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What changed in KEMPER Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KEMPER Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+333 added−433 removedSource: 10-K (2025-02-07) vs 10-K (2024-02-07)

Top changes in KEMPER Corp's 2024 10-K

333 paragraphs added · 433 removed · 291 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

74 edited+14 added−16 removed62 unchanged
Biggest changeFor each amount reinstated the Company shall pay additional premiums equal to the percentage of the reinsurer's loss limit for the excess layer exhausted for the loss occurrence multiplied by 100% of the reinsurance premium paid or payable for the excess layer for the term of the contract (50% of the reinsurance premium paid for $100 million excess of $150 million of the 2022 Reinsurance Contract). 7 Other In addition to the catastrophe loss exposures caused by natural events described above, Kemper’s property and casualty insurance companies are exposed to losses from catastrophic events that are not the result of acts of nature, such as acts of terrorism, the nature, occurrence and severity of which in any period cannot be accurately predicted.
Biggest changeOther In addition to the catastrophe loss exposures caused by natural events described above, Kemper’s property and casualty insurance companies are exposed to losses from catastrophic events that are not the result of acts of nature, such as acts of terrorism, the nature, occurrence and severity of which in any period cannot be accurately predicted.
Further, because the level of insured losses that could occur in any one year cannot be accurately predicted, these losses contribute to material year-to-year fluctuations in the results of operations and financial position of these companies. Specific types of catastrophic events are more likely to occur at 6 certain times within the year than others.
Further, because the level of insured losses that 6 could occur in any one year cannot be accurately predicted, these losses contribute to material year-to-year fluctuations in the results of operations and financial position of these companies. Specific types of catastrophic events are more likely to occur at certain times within the year than others.
On the privacy front, the California Consumer Privacy Act, as amended, by the California Privacy Rights Act (“CPRA”), which went into effect in January 2023, among other things, requires companies to provide privacy notices and 12 respond to any request made to the company by a California resident regarding his or her personal information used or maintained by the company outside the scope of the GLBA privacy laws.
On the privacy front, the California Consumer Privacy Act, as amended, by the California Privacy Rights Act (“CPRA”), which went into effect in January 2023, among other things, requires companies to provide privacy notices and respond to any request made to the company by a California resident regarding his or her personal information used or maintained by the company outside the scope of the GLBA privacy laws.
These requirements may include the advance filing of specific information with the state insurance regulators, a public hearing on the matter, and the review and approval of the change of control by such regulators. The Company has insurance subsidiaries domiciled or deemed commercially domiciled in Alabama, California, Florida, Illinois, Indiana, Louisiana, Missouri, New York, Ohio, Oregon, Texas and Wisconsin.
These requirements may include the advance filing of specific information with the state insurance regulators, a public hearing on the matter, and the review and approval of the change of control by such 12 regulators. The Company has insurance subsidiaries domiciled or deemed commercially domiciled in Alabama, California, Florida, Illinois, Indiana, Louisiana, Missouri, New York, Ohio, Oregon, Texas and Wisconsin.
Resulting changes in the liability due to differences in actual versus expected experience, changes in current cash flow assumptions, and prefunding and payout of benefits compared to the carrying amount of the liability as of that same date are recorded as a separate component of benefit expense in the Consolidated Statements of Loss.
Resulting changes in the liability due to differences in actual versus expected experience, changes in current cash flow assumptions, and prefunding and payout of benefits compared to the carrying amount of the liability as of that same date are recorded as a separate component of benefit expense in the Consolidated Statements of Income (Loss).
However, certain perils, such as biological, chemical, nuclear pollution or contamination, are excluded from the reinsurance coverage for non-certified events. Under the various reinsurance arrangements, Kemper’s property and casualty insurance companies are indemnified by reinsurers for certain losses incurred under insurance policies issued by the reinsurers.
However, certain perils, such as biological, chemical, nuclear pollution or contamination, are excluded from the reinsurance coverage for non-certified events. 7 Under the various reinsurance arrangements, Kemper’s property and casualty insurance companies are indemnified by reinsurers for certain losses incurred under insurance policies issued by the reinsurers.
See Item 1A., “Risk Factors,” under the caption “ The insurance industry is highly competitive, making it difficult to grow profitability and within expectations of investors. ” 8 Life Insurance Business General The Company’s life & health insurance business operations are conducted primarily through the Life Insurance segment.
See Item 1A., “Risk Factors,” under the caption “ The insurance industry is highly competitive, making it difficult to grow profitability and within expectations of investors. ” Life Insurance Business General The Company’s life & health insurance business operations are conducted primarily through the Life Insurance segment.
Accordingly, the process of estimating and establishing the Company’s Life Insurance Reserves is inherently uncertain. See MD&A, “Critical Accounting Estimates,” under the caption “Life Insurance Reserves” for more details on the Company’s reserving process and the factors considered by the Company’s actuaries in estimating the Company’s Life Insurance Reserves.
Accordingly, the process of estimating and establishing the Company’s Life Insurance Reserves is inherently uncertain. See MD&A, “Critical Accounting Estimates,” 9 under the caption “Life Insurance Reserves” for more details on the Company’s reserving process and the factors considered by the Company’s actuaries in estimating the Company’s Life Insurance Reserves.
Depending on the state, these laws permit investments in qualified assets, including, but not limited to, municipal, state and federal government obligations, corporate bonds, real estate, preferred and common stocks, investment partnerships, limited liability investment companies and limited partnerships.
Depending on the state, these laws permit investments in qualified assets, including, but not limited to, municipal, state and federal government obligations, corporate bonds, structured bonds, real estate, preferred and common stocks, investment partnerships, limited liability investment companies and limited partnerships.
See the discussions of the Company’s investments under the headings “Investment Results,” “Investment Quality and Concentrations,” “Investments in Limited Liability Companies and Limited Partnerships,” “Liquidity and Capital Resources” and “Critical Accounting Estimates,” in the MD&A, “Quantitative and Qualitative Disclosures about Market Risk,” in Item 7A and Note 10, “Investments,” Note 11, “Income from Investments,” Note 12, “Derivatives,” and Note 13, “Fair Value Measurements,” to the Consolidated Financial Statements.
See the discussions of the Company’s investments under the headings “Investment Results,” “Investment Quality and Concentrations,” “Investments in Limited Liability Companies and Limited Partnerships,” “Liquidity and Capital Resources” and “Critical Accounting Estimates,” in the MD&A, “Quantitative and Qualitative Disclosures about Market Risk,” in Item 7A and Note 11, “Investments,” Note 12, “Income from Investments,” Note 13, “Derivatives,” and Note 14, “Fair Value Measurements,” to the Consolidated Financial Statements.
ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry. The discussions throughout this 2023 Annual Report utilize ISO’s definition of catastrophes. The process of estimating and establishing reserves for catastrophe losses is inherently uncertain and the actual ultimate cost of a claim, net of reinsurance recoveries, may vary materially from the estimated amount reserved.
ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry. The discussions throughout this 2024 Annual Report utilize ISO’s definition of catastrophes. The process of estimating and establishing reserves for catastrophe losses is inherently uncertain and the actual ultimate cost of a claim, net of reinsurance recoveries, may vary materially from the estimated amount reserved.
See Item 1A., “Risk Factors,” under the caption “ Catastrophe losses could materially and adversely affect the Company’s results of operations, liquidity and/or financial condition ” for a discussion of catastrophe risk. See Note 25, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for a discussion of the factors that influence the process of estimating and establishing reserves for catastrophes.
See Item 1A., “Risk Factors,” under the caption “ Catastrophe losses could materially and adversely affect the Company’s results of operations, liquidity and/or financial condition ” for a discussion of catastrophe risk. See Note 26, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for a discussion of the factors that influence the process of estimating and establishing reserves for catastrophes.
For example, insurance companies are required to maintain a cybersecurity program, incident response plan and information technology system safeguards that protect customer information under extensive cybersecurity regulations implemented by the New York Department of Financial Services and statutes adopted by a number of states based on a model data security law adopted by the NAIC.
For example, insurance companies are required to maintain a cybersecurity program, incident response plan and information technology system safeguards that protect personal and confidential information under extensive cybersecurity regulations implemented by the New York Department of Financial Services and statutes adopted by a number of states based on a model data security law adopted by the NAIC.
See Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for information about incurred and paid claims development for the 2019-2022 accident years as of December 31, 2023, net of reinsurance and indemnification, as well as cumulative claim frequency and the total of incurred but not reported (“IBNR”) liabilities, including expected development on reported claims included within the net incurred losses and allocated LAE amounts as of December 31, 2023.
See Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for information about incurred and paid claims development for the 2020 to 2023 accident years as of December 31, 2024, net of reinsurance and indemnification, as well as cumulative claim frequency and the total of incurred but not reported (“IBNR”) liabilities, including expected development on reported claims included within the net incurred losses and allocated LAE amounts as of December 31, 2024.
Kemper’s property and casualty insurance companies wrote less than 1% of the industry’s 2022 premium volume. The property and casualty insurance industry is highly competitive, particularly with respect to personal automobile insurance.
Kemper’s property and casualty insurance companies wrote less than 1% of the industry’s 2023 premium volume. The property and casualty insurance industry is highly competitive, particularly with respect to personal automobile insurance.
The Company derives a significant portion of its earned premiums in two such states, California and Florida. See MD&A under the caption “Specialty Property & Casualty Insurance”. Competition Based on the most recent annual data published by A.M. Best, as of the end of 2022, there were 1,110 property and casualty insurance groups in the United States.
The Company derives a significant portion of its earned premiums in two such states, California and Florida. See MD&A under the caption “Specialty Property & Casualty Insurance”. Competition Based on the most recent annual data published by A.M. Best, as of the end of 2023, there were 1,104 property and casualty insurance groups in the United States.
The Life Insurance segment’s lapse ratio for individual life insurance was 5%, 6%, and 3% in 2023, 2022 and 2021 respectively. The customer base served by the Life Insurance segment tends to have a higher incidence of lapse than other demographic segments of the population.
The Life Insurance segment’s lapse ratio for individual life insurance was 5%, 5%, and 6% in 2024, 2023 and 2022, respectively. The customer base served by the Life Insurance segment tends to have a higher incidence of lapse than other demographic segments of the population.
For further discussion of the reinsurance programs, see Note 25, “Catastrophe Reinsurance,” and Note 26, “Other Reinsurance,” to the Consolidated Financial Statements.
For further discussion of the reinsurance programs, see Note 26, “Catastrophe Reinsurance,” and Note 27, “Other Reinsurance,” to the Consolidated Financial Statements.
Our total rewards are a vital part of the employee experience at Kemper, and are designed to add value to our business and promote the health and well-being of all employees. Kemper is focused on investing in the physical, emotional, financial and social well-being of our people by providing a wide range of benefits.
Our total rewards are a vital component of the employee experience at Kemper, designed to add value to our business while promoting the health and well-being of all employees. Kemper is focused on investing in the physical, emotional, financial and social well-being of our people by providing a wide range of benefits.
With nearly $12.7 billion in assets, Kemper is improving the world of insurance by providing affordable and easy-to-use personalized solutions to individuals, families and businesses through its Kemper Auto and Kemper Life brands.
With approximately $12.6 billion in assets, Kemper is improving the world of insurance by providing affordable and easy-to-use personalized solutions to individuals, families and businesses through its Kemper Auto and Kemper Life brands.
State Percentage of Total Premiums California 53 % Florida 20 % Texas 15 % The Specialty Property & Casualty Insurance segment provides personal automobile insurance to consumers who have had difficulty obtaining standard or preferred risk insurance, usually because of their driving records, claims experience or premium payment history.
State Percentage of Total Premiums California 58 % Florida 19 % Texas 13 % The Specialty Property & Casualty Insurance segment provides personal automobile insurance to consumers who have had difficulty obtaining standard or preferred risk insurance, usually because of their driving records, claims experience or premium payment history.
Kemper’s property and casualty group was among the top 6% of property and casualty insurance groups in the United States as measured by net written premiums, policyholders’ surplus and net admitted assets in 2022. Among all personal lines automobile insurance writers, Kemper’s property and casualty group was the 12th largest writer as measured by net written premiums in 2022.
Kemper’s property and casualty group was among the top 6% of property and casualty insurance groups in the United States as measured by net admitted assets, net written premiums, and capital and surplus in 2023. Among all personal lines automobile insurance writers, Kemper’s property and casualty group was the 15th largest writer as measured by net written premiums in 2023.
In addition, the quality, nature, amount and concentration of the various types of investments held by Kemper’s insurance subsidiaries affect the amount of asset risk calculated by regulators and rating agencies in determining required capital.
In addition, the quality, nature, 10 amount and concentration of the various types of investments held by Kemper and its subsidiaries affect the amount of asset risk calculated by regulators and rating agencies in determining required capital.
To limit its exposure to catastrophic events, the Company maintains a catastrophe reinsurance program for its property and casualty insurance companies. Coverage for the catastrophe reinsurance program is provided in various layers through multiple excess of loss reinsurance contracts.
