Kemper Corporation · NYSE:KMPR
Kemper — Raymond James 40th Annual Institutional Investors Conference (March 2019)
28 slides from Kemper's conference presentation, Mar 5, 2019
Slide 1: Raymond James 40th Annual Institutional Investors Conference
Raymond James 40th Annual Institutional Investors Conference March 2019 Raymond James 40th Annual Institutional Investors Conference – March 2019
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: A Leading Specialized Multi-Line Insurer
A Leading Specialized Multi-Line Insurer Taking advantage of a diversified portfolio of niche businesses…. Founded in 1990 and headquartered in Chicago, with subsidiaries writing policies since 1911 ~$12B ~6.3M ~30,000 ~8,100 Assets Policies Agents/Brokers Employees Specialty P&C insurance providing
Slide 4: 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 Growing returns Strong capital/liquidity advantages and build and book value per positions; core capabilities share over time Disciplined ap
Slide 5: Key Company Highlights
Key Company Highlights Experienced Management Team with History of Delivering Favorable Results Strong Brand with Three Diversified Businesses Growing Top Line Revenues Successfully Executing on Strategy to Unlock Embedded Value Superior Risk Profile and Leading Portfolio Returns Strong Capitalizati
Slide 6: Experienced Leaders with History of Delivering Results
Experienced Leaders with History of Delivering Results Increased ability to attract and retain high caliber talent Joe Lacher • 25+ years of insurance industry experience; Joined Kemper in 2015 President & Chief Executive Officer • Previous experience: Allstate, Travelers Jim McKinney • 15+ years of
Slide 7: Three Diversified Businesses with Growing Revenues
Three Diversified Businesses with Growing Revenues Stable and predictable L&H cash flow supports P&C growth Specialty P&C1 Preferred P&C2 Life & Health • Seasoned auto writer providing • Offer stand-alone and packaged • Provides basic life, accident and insurance to this market for more property and
Slide 8: Latest Step on Kemper's Journey to Unlock Embedded Value
Latest Step on Kemper’s Journey to Unlock Embedded Value Acquisition of Infinity increased scale and capabilities in specialty auto Continued Progress on Specialty Auto Strategic Plan Successful Execution on Infinity Acquisition • Achieving integration milestones and exceeding Phase 1 Phase 2 Phase
Slide 9: Prudent Approach to Risk Management
Prudent Approach to Risk Management Multi-line platform enhances risk diversification • P&C: Primarily short-tail liabilities allow for flexible repricing to swiftly address frequency and severity trends as they emerge; strong catastrophe and aggregate stop- loss reinsurance programs in place that b
Slide 10: Consistent Portfolio Returns: High Quality & Diversified
Consistent Portfolio Returns: High Quality & Diversified Stable Net Investment Income Overview • Increase in core portfolio investment (MM) $83 $79 $78 $92 $91 $7 income primarily from the addition of $13 $13 $11 $7 Infinity’s portfolio and organic growth • Alternative investment income decreased $8
Slide 11: Strong Current Capital Position with Ample Liquidity
Strong Current Capital Position with Ample Liquidity Capital position and liquidity resources provide significant financial flexibility Strong Parent Company Liquidity Risk-Based Capital Ratios (%) (MM) $734 $741 Life & Health P&C¹ $684 $641 $582 $404 $400 $385 $385 $540 415 335 430 330 411 $330 $34
Slide 12: 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 our business and meet or exceed our ROE targets over time 2. Return capi
Slide 13: Key Company Highlights
Key Company Highlights Experienced Management Team with History of Delivering Favorable Results Strong Brand with Three Diversified Businesses Growing Top Line Revenues Successfully Executing on Strategy to Unlock Embedded Value Superior Risk Profile and Leading Portfolio Returns Strong Capitalizati
Slide 14: Raymond James 40th Annual Institutional Investors Conference – March 2019
Raymond James 40th Annual Institutional Investors Conference – March 2019 14
Slide 15: Appendix
Appendix Raymond James 40th Annual Institutional Investors Conference – March 2019 15
Slide 16: Key 2018 Highlights
Key 2018 Highlights 2018 was a transformational year in Kemper’s journey of building on core capabilities Execution of strategy by proven leadership team • Materially enhanced operating and financial performance Acquisition and successful integration of Infinity • Closed acquisition of Infinity in J
Slide 17: Fourth Quarter 2018 Highlights
Fourth Quarter 2018 Highlights Strong Specialty P&C growth and profitability drove overall results • Increased BVPS by 15% (28% excluding net unrealized gains on fixed maturities1) Shareholder Value • 7.7% rolling 12-month ROAE2, up 180 bps; 8.3% ROAE, excluding net unrealized gains on fixed Creatio
Slide 18: Successful Execution on Infinity Acquisition
Successful Execution on Infinity Acquisition Achieving integration milestones and exceeding financial targets • Cultures, vision, brand and strategic direction aligned • Leveraging combined data to inform “go-to-market” and product strategy Integration • Claims platform and processes are aligning to
Slide 19: 2019 Reinsurance Program
2019 Reinsurance Program Aggregate stop-loss program intended to reduce volatility from high-frequency, low-severity events Catastrophe Reinsurance Program (Multi-Year) Aggregate Catastrophe Program • Same coverage as 2018 program • Coverage – $50 million in excess of $60 million – $500k deductible
Slide 20: Kemper's New Brand Identity
Kemper’s New Brand Identity Powerful brand is foundational to unlock future value • Rationale – Previous architecture had over 20 consumer-facing brands with inconsistent identities hindering ability to leverage brand to enhance performance – Unified purpose, brand architecture and positioning incre
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Raymond James 40th Annual Institutional Investors Conference – March 2019 21
Slide 22: 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 C
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Consolidated Net Operating Income (Loss) is an after-tax, non-GAAP financial measure computed by excluding from Income (Loss) from Continuing Operations the after-tax impact of 1) income (loss) from change in fair value of equity and convertible securities, 2) ne
Slide 24: 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 25: 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 26: Non-GAAP Financial Measures: Underlying Combined Ratio
Non-GAAP Financial Measures Underlying Combined Ratio – Continued Specialty P&C Insurance For the Three Months Ended For the Year Ended 4Q17 1Q18 2Q18 3Q18 4Q18 2017 2018 Earned Premiums Kemper Specialty P&C - GAAP As Reported $ 270.7 $ 278.4 $ 320.0 $ 711.2 $ 717.8 $ 1,005.7 $ 2,027.4 Infinity - Pr
Slide 27: Non-GAAP Financial Measures: Underlying Combined Ratio
Non-GAAP Financial Measures Underlying Combined Ratio – Continued For the Three Months Ended For the Year Ended 4Q17 1Q18 2Q18 3Q18 4Q18 2017 2018 Specialty P&C Insurance Combined Ratio as Reported 95.9% 93.2% 94.5% 99.1% 94.6% 96.0% 96.0% Current Year Catastrophe Loss and LAE Ratio 0.3% (0.1%) (0.7
Slide 28: Non-GAAP Financial Measures: As Adjusted for Acquisition
Non-GAAP Financial Measures As Adjusted for Acquisition For the Three Months Ended For the Year Ended 4Q17 1Q18 2Q18 3Q18 4Q18 2017 2018 Earned Premiums - Consolidated Kemper - GAAP As Reported $ 605.9 $ 609.8 $ 658.1 $ 1,052.9 $ 1,063.6 $ 2,350.0 $ 3,384.4 Infinity - Prior to Acquisition 345.8 354.
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