KEMPER CORPORATION Exhibit 99.1
Kemper Corporation
200 East Randolph Street Suite 3300
Chicago, IL 60601 kemper.com
Press Release
Kemper Reports Second Quarter 2021 Operating Results
CHICAGO, July 29, 2021 - Kemper Corporation (NYSE: KMPR) reported net loss of $62.6 million, or $(0.97) per diluted share, for the second quarter of 2021, compared to net income of $126.1 million, or $1.91 per diluted share, for the second quarter of 2020. As adjusted1 for the acquisitions of American Access Casualty Company ("AAC") and Infinity Property and Casualty Corporation, net loss was $52.5 million, or $(0.82) per diluted share, for the second quarter of 2021, compared to net income of $149.3 million, or $2.25 per diluted share, for the second quarter of 2020. In the second quarter of 2021, net loss included a $32.3 million after-tax gain, or $0.50 per diluted share, attributable to the change in fair value of equity and convertible securities.
Adjusted Consolidated Net Operating Loss1 was $99.4 million, or $1.54 per diluted share, for the second quarter of 2021, compared to adjusted Consolidated Net Operating Income1 of $79.2 million, or $1.20 per diluted share, for the second quarter of 2020.
Key themes of the quarter include:
- Specialty P&C earned premiums increased 33% and policies-in-force (ex. Classic Car) grew ~19.4%; AAC contributed 12.2% and 14.0% for earned premiums and policies-in-force, respectively
- Specialty P&C underlying combined ratio1 was 107.3%, due primarily to higher claim frequency and severity trends
- Specialty P&C experienced adverse prior year development of $81M, or 8 points, primarily driven by legal developments and increased severity in personal injury protection coverage in Florida
- Repurchased shares worth $112 million and finalized acquisition of AAC
- Net investment income results were strong for the quarter, primarily driven by Alternative Investments
- Kemper remains well positioned to support customers and grow long-term shareholder value
"Our second quarter results demonstrated strong topline growth offset by a number of industry-related environmental challenges that impacted earnings," said President, CEO and Chairman Joseph P. Lacher, Jr. "The pandemic's re-opening is happening faster than projected, resulting in a significant increase in auto frequency and severity. Although these effects were mostly anticipated, the speed of the re-opening magnified their financial impact in this quarter's results. In addition, severity was impacted by social inflation creeping into lower-limit policies and Florida personal injury protection court rulings that impacted multiple policy years. As a result, the Specialty P&C segment generated an as adjusted underwriting loss of $60 million and an as adjusted underlying combined ratio of 106%. We believe this to be short-term in nature extending a few quarters while we take appropriate corrective measures.
"That said, this quarter we saw rising demand for our products. In specialty P&C, as adjusted, policies in force grew nearly 6% and direct written premium increased 13%. The business remains well positioned for attractive long- term growth and, through proactive corrective measures, appropriate long-term returns. Our life business continues to experience increased demand and historically strong policy retention. The heightened level of mortality we experienced earlier in the pandemic is beginning to subside, positioning the business for ongoing profitable growth.
"Related to capital deployment, we continue to take actions that enhance the long-term intrinsic value of the company. We closed on our acquisition of American Access on April 1 and repurchased roughly $160 million of shares through the end of the quarter, while maintaining a high level of financial flexibility. Despite this quarter's challenges, our balance sheet and business model remain strong and well-positioned to navigate the re-opening. We're taking the right measures to ensure we improve results and continue to deliver on our promises to our customers, as well as attractive long-term results and value creation for our stakeholders."
1 Non-GAAP financial measure. All Non-GAAP financial measures are denoted with footnote 1 throughout this release. See "Use of Non-GAAP Financial Measures" for additional information.