To limit its exposure to catastrophic events, the Company maintains a catastrophe reinsurance program for its property and casualty insurance companies. Coverage for the catastrophe reinsurance program is provided in various layers within one excess of loss reinsurance contract.
Specialty Property & Casualty Insurance The Specialty Property & Casualty Insurance segment, based in Chicago, Illinois, conducts business in 31 states under the Kemper Auto brand. As shown in the following table, three states provided 88% of the segment’s premium revenues in 2023.
Specialty Property & Casualty Insurance The Specialty Property & Casualty Insurance segment, based in Chicago, Illinois, conducts business in 16 states under the Kemper Auto brand. As shown in the following table, three states provided 90% of the segment’s premium revenues in 2024.
Life Insurance Reserves by business segment at December 31, 2023 and 2022 were: DOLLARS IN MILLIONS 2023 2022 Business Segments: Life Insurance: Life Insurance $ 3,417.7 $ 3,271.9 Accident & Health Insurance 4.7 4.3 Total Life Insurance Reserves $ 3,422.4 $ 3,276.2 Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current).
Life Insurance Reserves by business segment at December 31, 2024 and 2023 were: DOLLARS IN MILLIONS 2024 2023 Business Segments: Life Insurance: Life Insurance $ 3,195.1 $ 3,417.7 Accident & Health Insurance 4.6 4.7 Total Life Insurance Reserves $ 3,199.7 $ 3,422.4 Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current).
We measure engagement through an employee survey which offers all team members the opportunity to provide feedback on key drivers of overall work satisfaction, including career growth and development, company leadership, pay and benefits, recognition, collaboration, communication, resources, culture, DE&I, and ethics.
We measure engagement through an employee survey, giving all team members the opportunity to provide feedback on key drivers of work satisfaction, including career growth and development, company leadership, compensation and benefits, recognition, collaboration, communication, resources, culture, and ethics.
This rate cannot exceed 30% of the Exchange’s gross written and assumed premiums. 5 Property and Casualty Loss and Loss Adjustment Expense Reserves The Company’s reserves for losses and LAE for property and casualty insurance (“Property and Casualty Insurance Reserves”) are reported using the Company’s estimate of its ultimate liability for losses and LAE for claims that occurred prior to the end of any given accounting period but have not yet been paid.
The AIF can charge a management fee of up to 30% of the Exchange’s gross written and assumed premiums. 5 Property and Casualty Loss and Loss Adjustment Expense Reserves The Company’s reserves for losses and LAE for property and casualty insurance (“Property and Casualty Insurance Reserves”) are reported using the Company’s estimate of its ultimate liability for losses and LAE for claims that occurred prior to the end of any given accounting period but have not yet been paid.
Kemper serves over 4.9 million policies, is represented by more than 23,700 agents and brokers, and has approximately 8,100 associates dedicated to meeting the ever-changing needs of its customers. The Company is engaged, through its subsidiaries, in the property and casualty insurance and life insurance businesses.
Kemper serves over 4.7 million policies, is represented by more than 22,200 agents and brokers, and has approximately 7,400 associates dedicated to meeting the ever-changing needs of its customers. The Company is engaged, through its subsidiaries, in the property and casualty insurance and life insurance businesses.
Kemper’s subsidiaries employ approximately 8,100 associates supporting their operations, of which approximately 2,900 are employed in the Specialty Property & Casualty Insurance Segment, approximately 3,000 are employed in the Life Insurance segment and the remainder are employed in various corporate and other functions.
Kemper’s subsidiaries employ approximately 7,400 associates supporting their operations, of which approximately 2,500 are employed in the Specialty Property & Casualty Insurance Segment, approximately 2,900 are employed in the Life Insurance segment and the remainder are employed in various corporate and other functions.
Compliance and Ethics A culture that includes compliance and ethical behaviors is key to protecting the Company from actions that could negatively impact our reputation and business results. These values are also critical to the sound operation of our business and contribute to a positive work experience for our employees.
Compliance and Ethics A culture grounded in compliance and ethical behavior is essential for protecting the Company from actions that could negatively impact our reputation and business results. These values are also critical to the sound operation of our business and contribute to a positive work environment for our employees.
Rankings by net admitted assets, net premiums written and capital and surplus were: Ordinal Percentile Measurement Rank Rank Net Admitted Assets 96 75 % Net Written Premiums 107 72 Capital and Surplus 112 71 Kemper’s life and health insurance subsidiaries generally compete by using appropriate pricing, offering products to selected markets or geographies, controlling expenses, maintaining adequate ratings from A.M.
Rankings by net admitted assets, net premiums written and capital and surplus were: Ordinal Percentile Measurement Rank Rank Net Admitted Assets 102 73 % Net Written Premiums 115 70 Capital and Surplus 116 70 Kemper’s life and health insurance subsidiaries generally compete by using appropriate pricing, offering products to selected markets or geographies, controlling expenses, maintaining adequate ratings from A.M.
Some of these matters are discussed in more detail below. 11 Approval of Policy Rates and Forms The majority of Kemper’s insurance operations are in states requiring prior approval by regulators before proposed policy or coverage forms and rates for insurance policies may be implemented and used.
Approval of Policy Rates and Forms The majority of Kemper’s insurance operations are in states requiring prior approval by regulators before proposed policy or coverage forms and rates for insurance policies may be implemented and used.
The Life Insurance segment is a party to the FHCF and the Property & Casualty catastrophe excess of loss reinsurance contracts. Lapse Ratio The lapse ratio is a measure of a life insurer’s loss of in-force policies.
The Life Insurance segment is a party to the Florida Hurricane Catastrophe Fund (“FHCF”) and the Property & Casualty catastrophe excess of loss reinsurance contract. Lapse Ratio The lapse ratio is a measure of a life insurer’s loss of in-force policies.
Total rewards includes both benefits and compensation (base salary, short- and long-term incentives). Kemper is committed to providing a robust and market competitive total rewards package that enables us to attract and retain the talent we need to grow our company, and achieve our results.
This includes both benefits and compensation (base salary, short- and long-term incentives). Kemper is committed to offering a robust and market-competitive total rewards package that helps us attract and retain the talent necessary to grow our company and achieve our goals.
These modifications impose new reporting requirements and substantially expand the oversight and examination powers of state insurance regulators to assess enterprise risks within the entire holding company system that may arise from both insurance and non-insurance subsidiaries.
These modifications impose new reporting requirements and substantially expand the oversight and examination powers of state insurance regulators to assess enterprise risks within the entire holding company system that may arise from both insurance and non-insurance subsidiaries. They also impose new reporting requirements on affiliated transactions and divestiture of a controlling interest in an insurance subsidiary.
