Kemper Corporation · NYSE:KMPR
Kemper — Q4 2022 Earnings Presentation
28 slides from Kemper's earnings presentation, Feb 2, 2023
Slide 1: Fourth Quarter 2022 Earnings
Earnings Call Presentation – 4Q 2022 Fourth Quarter 2022 Earnings February 2, 2023
Slide 2: Preliminary Matters: Cautionary Statements
Earnings Call Presentation – 4Q 2022 Preliminary Matters 2 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
Slide 3: Leading Insurer Empowering Specialty and Underserved Markets
Earnings Call Presentation – 4Q 2022 Leading Insurer Empowering Specialty and Underserved Markets 3 Enabled by a dynamic, diverse and innovative team who act like owners 1 Kemper Auto is equivalent to the Specialty Property & Casualty Insurance Segment Target top quartile value creation for customer
Slide 4: Fourth Quarter 2022 Highlights
Earnings Call Presentation – 4Q 2022 Fourth Quarter 2022 Highlights 1 As adjusted for acquisition; see reconciliation on pages 26‐28 2 Non‐GAAP financial measure; please see reconciliation in appendix on pages 20‐25 3 Return on average shareholders’ equity (5‐point average) 4 Normalized profitabilit
Slide 5: Fourth Quarter 2022 Financial Highlights
Earnings Call Presentation – 4Q 2022 Fourth Quarter 2022 Financial Highlights 5 Focus remains on restoring business to profitability Actions continue to take hold and earn into financial results Quarter Ended Year Ended ($ in millions, except per share amounts) Dec 31, 2022 Dec 31, 2021 Dec 31, 2022
Slide 6: Fourth Quarter Normalizing Adjustments
Earnings Call Presentation – 4Q 2022 Fourth Quarter Normalizing Adjustments 6 Results impacted by seasonality and modest development 1 Non‐GAAP financial measure; see reconciliation in appendix on pages 20‐25 Optimistic on underwriting improvement in 2023 given normalized results Fourth Quarter 2022
Slide 7: Kemper P&C Business Reserve Update
Earnings Call Presentation – 4Q 2022 Kemper P&C Business Reserve Update 7 Strong data and analytics enable efficient reserving practice that appropriately reflects environment 1 Specialty P&C is represented by the Kemper Auto Brand 2 Preferred P&C is equivalent to Kemper Personal Insurance Full Year
Slide 8: Streamlining Our Cost Structure
Earnings Call Presentation – 4Q 2022 Streamlining Our Cost Structure 8 Advancing differentiated capabilities to strengthen systematic, sustainable competitive advantages Initiatives accelerate return to profitability and enhance long‐term value creation 61 150 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 FY'24‐FY'
Slide 9: Strong Balance Sheet with Well-Funded Insurance Entities
Earnings Call Presentation – 4Q 2022 Strong Balance Sheet with Well‐Funded Insurance Entities 9 Significant capital and liquidity positions Initiatives accelerate return to profitability and enhance long‐term value creation 1 The 4Q’22 Risk‐Based Capital Ratios are calculated at the Company Action L
Slide 10: Diversified Investment Portfolio with Consistent Returns
Earnings Call Presentation – 4Q 2022 Diversified Investment Portfolio with Consistent Returns 10 1Other category includes Equity Securities, which excludes $197M of Other Equity Interests of LP/LLC’s that have been reclassified into Alternative Investments; COLI represents Company Owned Life Insuran
Slide 11: Fourth Quarter 2022 – Strategic Updates
Earnings Call Presentation – 4Q 2022 Fourth Quarter 2022 – Strategic Updates 11 Reciprocal set‐up is underway; review of Kemper Personal Insurance ongoing Initiatives focused on creating long‐term shareholder value 1. Establishment of Reciprocal Exchange Structure: • Submitted initial filing with th
Slide 12: Specialty Property & Casualty Insurance Segment
Earnings Call Presentation – 4Q 2022 Specialty Property & Casualty Insurance Segment 12 Normalized underwriting profits improving; quarter noise driven by seasonality and modest loss pattern 1 Non‐GAAP financial measure; see reconciliation in appendix on pages 20‐25; excludes impact of purchase acco
Slide 13: Preferred Property & Casualty Insurance Segment
Earnings Call Presentation – 4Q 2022 Preferred Property & Casualty Insurance Segment [ ] 13 Seasonality, development on prior quarters, and non cat weather impacted results 1 Non‐GAAP financial measure; please see reconciliation in appendix on pages 20‐25 2 Represents the percent of total book impac
Slide 14: Life & Health Insurance Segment