Three Months Ended | Six Months Ended | |||||||||||
Jun 30, | Jun 30, | Jun 30, | Jun 30, | |||||||||
(Dollars in Millions, Except Per Share Amounts) (Unaudited) | 2021 | 2020 | 2021 | 2020 | ||||||||
Net Income (Loss)............................................................................................... | $ | (62.6) | $ | 126.1 | $ | 60.6 | $ | 190.1 | ||||
Adjusted Consolidated Net Operating Income (Loss) 1....................................... | $ | (99.4) | $ | 79.2 | $ | (12.2) | $ | 242.1 | ||||
Impact of Catastrophe Losses and Related Loss Adjustment Expense (LAE) on | ||||||||||||
Net Income..................................................................................................... | $ | (27.5) | $ | (22.3) | $ | (49.3) | $ | (26.9) | ||||
Diluted Net Income Per Share From: | ||||||||||||
Net Income (Loss).......................................................................................... | $ | (0.97) | $ | 1.91 | $ | 0.92 | $ | 2.85 | ||||
Adjusted Consolidated Net Operating Income (Loss) 1.................................. | $ | (1.54) | $ | 1.20 | $ | (0.19) | $ | 3.63 | ||||
Impact of Catastrophe Losses and Related LAE on Net Income Per Share......... | $ | (0.43) | $ | (0.34) | $ | (0.75) | $ | (0.41) |
Capital
Total Shareholders' Equity at the end of the quarter was $4,306.2 million, a decrease of $257.2 million, or 6 percent, since year-end 2020 primarily driven by a decrease in the valuation of our fixed income bond portfolio, repurchases of common stock, and cash dividends. Kemper and its direct non-insurance subsidiaries ended the quarter with cash and investments of $214.8 million, and the $400.0 million revolving credit agreement was undrawn.
During the second quarter of 2021, Kemper paid dividends of $20.4 million.
On May 5, 2021, Kemper announced that its Board of Directors declared a quarterly dividend of $0.31 per share.
Kemper ended the quarter with a book value per share of $67.67, a decrease of 3 percent from $69.74 at the end of 2020. Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 was $58.39, compared to $58.67 at the end of 2020.
Revenues
Total revenues for the second quarter of 2021 increased $276.8 million, or 22 percent, to $1,507.7 million, compared to the second quarter of 2020, driven by $251.3 million of higher Specialty P&C earned premiums and a $30.8 million decrease attributable to the change in fair value of equity and convertible securities. Specialty P&C earned premiums increased due primarily to higher premium volume. Net investment income increased $46.1 million to $113.9 million in the second quarter of 2021 due primarily to the continued outperformance of Alternative Investments and higher levels of investments in fixed income securities, partially offset by lower yields on fixed income securities. Net realized investment gains were $19.2 million in the second quarter of 2021, compared to $11.7 million in the second quarter of 2020. Other income increased from $1.5 million to $7.0 million in the second quarter of 2021.
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Segment Results
Unless otherwise noted, (i) the segment results discussed below are presented on an after-tax basis, (ii) prior-year development includes both catastrophe and non-catastrophe losses and LAE, (iii) catastrophe losses and LAE exclude the impact of prior-year development, (iv) loss ratio includes loss and LAE, and (v) all comparisons are made to the prior year quarter unless otherwise stated.
Three Months Ended | Six Months Ended | |||||||||||
Jun 30, | Jun 30, | Jun 30, | Jun 30, | |||||||||
(Dollars in Millions) (Unaudited) | 2021 | 2020 | 2021 | 2020 | ||||||||
Segment Net Operating Income (Loss): | ||||||||||||
Specialty Property & Casualty Insurance......................................................... | $ | (91.7) | $ | 67.5 | $ | (11.6) | $ | 127.6 | ||||
Preferred Property & Casualty Insurance........................................................ | (8.3) | 0.9 | 1.3 | 19.3 | ||||||||
Life & Health Insurance.................................................................................... | 13.0 | 16.1 | 20.3 | 38.4 | ||||||||
Total Segment Net Operating Income (Loss)...................................................... | (87.0) | 84.5 | 10.0 | 185.3 | ||||||||
Corporate and Other Net Operating Income (Loss)............................................ | (12.4) | (5.3) | (22.2) | 56.8 | ||||||||
.......................................Adjusted Consolidated Net Operating Income (Loss) 1 | (99.4) | 79.2 | (12.2) | 242.1 | ||||||||
Net Income (Loss) From: | ||||||||||||
Change in Fair Value of Equity and Convertible Securities.............................. | 32.3 | 56.6 | 73.5 | (36.5) | ||||||||
Net Realized Gains on Sales of Investments.................................................... | 15.2 | 9.3 | 26.1 | 22.3 | ||||||||
Impairment Losses........................................................................................... | (2.5) | (5.5) | (5.7) | (15.0) | ||||||||
Acquisition Related Transaction, Integration and Other Costs........................ | (8.2) | (13.5) | (21.1) | (22.8) | ||||||||
Net Income (Loss)............................................................................................... | $ | (62.6) | $ | 126.1 | $ | 60.6 | $ | 190.1 | ||||
The Specialty Property & Casualty Insurance segment reported net operating loss of $91.7 million for the second quarter of 2021, compared to net operating income of $67.5 million in the second quarter of 2020. Results decreased due primarily to higher underlying loss ratio and adverse development of prior year loss and LAE reserves. The segment's Underlying Combined Ratio1 was 107.3 percent, compared to 89.1 percent in the second quarter of 2020.