Our compliance reporting protocol enhances our efforts to foster a culture of integrity and ethical behavior while facilitating corrective actions necessary to address identified problems. In addition, Kemper encourages employees to reach out to their direct manager, another manager, the Kemper Corporate Responsibility Hotline , or Human Resources with any compliance or ethical misconduct questions or concerns.
Our compliance reporting protocol strengthens our efforts to foster integrity and ethical behavior, while enabling corrective actions to address any identified issues. In addition, Kemper encourages employees to reach out to their direct manager, another manager, the Kemper Corporate Responsibility Hotline, the Kemper Corporate Compliance and Ethics Officer, or Human Resources with any compliance or ethical concerns.
Additional regulations or new requirements may emerge from activities of various regulatory entities, including the Federal Reserve Board, FIO, FSOC, NAIC and the International Association of Insurance Supervisors (“IAIS”), that are evaluating solvency and capital standards for insurance company groups.
However, there remains uncertainty regarding the future of the Dodd-Frank Act and how it may impact our business. Additional regulations or new requirements may emerge from activities of various regulatory entities, including the Federal Reserve Board, FIO, FSOC, NAIC and the International Association of Insurance Supervisors (“IAIS”), that are evaluating solvency and capital standards for insurance company groups.
Kemper provides a variety of tools and resources to ensure that these values ultimately result in an environment that’s welcoming for every member of the Kemper community. Kemper maintains an open communication environment to all employees that features multiple channels for reporting instances of fraud, theft, violence, and misconduct.
Kemper provides a variety of tools and resources to ensure these values create an inclusive and welcoming environment for every member of the Kemper community. Kemper maintains an open communication environment with multiple channels for reporting fraud, theft, violence, and misconduct.
Kemper’s commitment 14 to Own Your Career is closely tied to our Act Like an Owner culture, and offers individuals the opportunity for skill building, talent development, and opportunities to connect with peers and managers to support employees on their path forward. Engagement with Company Culture Employee engagement is a critical element in driving the Company’s culture and success.
Kemper’s commitment to Own Your Career aligns with our Act Like an Owner culture, offering opportunities for skill building, talent development, and connection with peers and managers to support employees on their path forward. Engagement with Company Culture Employee engagement is essential to driving the Company’s culture and success.
The feedback is evaluated by our business, functional and Human Resources leadership teams to understand employees’ emotional commitment to the most critical areas of employee engagement, further define and improve our culture, and address areas of opportunity to enhance the work experience. Total Rewards Total rewards represent investments Kemper makes to recognize and reward employees for their contributions.
This feedback is reviewed by our business, functional and Human Resources leadership teams to assess employees’ emotional commitment to the most critical engagement factors, refine our culture, and address opportunities to enhance the work experience. Total Rewards Total rewards represent the investments Kemper makes to recognize and reward employees for their contributions.
In addition, insurance regulatory authorities perform periodic examinations of an insurer’s financial condition, market conduct activities and other affairs.
In addition, insurance regulatory authorities perform periodic examinations of an insurer’s financial condition, market conduct activities and other affairs. Some of these matters are discussed in more detail below.
Reinstatement of Excess of Loss Reinsurance Contracts In the event that the Company’s incurred catastrophe losses and LAE covered by its catastrophe reinsurance program exceed the retention for a particular layer, the program allows for one reinstatement of such coverage.
The second layer provides 95% coverage on the losses on individual catastrophes of $65 million in excess of $110 million. Reinstatement of Excess of Loss Reinsurance Contract In the event that the Company’s incurred catastrophe losses and LAE covered by its catastrophe reinsurance program exceed the retention for a particular layer, the program allows for reinstatement of such coverage.
Best, as of the end of 2022, there were 389 life and health insurance company groups in the United States. The Company’s Life Insurance segment ranked in the top 29% of life and health insurance company groups, as measured by net admitted assets, net premiums written and capital and surplus.
The Company’s Life Insurance segment ranked in the top 30% of life and health insurance company groups, as measured by net admitted assets, net premiums written and capital and surplus.
These include, but are not limited to: • Health insurance including medical, dental, vision and prescription drug coverage • Life and disability insurance • Tax-advantaged Flexible Spending Accounts for health care and dependent care • Health Savings Accounts for the High-Deductible Health Plan, including a company match • 401(k) retirement savings program, including a company match and 100% vesting upon hire • Employee Stock Purchase Program (ESPP) • Employee Assistance & Work/Life Program (EAP) • Tuition reimbursement • Adoption assistance • Employee discount programs • Voluntary benefit programs • Leave and time off programs • Flexible work arrangements based on function and role • Wellness resources, including diabetes, hypertension, weight management and pregnancy support • Commuter benefits • Benefits navigation Future of Work Kemper’s top priority in responding to the COVID-19 pandemic was to ensure the health, safety, and well-being of our employees, agents, and customers.
These include, but are not limited to: • Health insurance including medical, dental, vision and prescription drug coverage • Life and disability insurance • Tax-advantaged Flexible Spending Accounts for health care and dependent care • Health Savings Accounts for the High-Deductible Health Plan, including a company match 14 • 401(k) retirement savings program, including a company match and 100% vesting upon hire • Employee Stock Purchase Program (ESPP) • Employee Assistance & Work/Life Program (EAP) • Tuition reimbursement • Adoption assistance • Employee discount programs • Voluntary benefit programs • Leave and time off programs • Flexible work arrangements based on function and role • Wellness resources, including diabetes, hypertension, weight management and pregnancy support • Commuter benefits • Benefits navigation How We Work At Kemper, we embrace a thoughtful hybrid work model designed to enhance both flexibility and connection within our workforce.
Rankings by net admitted assets, net premiums written and capital and surplus were: Ordinal Percentile Measurement Rank Rank Net Admitted Assets 49 96 % Net Written Premiums 32 97 Capital and Surplus 69 94 In 2022, the U.S. property and casualty insurance industry’s estimated net premiums written were $782.3 billion, of which nearly 81% were accounted for by the top 50 groups of property and casualty insurance companies.
Rankings by net admitted assets, net premiums written and capital and surplus were: Ordinal Percentile Measurement Rank Rank Net Admitted Assets 56 95 % Net Written Premiums 36 97 Capital and Surplus 67 94 In 2023, the U.S. property and casualty insurance industry’s estimated net premiums written were $863.6 billion, of which nearly 82% were accounted for by the top 50 groups of property and casualty insurance companies.
Face amounts of these policies are lower than those of policies typically sold to higher income customers by other companies in the life insurance industry. Premiums average approximately $28 per policy per month with an average face value of $6,308.
