024 Mar 31, 2023 Annualized Net Income (Loss) attributable to Kemper Corporation $285.2 $(320.4) Average Shareholders’ Equity1 $2,547.5 $2,658.8 Less: Average Net Unrealized Gains and Lo
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Tangible Book Value Per Share As of ($ and shares in millions except per share amounts) Mar 31, 2024 Mar 31, 2023 Kemper Corporation Shareholders’ Equity $2,589.8 $2,646.9 Less: Net Unrealized Gains and Losses on Fixed Maturities 618.4 574.2 Less: Change in Discount Rat
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Underlying Combined Ratio Three Months Ended 1Q’24 4Q'23 3Q'23 2Q'23 1Q’23 Specialty P&C Insurance Combined Ratio as Reported 94.8% 98.5% 109.9% 106.5% 112.1% Current Year Catastrophe Losses and LAE Ratio (0.5) (0.3) (0.7) (1.9) (0.9) Prior Years Non-Catastrophe Losses an