Earnings Call Presentation – 4Q 2022 Life & Health Insurance Segment 14 On path to achieve pre‐pandemic profitability during second half of 2023 1 Excludes other income and solar credit impairment 2 Annual basis 3 The Life & Health Insurance Segment includes the results of Reserve National through D
Slide 15: Fourth Quarter Wrap-Up
Earnings Call Presentation – 4Q 2022 Fourth Quarter Wrap‐Up 15 Business on track to return to profitability during first half of 2023 Remain focused on profit restoration and shareholder value creation Key Takeaways • The financial benefits of strategic initiatives are expected to earn into the book
Slide 16: Appendix
Earnings Call Presentation – 4Q 2022 Appendix 16
Slide 17: Significant, rapid drop in loss trend
Earnings Call Presentation – 4Q 2022 Significant, rapid drop in loss trend Actions take time to earn into financials | illustrative earned rate vs. loss trend comparison 17 Time (not to scale) Ea rn ed R at e an d Lo ss T re nd Δ Earned Rate Loss Trend (frequency & severity) Pre‐Pandemic Lockdowns R
Slide 18: Auto Severity Remains Elevated from Continued Inflationary Pressures
Earnings Call Presentation – 4Q 2022 Auto Severity Remains Elevated from Continued Inflationary Pressures 18Source: U.S. Bureau of Labor Statistics • Physical damage severity increased due to higher used car values, replacement parts, and labor costs – Body Work‐related costs increased in Q4, growin
Slide 19: 2023 Reinsurance Program Renewed
Earnings Call Presentation – 4Q 2022 2023 Reinsurance Program 19 Renewed Catastrophe XoL Reinsurance; discontinued the Catastrophe Aggregate for 2023 1 Includes year‐end 2022 treaty adjustment for 2021 and 2022 treaty years • Policy placed at 01/01/23 ‐ New limit aligned with risk‐appetite to cover
Slide 20: Book Value Per Share Excluding Net Unrealized Gains Losses
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 20 Book Value Per Share Excluding Net Unrealized (Gains) Losses 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 unreal
Slide 21: Underlying Combined Ratio definition
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 21 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 C
Slide 22: Book Value reconciliation
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 22 Book Value 4Q'22 3Q'22 2Q'22 1Q'22 4Q'21 Book Value Per Share 38.23$ 38.16$ 44.64$ 53.21$ 62.93$ Less: Net Unrealized (Gains) Losses on Fixed Maturities Per Share 11.21 12.25 7.39 0.21 (7.89) Book Value Per Share Excluding Net Unrea
Slide 23: Return on Equity reconciliation
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 23 Return on Equity 4Q'22 3Q'22 2Q'22 1Q'22 4Q'21 Rolling 12 Month Return on Average Shareholders' Equity (5 Point Avg) (10.0)% (10.4)% (9.4)% (8.4)% (2.8)% Less: Net Unrealized (Gains) Losses on Fixed Maturities 0.9% 0.1% (0.6)% (0.9)
Slide 24: Diluted Adjusted Consolidated Net Operating Income Per Share
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 24 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 weighte
Slide 25: Underlying Combined Ratio – Continued
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 25 Underlying Combined Ratio – Continued 4Q22 3Q22 2Q22 1Q22 4Q21 Specialty P&C Insurance Combined Ratio as Reported 108.8% 107.6% 108.0% 108.6% 118.9% Current Year Catastrophe Loss and LAE Ratio 0.0% (1.5)% (0.6)% (0.2)% (0.2)% Prior
Slide 26: As Adjusted for Acquisition – Consolidated Financial Highlights
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 26 As Adjusted for Acquisition – Continued Consolidated Financial Highlights ($ in millions, except per share data) 31‐Dec‐22 30‐Sep‐22 30‐Jun‐22 31‐Mar‐22 31‐Dec‐21 Earned Premiums Kemper ‐ GAAP As Reported 1,267.0$ 1,307.0$ 1,353.7$
Slide 27: As Adjusted for Acquisition – Specialty P&C Segment
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 27 As Adjusted for Acquisition – Continued 1 As Adjusted is a non‐GAAP measure, which is comprised by excluding impact of purchase accounting in 2021 and 2022 and including historical results of Kemper and AAC in periods prior to acqui
Slide 28: As Adjusted for Acquisition – Specialty Personal Automobile
Earnings Call Presentation – 4Q 2022 Non‐GAAP Financial Measures 28 As Adjusted for Acquisition – Continued 1 As Adjusted is a non‐GAAP measure, which is comprised by excluding impact of purchase accounting in 2021 and 2022 and including historical results of Kemper and AAC in periods prior to acqui