Individual life insurance is offered primarily on a non-participating, guaranteed-cost basis. Face amounts of these policies are lower than those of policies typically sold to higher income customers by other companies in the life insurance industry. Premiums average approximately $29 per policy per month with an average face value of $6,413.
Our culture enables everyone, at every level, to take authority and accountability for their respective roles and responsibilities and strive towards high performance. We promote this through dynamic, diverse , and innovative team members who act like owners and are continually driven by intellectual curiosity, analytic superiority, and being world class operators.
Our culture empowers employees at every level to take authority and accountability for their roles, driving high performance. We foster this through a dynamic, diverse, and innovative team of individuals who act like owners, continually driven by intellectual curiosity, analytic superiority, and a commitment to being world class operators.
The AIF receives a management fee for the services provided to the Reciprocal Exchange. The management fee revenues are based upon all premiums written or assumed by the Exchange. The AIF determines the management fee rate to be paid by the Exchange.
The Exchange is operated by a management company owned by Kemper that acts as the attorney-in-fact (“AIF”). The AIF receives a management fee for the services provided to the Reciprocal Exchange. The management fee revenues are based upon all premiums written or assumed by the Exchange. The AIF determines the management fee rate to be paid by the Exchange.
Kemper encourages elevated engagement through various initiatives and programs, and reinforces behaviors through recognition to employees who consistently go above and beyond in their contributions to the Company’s success.
Kemper fosters elevated engagement through various initiatives and programs, recognizing employees who consistently go above and beyond in contributing to the Company’s success.
Kemper’s strategic intent is focused on empowering each employee on our team to Act Like an Owner to deliver on our promises to our stakeholders. This concept describes one of the most important parts of executing on our purpose—our employees—and infuses our ownership culture in everything we do.
Kemper’s Strategic Intent centers on empowering every team member to Act Like an Owner to deliver on our promises to our stakeholders. This concept highlights one of the most important elements of fulfilling our purpose—our employees—and infuses our ownership culture into everything we do.
The Dodd-Frank Act also created the Federal Insurance Office (“FIO”) within the U.S. Department of the Treasury (“Treasury”). The FIO monitors the insurance industry, provides advice to the Financial Stability Oversight Council (“FSOC”), represents the U.S. on international insurance matters, and studies the current regulatory system.
Department of the Treasury (“Treasury”). The FIO monitors the insurance industry, provides advice to the Financial Stability Oversight Council (“FSOC”), represents the U.S. on international insurance matters, and studies the current regulatory system. The Dodd-Frank Act includes a number of financial reforms and regulations that may affect our business and financial reporting.
Prior periods have been recast to reflect the change in calculation of Adjusted Consolidated Operating Net Loss. 4 Net Written Premiums for the Property and Casualty Business were as follows: DOLLARS IN MILLIONS 2023 2022 2021 Business Segments: Specialty Property & Casualty Insurance Segment: Specialty Personal Automobile Insurance $ 2,677.5 $ 3,305.1 $ 3,587.2 Commercial Automobile Insurance 627.9 629.3 470.1 Life Insurance Segment: Fire/Contents Protection 45.3 50.0 61.6 Total Segment Net Written Premiums 3,350.7 3,984.4 4,118.9 Non-Core Operations 435.5 527.1 642.0 Total Property and Casualty Net Written Premiums $ 3,786.2 $ 4,511.5 $ 4,760.9 Property insurance indemnifies an insured with an interest in physical property for loss of, or damage to, such property.
Collectively, these segments provide specialty automobile, fire/contents, and other types of property and casualty insurance to individuals and commercial automobile insurance, and general liability as an endorsement to commercial automobile, to businesses. 4 Net Written Premiums for the Property and Casualty Business were as follows: DOLLARS IN MILLIONS 2024 2023 2022 Business Segments: Specialty Property & Casualty Insurance Segment: Specialty Personal Automobile Insurance $ 2,887.7 $ 2,677.5 $ 3,305.1 Commercial Automobile Insurance 797.7 627.9 629.3 Life Insurance Segment: Fire/Contents Protection 43.3 45.3 50.0 Total Segment Net Written Premiums 3,728.7 3,350.7 3,984.4 Non-Core Operations 108.3 435.5 527.1 Total Property and Casualty Net Written Premiums $ 3,837.0 $ 3,786.2 $ 4,511.5 Property insurance indemnifies an insured with an interest in physical property for loss of, or damage to, such property.
They also impose new reporting requirements on affiliated transactions and divestiture of a controlling interest in an insurance subsidiary. 13 Other Federal Government Regulation Dodd-Frank Wall Street Reform and Consumer Protection Act and Other Financial Reform Efforts As part of an effort to strengthen the regulation of the financial services market, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was enacted in 2010.
Other Federal Government Regulation Dodd-Frank Wall Street Reform and Consumer Protection Act and Other Financial Reform Efforts As part of an effort to strengthen the regulation of the financial services market, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was enacted in 2010. The Dodd-Frank Act also created the Federal Insurance Office (“FIO”) within the U.S.
The Life Insurance segment distributes its products through a network of employee, or “career” agents. These career agents are paid commissions for their services. Earned premiums from the life insurance segment accounted for 7%, of the Company’s consolidated insurance premiums earned in 2023 and 2022, respectively, and 6% of the Company’s insurance premium earned in 2021.
The Life Insurance segment distributes its products through a network of employee, or “career” agents. These career agents are paid commissions for their services.
The Company anticipates a continuing focus on new regulatory and legislative proposals at the state and federal levels that further regulate practices regarding privacy and security of personal information.
Kemper Bermuda Ltd. is subject to Bermuda’s Personal Information Protection Act, which went into effect on January 1, 2025. The Company anticipates a continuing focus on new regulatory and legislative proposals at the state and federal levels that further regulate practices regarding privacy and security of personal and confidential information.
As shown in the following table, five states provided 69% of the premium revenues in this segment in 2023. State Percentage of Total Premiums Texas 30 % Louisiana 15 Alabama 11 Florida 7 Georgia 6 9 Life Insurance Reserves The Company’s Life Insurance Reserves are reported using the Company’s estimate of its liability for future policyholder benefits.
State Percentage of Total Premiums Texas 29 % Louisiana 15 Alabama 10 Florida 7 Georgia 6 Life Insurance Reserves The Company’s Life Insurance Reserves are reported using the Company’s estimate of its liability for future policyholder benefits.
Property and Casualty Insurance Business General The Company’s property & casualty insurance business operations are conducted primarily through the Specialty Property & Casualty Insurance segment. The Specialty Property & Casualty Insurance segment distributes these products primarily through independent agents and brokers who are paid commissions for their services.
The Specialty Property & Casualty Insurance segment distributes these products primarily through independent agents and brokers who are paid commissions for their services, but also distributes a smaller portion of these products through direct to consumer and captive channels.