The Preferred Property & Casualty Insurance segment reported net operating loss of $8.3 million for the second quarter of 2021, compared to net operating income of $0.9 million in the second quarter of 2020. Results decreased due primarily to higher underlying losses and LAE, partially offset by improved prior year development. The Preferred Property & Casualty Insurance segment's Underlying Combined Ratio1 deteriorated 18.7 percentage points to 103.1 percent in the second quarter of 2021 due primarily to higher incurred losses and LAE.
The Life & Health Insurance segment reported net operating income of $13.0 million for the second quarter of 2021, compared to $16.1 million in the second quarter of 2020.
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Unaudited condensed consolidated statements of income for the three and six months ended June 30, 2021 and 2020 are presented below.
Three Months Ended | Six Months Ended | |||||||||||
Jun 30, | Jun 30, | Jun 30, | Jun 30, | |||||||||
(Dollars in Millions, Except Per Share Amounts) | 2021 | 2020 | 2021 | 2020 | ||||||||
Revenues: | ||||||||||||
Earned Premiums............................................................................................. | $ 1,337.7 | $ 1,085.3 | $ 2,538.5 | $ 2,251.7 | ||||||||
Net Investment Income.................................................................................... | 113.9 | 67.8 | 217.0 | 153.4 | ||||||||
Change in Value of Alternative Energy Partnership Investments2................... | (7.7) | - | (23.1) | - | ||||||||
Other Income................................................................................................... | 7.0 | 1.5 | 8.5 | 91.8 | ||||||||
Income (Loss) from Change in Fair Value of Equity and Convertible | ||||||||||||
Securities..................................................................................................... | 40.8 | 71.6 | 93.0 | (46.2) | ||||||||
Net Realized Gains on Sales of Investments.................................................... | 19.2 | 11.7 | 33.0 | 28.2 | ||||||||
Impairment Losses........................................................................................... | (3.2) | (7.0) | (7.2) | (19.0) | ||||||||
Total Revenues................................................................................................... | 1,507.7 | 1,230.9 | 2,859.7 | 2,459.9 | ||||||||
Expenses: | ||||||||||||
Policyholders' Benefits and Incurred Losses and Loss Adjustment Expenses. | 1,224.1 | 747.5 | 2,113.6 | 1,582.7 | ||||||||
Insurance Expenses.......................................................................................... | 314.0 | 272.7 | 597.7 | 544.3 | ||||||||
Interest and Other Expenses............................................................................ | 59.3 | 51.0 | 116.5 | 95.5 | ||||||||
Total Expenses.................................................................................................... | 1,597.4 | 1,071.2 | 2,827.8 | 2,222.5 | ||||||||
Income (Loss) before Income Taxes ................................................................... | (89.7) | 159.7 | 31.9 | 237.4 | ||||||||
Income Tax Benefit (Expense)............................................................................. | 27.1 | (33.6) | 28.7 | (47.3) | ||||||||
Net Income (Loss)............................................................................................... | $ | (62.6) | $ | 126.1 | $ | 60.6 | $ | 190.1 | ||||
Income from Continuing Operations Per Unrestricted Share: | ||||||||||||
Basic.................................................................................................................. | $ | (0.97) | $ | 1.93 | $ | 0.93 | $ | 2.88 | ||||
..............................................................................................................Diluted | $ | (0.97) | $ | 1.91 | $ | 0.92 | $ | 2.85 | ||||
Net Income Per Unrestricted Share: | ||||||||||||
Basic.................................................................................................................. | $ | (0.97) | $ | 1.93 | $ | 0.93 | $ | 2.88 | ||||
..............................................................................................................Diluted | $ | (0.97) | $ | 1.91 | $ | 0.92 | $ | 2.85 | ||||
Weighted-average Outstanding (Shares in Thousands): | ||||||||||||
Unrestricted Shares - Basic............................................................................... | 64,376.8 | 65,257.6 | 64,897.8 | 65,886.8 | ||||||||
......................................Unrestricted Shares and Equivalent Shares - Diluted | 64,376.8 | 66,020.8 | 66,051.5 | 66,667.9 | ||||||||
Dividends Paid to Shareholders Per Share........................................................ | $ | 0.31 | $ | 0.30 | $ | 0.62 | $ | 0.60 | ||||
2The Alternative Energy Partnership Investments results are included as a pre-tax loss in the Change in Value of Alternative Energy Partnership Investments of $7.7 million and $23.1 million and benefit in income tax expense of $8.6 million and $37.2 million for a net income impact of $0.9 million and $14.1 million for the three and six months ended June 30, 2021, respectively.
