Kemper Corporation · NYSE:KMPR
Kemper — Investor Presentation (February 2012)
35 slides from Kemper's investor presentation, Feb 6, 2012
Slide 1: Investor Materials February 2012
Investor Materials February 2012
Slide 2: Caution Regarding Forward-Looking Statements
2 Investor Materials – February 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 Private Securities Litigation Reform Act o
Slide 3: Kemper Overview
3 Investor Materials – February 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 strong liquidity • $8.1B assets, $2.2B sh
Slide 4: Business Profile: Kemper Family of Companies
4 Investor Materials – February 2012 Business Profile: Kemper Family of Companies Property & Casualty Insurance $830MM1 statutory surplus Life & Health Insurance $475MM1 statutory surplus Overall Business Preferred Specialty Direct Home Service Companies Reserve National Total employees ~6,500 Distr
Slide 5: Management
5 Investor Materials – February 2012 Management Life & Health Group Ed Konar President Property & Casualty Group Jim Schulte President Chairman, President & CEO Don Southwell Corporate Operations Preferred Denise Lynch President Ron Greco Corporate Actuary Scott Renwick General Counsel Specialty Tim
Slide 6: Earned Premiums
6 Investor Materials – February 2012 Earned Premiums ($ 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 Auto 40 2010: $2,289MM 2011: $2,174MM ($ M
Slide 7: The Kemper Brand
7 Investor Materials – February 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 Bought Kemper Personal Lines in 2002 Part
Slide 8: Kemper Property & Casualty Group Earned Premiums
8 Investor Materials – February 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 Investor Materials – February 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 & TX Net Written Premium: $869MM
Slide 10: Preferred Advantages
10 Investor Materials – February 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 for agency convenience Claims handling
Slide 11: Specialty
11 Investor Materials – February 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 & agent convenience Top premium states: CA &
Slide 12: Specialty Advantages
12 Investor Materials – February 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 pricing model Claims handling designed for
Slide 13: Direct
13 Investor Materials – February 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 insurance platform Focused on margin improvem
Slide 14: Direct Advantages
14 Investor Materials – February 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 underwriting characteristics • Partnering with p
Slide 15: Life & Health Insurance Group
15 Investor Materials – February 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 to variable annuities Operate in 25 state
Slide 16: Home Service Companies
16 Investor Materials – February 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 volatility • Products are simple with stable,
Slide 17: Reserve National
17 Investor Materials – February 2012 Reserve National ~275 exclusive independent agents supporting underserved rural markets 2011 Total earned premium: $135MM Earned premiums by product Other / Supplemental Medicare Supplement Hospitalization 22% 25% 53% Products & Distribution: • Markets served –
Slide 18: Financial Results
Financial Results
Slide 19: Consolidated Results of Operations
19 Investor Materials – February 2012 (Millions) 2011 2010 Change Revenues: Earned Premiums: Property & Casualty Group¹ 1,528$ 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 Other Income 1 1 0.0% Net Realized Inves
Slide 20: Consolidated Balance Sheet
20 Investor Materials – February 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 Securities 397 551 -27.9% Reduced concentration o
Slide 21: Strong Liquidity Profile
21 Investor Materials – February 2012 Strong Liquidity Profile Max ordinary dividend capacity1 (Insurance Companies) ¹ Calculated as the greater of 10% of insurance statutory surplus or insurance statutory net income from the prior year 2 See Non-GAAP measures for more information 2009 2010 2011 ($
Slide 22: Shareholders' Equity, BVPS, EPS and Dividends
22 Investor Materials – February 2012 2009 2010 2011 Shareholders’ Equity ¹ Accumulated Other Comprehensive Income 2 $1.76 EPS impact from 2011 catastrophes vs. $0.83 and $0.64 in 2010 and 2009, respectively ³Computed by annualizing 4th quarter dividend and dividing by year-end market price ($ MM )
Slide 23: Capital Redeployment Priorities
23 Investor Materials – February 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 dividends 4. Share repurchases (MM): Program:
Slide 24: Operating Results
Operating Results
Slide 25: Property & Casualty Group Results
25 Investor Materials – February 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 Income (Loss) GAAP Combined Ratio 0 500 10
Slide 26: Preferred Results
26 Investor Materials – February 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 0 200 400 600 800 1000 2009 2010 2011 $(
Slide 27: Specialty Results
27 Investor Materials – February 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 Operating Income GAAP Combined Ratio 0 1
Slide 28: Direct Results
28 Investor Materials – February 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 primarily due to increased severity in aut
Slide 29: Life & Health Insurance
29 Investor Materials – February 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 included a $15MM write-off of goodwill Ear
Slide 30: Fireside Bank
30 Investor Materials – February 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 2012 • Bank charter to be relinquished firs
Slide 31: Kemper
IY KEMPER
Slide 32: Appendix
Appendix
Slide 33: Kemper Board of Directors
33 Investor Materials – February 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 Corporation X X James F. Annable Secret
Slide 34: Organizational Chart
34 Investor Materials – February 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 Corporation Trinity Universal Insurance Company
Slide 35: Non-GAAP Measures
35 Investor Materials – February 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 financial measure is the combined ratio, whi