In addition, the Life Insurance segment’s career agents also sell contents coverage for personal property to its customers against loss resulting from fire, lighting and other causes. Collectively, these segments provide specialty automobile, fire/contents, and other types of property and casualty insurance to individuals and commercial automobile insurance, and general liability as an endorsement to commercial automobile, to businesses.
In addition, the Life Insurance segment’s career agents also sell contents coverage for personal property to its customers against loss resulting from fire, lightning and other causes.
Privacy and Cybersecurity Regulation and Oversight The Company is subject to numerous federal and state laws and state insurance regulations that impose significant requirements and standards for protecting personally identifiable information of insurance company policyholders, employees, and other individuals.
In most states, the involuntary pool participation of Kemper’s insurance subsidiaries is determined in proportion to their voluntary writings of related lines of business in such states. 11 Privacy and Cybersecurity Regulation and Oversight The Company is subject to numerous federal and state laws and state insurance regulations that impose significant requirements and standards for protecting personal and confidential information of insurance company policyholders, employees, and other individuals.
Kemper’s insurance subsidiaries are also required to participate in various involuntary pools or assigned risk pools, principally involving windstorms and high risk drivers. In most states, the involuntary pool participation of Kemper’s insurance subsidiaries is determined in proportion to their voluntary writings of related lines of business in such states.
Kemper’s insurance subsidiaries are also required to participate in various involuntary pools or assigned risk pools, principally involving windstorms and high risk drivers.
A company’s requirements are calculated based on an RBC formula and compared to its total adjusted capital to determine whether regulatory intervention is warranted. At December 31, 2023, the total amount of capital held by each of Kemper’s insurance subsidiaries exceeded the minimum levels required under applicable RBC requirements.
A company’s requirements are calculated based on an RBC formula and compared to its total adjusted capital to determine whether regulatory intervention is warranted.
The Exchange principally writes specialty automobile policies sold to subscribers of the Exchange. Net written premiums and net earned premiums reported through the Exchange were $0.6 million and $0.1 million, respectively, for the year ended December 31, 2023. The Exchange is operated by a management company owned by Kemper that acts as the attorney-in-fact (“AIF”).
In the third quarter of 2023 the Company established Kemper Reciprocal (the “Reciprocal Exchange” or “Exchange”), an Illinois-domiciled reciprocal insurance exchange. The Exchange principally writes specialty automobile policies sold to subscribers of the Exchange. Net written premiums and net earned premiums reported through the Exchange were $27.6 million and $17.0 million, respectively, for the year ended December 31, 2024.
Their leading product is individual life insurance, including permanent insurance that can be offered on a limited or recurring pay basis, term insurance and guaranteed issue insurance. Individual life insurance is offered primarily on a non-participating, guaranteed-cost basis.
Louis, Missouri, focuses on providing individual life and supplemental accident and health insurance products to customers who desire basic protection for themselves and their families. Their leading product is individual life insurance, including permanent insurance that can be offered on a limited or recurring pay basis, term insurance and guaranteed issue insurance.
The 2024 Annual Excess of Loss Contract provides 53.33% coverage on the first layer of losses on individual catastrophes of $100 million in excess of $50 million. The second layer provides 63.33% coverage on the losses on individual catastrophes of $90 million in excess of $150 million.
The 2025 Annual Excess of Loss Contract provides coverage in two layers for losses on individual catastrophes of $125 million in excess of $50 million. The 2025 Annual Excess of Loss Contract provides 95% coverage on the first layer of losses on individual catastrophes of $60 million in excess of $50 million.
Thus, to maintain or increase the level of its business, the Life Insurance segment must write a higher volume of new policies than competitors serving other demographic segments of the population. 10 Pricing Premiums for life insurance products are based on assumptions with respect to mortality, morbidity, investment yields, expenses, and lapses and are also affected by state laws and regulations, as well as competition.
Pricing Premiums for life insurance products are based on assumptions with respect to mortality, morbidity, investment yields, expenses, and lapses and are also affected by state laws and regulations, as well as competition. Pricing assumptions are based on the experience of the Life Insurance segment, as well as the industry in general, depending on the factor being considered.
Employee Development Kemper’s long-term success is inextricably linked to our employees’ development and engagement. Kemper provides valuable opportunities for personal development and professional challenge at all career stages, from early career programs including internships and rotational development programs to leadership development. Individual growth and development are promoted through various programs and outlets, including the Own Your Career initiative.
Employee Development Kemper’s long-term success is closely tied to the development and engagement of our employees. Kemper offers valuable opportunities for personal and professional growth at every career stage, from early career programs like internships and rotational development programs to manager and leadership development.
Property and Casualty Insurance Reserves at December 31, 2023 and 2022 were: DOLLARS IN MILLIONS 2023 2022 Business Segments: Specialty Property & Casualty Insurance: Personal Automobile Insurance $ 1,711.9 $ 1,875.8 Commercial Automobile Insurance 596.8 445.3 Life Insurance: Fire/Contents Protection 2.9 2.3 Total Segment Property and Casualty Insurance Reserves 2,311.6 2,323.4 Non-Core Operations 356.4 419.1 Unallocated Reserves 12.5 14.4 Total Property and Casualty Insurance Reserves $ 2,680.5 $ 2,756.9 In estimating the Company’s Property and Casualty Insurance Reserves, the Company’s actuaries exercise professional judgment and must consider, and are influenced by, many variables that are difficult to quantify.
Property and Casualty Insurance Reserves at December 31, 2024 and 2023 were: DOLLARS IN MILLIONS 2024 2023 Business Segments: Specialty Property & Casualty Insurance: Personal Automobile Insurance 1 $ 1,626.0 $ 1,711.9 Commercial Automobile Insurance 721.9 596.8 Life Insurance: Fire/Contents Protection 2.7 2.9 Total Segment Property and Casualty Insurance Reserves 2,350.6 2,311.6 Non-Core Operations 261.7 356.4 Unallocated Reserves 9.0 12.5 Total Property and Casualty Insurance Reserves 1 $ 2,621.3 $ 2,680.5 1 Includes $9.4 million attributable to Kemper Reciprocal as of December 31, 2024, which is reported as a consolidated variable interest entity.
Pricing assumptions are based on the experience of the Life Insurance segment, as well as the industry in general, depending on the factor being considered. The actual profit or loss produced by a product will vary from the anticipated profit if the actual experience differs from the assumptions used in pricing the product.
The actual profit or loss produced by a product will vary from the anticipated profit if the actual experience differs from the assumptions used in pricing the product. Premiums for policies sold by the Life Insurance segment are set at levels designed to cover the relatively high cost of “in-home” servicing of such policies.