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Unaudited business segment revenues for the three and six months ended June 30, 2021 and 2020 are presented below.
Three Months Ended | Six Months Ended | |||||||||
Jun 30, | Jun 30, | Jun 30, | Jun 30, | |||||||
(Dollars in Millions) | 2021 | 2020 | 2021 | 2020 | ||||||
REVENUES: | ||||||||||
Specialty Property & Casualty Insurance: | ||||||||||
Earned Premiums: | ||||||||||
Specialty Automobile................................................................................... | $ | 909.6 | $ | 689.8 | $ 1,695.0 | $ 1,443.0 | ||||
Commercial Automobile.............................................................................. | 100.7 | 69.2 | 192.9 | 138.5 | ||||||
Total Earned Premiums.................................................................................... | 1,010.3 | 759.0 | 1,887.9 | 1,581.5 | ||||||
Net Investment Income.................................................................................... | 42.7 | 16.9 | 77.7 | 45.7 | ||||||
Change in Value of Alternative Energy Partnership Investments.................... | (3.7) | - | (11.0) | - | ||||||
Other Income................................................................................................... | 1.0 | 0.1 | 1.9 | 1.0 | ||||||
Total Specialty Property & Casualty Insurance Revenues | 1,050.3 | 776.0 | 1,956.5 | 1,628.2 | ||||||
Preferred Property & Casualty Insurance: | ||||||||||
Earned Premiums: | ||||||||||
Preferred Automobile.................................................................................. | 103.5 | 99.1 | 206.5 | 214.0 | ||||||
Homeowners................................................................................................ | 51.3 | 55.6 | 102.1 | 112.4 | ||||||
Other Personal............................................................................................. | 8.4 | 8.9 | 16.8 | 18.1 | ||||||
Total Earned Premiums.................................................................................... | 163.2 | 163.6 | 325.4 | 344.5 | ||||||
Net Investment Income.................................................................................... | 19.5 | 4.3 | 35.4 | 14.0 | ||||||
Change in Value of Alternative Energy Partnership Investments.................... | (2.0) | - | (6.1) | - | ||||||
Other Income................................................................................................... | - | 0.1 | - | 0.1 | ||||||
Total Preferred Property & Casualty Insurance Revenues................................. | 180.7 | 168.0 | 354.7 | 358.6 | ||||||
Life & Health Insurance: | ||||||||||
Earned Premiums: | ||||||||||
Life................................................................................................................ | 100.6 | 95.7 | 198.7 | 192.9 | ||||||
Accident & Health........................................................................................ | 47.9 | 50.8 | 95.3 | 100.2 | ||||||
Property....................................................................................................... | 15.7 | 16.2 | 31.2 | 32.6 | ||||||
Total Earned Premiums.................................................................................... | 164.2 | 162.7 | 325.2 | 325.7 | ||||||
Net Investment Income.................................................................................... | 52.4 | 44.3 | 103.5 | 95.3 | ||||||
Change in Value of Alternative Energy Partnership Investments.................... | (2.0) | - | (6.0) | - | ||||||
Other Income................................................................................................... | 0.1 | 0.5 | 0.2 | 0.6 | ||||||
Total Life & Health Insurance Revenues............................................................. | 214.7 | 207.5 | 422.9 | 421.6 | ||||||
Total Segment Revenues.................................................................................... | 1,445.7 | 1,151.5 | 2,734.1 | 2,408.4 | ||||||
Income (Loss) from Change in Fair Value of Equity and Convertible Securities. | 40.8 | 71.6 | 93.0 | (46.2) | ||||||
Net Realized Gains on Sales of Investments....................................................... | 19.2 | 11.7 | 33.0 | 28.2 | ||||||
Impairment Losses.............................................................................................. | (3.2) | (7.0) | (7.2) | (19.0) | ||||||
Other................................................................................................................... | 5.2 | 3.1 | 6.8 | 88.5 | ||||||
Total Revenues................................................................................................... | $ | 1,507.7 | $ | 1,230.9 | $ 2,859.7 | $ 2,459.9 | ||||
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Kemper Corporation published this content on 29 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2021 20:28:04 UTC.