These career agents are full-time employees who call on customers in their homes to sell insurance products, provide services related to policies in force and collect premiums, typically monthly. These career agents also distribute and/or service contents coverage for personal property providing coverage against loss resulting from fire, lightning, and other causes.
The Life Insurance segment employs nearly 2,200 career agents, operating in 26 states and the District of Columbia. These career agents are full-time employees who call on customers in their homes to sell insurance products, provide services related to policies in force and collect premiums, typically monthly.
Premiums for policies sold by the Life Insurance segment are set at levels designed to cover the relatively high cost of “in-home” servicing of such policies. As a result, the Life Insurance segment premiums have a higher expense load than the life insurance industry average. Competition Based on the most recent data published by A.M.
As a result, the Life Insurance segment premiums have a higher expense load than the life insurance industry average. Competition Based on the most recent data published by A.M. Best, as of the end of 2023, there were 384 life and health insurance company groups in the United States.
This program provides employees with the resources and tools necessary to continue to build momentum toward career success and development.
Individual growth and development is supported through various initiatives, including the Own Your Career program, which provides employees with the resources and tools needed to continue advancing toward career success.
The segment’s insurance products accounted for 80%, 78% and 76% of the Company’s consolidated insurance premiums in 2023, 2022 and 2021, respectively. The segment’s insurance products are marketed through approximately 16,800 independent agents and brokers. In the third quarter of 2023 the Company established Kemper Reciprocal (the “Reciprocal Exchange” or “Exchange”), an Illinois-domiciled reciprocal insurance exchange.
The segment’s insurance products accounted for 85%, 80% and 78% of the Company’s consolidated insurance premiums in 2024, 2023 and 2022, respectively. The segment’s insurance products are marketed through approximately 15,750 independent agents and brokers as well as a smaller portion sold direct to consumer and through captive agents.
Annual Excess of Loss Reinsurance Contract The 2024 Annual Excess of Loss Contracts provide coverage for the annual period of January 1, 2024 through December 31, 2024. The 2024 Annual Excess of Loss Contracts provide coverage in two layers for losses on individual catastrophes of $190 million in excess of $50 million.
The 2025 catastrophe reinsurance program covering the property and casualty insurance companies is provided by an annual excess of loss reinsurance contract. Annual Excess of Loss Reinsurance Contract The 2025 Annual Excess of Loss Contract provides coverage for the annual period of January 1, 2025 through December 31, 2025.
Removed
Item 1. Business. Kemper is a diversified insurance holding company, with subsidiaries that provide automobile, life, and other insurance products to individuals and businesses.
Added
Item 1. Business. Kemper is an insurance holding company that offers complementary insurance products, through its subsidiaries, including personal and commercial automobile insurance to consumers in targeted markets and industries. Kemper also offers life and other insurance solutions to customers who desire basic protection for themselves and their families.
Removed
In the third quarter of 2023, the Company announced that it will exit the Preferred Property and Casualty Insurance business and will actively reduce the business beginning in third quarter 2023, with all policies being non-renewed or canceled in accordance with applicable state regulations.
Added
Property and Casualty Insurance Business General The Company’s property & casualty insurance business operations are conducted primarily through the Specialty Property & Casualty Insurance segment.
Removed
As a result, the Company will no longer provide preferred automobile, homeowners insurance or other personal insurance. The results of this business, previously reported as a reportable segment, are now reflected as Non-Core Operations and presented as a reconciling item from Net Loss to Adjusted Consolidated Net Operating Loss.
Added
In estimating the Company’s Property and Casualty Insurance Reserves, the Company’s actuaries exercise professional judgment and must consider, and are influenced by, many variables that are difficult to quantify.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the Company’s controls are not effective (including with respect to the prevention or identification of misconduct by employees or others with whom we do business), it could lead to financial loss, unanticipated risk exposure (including underwriting, credit and investment risk), errors in financial reporting, litigation (including actions seeking extra-contractual damages), regulatory proceedings or damage to our reputation.
Biggest changeIf the Company’s controls are not effective (including with respect to the prevention or identification of misconduct by employees or others with whom we do business), it could lead to financial loss, unanticipated risk exposure (including underwriting, credit and investment risk), errors in financial reporting, litigation (including actions seeking extra-contractual damages), regulatory proceedings or damage to our reputation. 20 Risks Relating to Security of Personal Data, Availability of Critical Systems, and Technology Initiatives Failure to protect against cyber attacks or other exposures that compromise data, including personal data, held by the Company could result in business interruption, legal and consulting fees, regulatory penalties, litigation, lost business, reputational harm, and other liabilities and expenses.
If the Company overestimates the severity or frequency of claims and other 16 factors in determining the rates to charge for insurance products, the rates for the Company’s products could be noncompetitive and result in loss of revenue and market share. Catastrophe losses could materially and adversely affect the Company’s results of operations, liquidity and/or financial condition.
If the Company overestimates the severity or frequency of claims and other factors in determining the rates to charge for insurance products, the rates for the Company’s products could be noncompetitive and result in loss of revenue and market share. 16 Catastrophe losses could materially and adversely affect the Company’s results of operations, liquidity and/or financial condition.
Competitive success is based on many factors, including, but not limited to, the following: • Competitiveness of prices charged for insurance policies; • Sophistication of pricing segmentation; • Design and introduction of insurance products to meet emerging consumer trends; • Ability to attract and retain experienced industry talent; • Selection and retention of agents and other business partners; • Compensation paid to agents; • Underwriting discipline; • Selectiveness of sales markets; • Effectiveness of marketing materials and name recognition; • Product and technological innovation; • Effectiveness of online servicing platforms; • Ability to settle claims timely, efficiently, and without incurring extra-contractual liability; • Ability to detect and prevent fraudulent insurance claims; • Effectiveness of deployment and use of information technology across all aspects of operations; • Ability to control operating expenses; • Financial strength ratings; and • Quality of services provided to, and ease of doing business with, independent agents, brokers, or policyholders.
Competitive success is based on many factors, including, but not limited to, the following: • Competitiveness of prices charged for insurance policies; • Sophistication of pricing segmentation; • Design and introduction of insurance products to meet emerging consumer trends; • Ability to attract and retain experienced industry talent; • Selection and retention of agents and other business partners; • Compensation paid to agents; • Underwriting discipline; • Selectiveness of sales markets; • Effectiveness of marketing materials and name recognition; • Product and technological innovation; • Effectiveness of online servicing platforms; • Ability to settle claims timely, efficiently, and without incurring extra-contractual liability; 18 • Ability to detect and prevent fraudulent insurance claims; • Effectiveness of deployment and use of information technology across all aspects of operations; • Ability to control operating expenses; • Financial strength ratings; and • Quality of services provided to, and ease of doing business with, independent agents, brokers, or policyholders.
Kemper’s ability to achieve 24 the anticipated financial benefits from transactions may not be realized due to any number of factors, including, but not limited to, integration or execution difficulties or failures that may result in substantial disruptions, costs, or delays and adversely affect the Company’s ability to compete, the loss of key agents/brokers, customers or employees, unexpected or underestimated liabilities, increased costs, fees, expenses and charges related to transactions, or may be delayed by factors outside of the Company’s control.
Kemper’s ability to achieve the anticipated financial benefits from transactions may not be realized due to any number of factors, including, but not limited to, integration or execution difficulties or failures that may result in substantial disruptions, costs, or delays and adversely affect the Company’s ability to compete, the loss of key agents/brokers, customers or employees, unexpected or underestimated liabilities, increased costs, fees, expenses and charges related to transactions, or may be delayed by factors outside of the Company’s control.
These changes and emerging issues could adversely affect Kemper’s business in a variety of ways, including, for example, by expanding coverages beyond the underwriting intent, increasing the number or size of claims increasing the likelihood of class-action suits and other legislative and judicial actions, accelerating the payment of claims, repealing or weakening tort reforms or otherwise adding to operational costs or adversely affecting the Company’s competitive advantages.
These changes and emerging issues could adversely affect Kemper’s business in a variety of ways, including, for example, by expanding coverages beyond the underwriting intent, increasing the number or size of claims increasing the likelihood of class-action suits and other legislative and judicial actions, accelerating the payment of claims, repealing or weakening tort reforms or otherwise adding to operational and compliance costs or adversely affecting the Company’s competitive advantages.
The Company may periodically initiate multi-year technology projects to enhance operations or replace systems. While technology developments can facilitate the use and enhance the value of data and analytics, streamline business processes and ultimately reduce the cost of operations, technology 22 initiatives can present significant economic and organizational challenges to the Company and potential short-term cost and implementation risks.
The Company may periodically initiate multi-year technology projects to enhance operations or replace systems. While technology developments can facilitate the use and enhance the value of data and analytics, streamline business processes and ultimately reduce the cost of operations, technology initiatives can present significant economic and organizational challenges to the Company and potential short-term cost and implementation risks.
The assumptions used by management to measure fair values could turn out to be different than the actual amounts that may be realized in an orderly transaction with a willing market participant could be either lower or higher than the Company’s estimates of fair value.
The assumptions used by management to measure fair values could turn out to be different 23 than the actual amounts that may be realized in an orderly transaction with a willing market participant could be either lower or higher than the Company’s estimates of fair value.
Well-capitalized new entrants to the property and casualty insurance industry, or existing competitors that receive substantial infusions of capital or access to third-party capital, provide increasing competition, 18 which may adversely impact our business and profitability.
Well-capitalized new entrants to the property and casualty insurance industry, or existing competitors that receive substantial infusions of capital or access to third-party capital, provide increasing competition, which may adversely impact our business and profitability.
These exposures can create or increase the Company’s vulnerability to the loss or misuse of its data. The Company uses an array of security measures, with policies and procedures designed to secure this information and the Company’s data systems.
These exposures can create or increase the Company’s vulnerability to the loss or misuse of data. The Company uses an array of security measures, with policies and procedures designed to secure this information and the Company’s data systems.
The Company invests a portion of its investment portfolio in equity securities, which generally have more volatile returns than fixed income securities and may experience sustained periods of depressed values. There are multiple factors that could negatively impact the performance of the Company’s equity portfolio, including general economic conditions, industry or sector deterioration and issuer-specific concerns.
The Company invests a portion of its investment portfolio in equity securities, which generally have more volatile returns than fixed maturities and may experience sustained periods of depressed values. There are multiple factors that could negatively impact the performance of the Company’s equity portfolio, including general economic conditions, industry or sector deterioration and issuer-specific concerns.
Readers are advised to consider all of these factors along with the other information included in this 2023 Annual Report, including the factors set forth under the caption “Caution Regarding Forward-Looking Statements”, and to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.
Readers are advised to consider all of these factors along with the other information included in this 2024 Annual Report, including the factors set forth under the caption “Caution Regarding Forward-Looking Statements”, and to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.
If the amount of available reinsurance is reduced, the cost to obtain reinsurance may increase or Kemper’s subsidiaries may be unable to obtain sufficient reinsurance on acceptable terms, which could adversely affect their ability to write future insurance policies or result in their retaining more risk with respect to those policies.
As a result, if the amount of available reinsurance is reduced, the cost to obtain reinsurance may increase or Kemper’s subsidiaries may be unable to obtain sufficient reinsurance on acceptable terms, which could adversely affect their ability to write future insurance policies or result in their retaining more risk with respect to those policies.
Some of these proceedings may involve matters particular to Kemper or one or more of its subsidiaries, while others may pertain to industry business practices. Some lawsuits may seek class action status that, if granted, could expose the Company to potentially significant liability by virtue of the size of the punitive classes.
Some of these proceedings may involve matters particular to Kemper or one or more of its subsidiaries, while others may pertain to industry business practices. Some lawsuits may seek class action status that, if granted, could expose the Company to potentially significant liability by virtue of the size of the putative classes.
These adverse events could result in a decrease in the estimated fair value of goodwill or other intangible assets established as a result of such transactions, triggering an impairment. In addition, the Company’s strategic initiatives, such as the establishment of Kemper Reciprocal, may not perform as expected or deliver the expected benefits to the Company.
These adverse events could result in a decrease in the estimated fair value of goodwill or other intangible assets established as a result of such transactions, triggering an impairment. In addition, the Company’s strategic initiatives, such as the operation of Kemper Reciprocal, may not perform as expected or deliver the expected benefits to the Company.
Current laws and regulations affect a wide variety of matters, including policy forms, premium rates, licensing, market conduct, trade practices, claims handling practices, reserve and loss ratio requirements, investment standards, statutory capital and surplus requirements, restrictions on the payment of dividends, approvals of transactions involving a change in control of one or more insurance companies, restrictions on transactions among affiliates, climate change, and consumer privacy and data security.
Current laws and regulations affect a wide variety of matters, including policy forms, premium rates, licensing, market conduct, trade practices, claims handling practices, reserve and loss ratio requirements, investment standards, statutory capital and surplus requirements, restrictions on the payment of dividends, approvals of transactions involving a change in control of one or more insurance companies, restrictions on transactions among affiliates, climate change, artificial intelligence, cybersecurity, accounting and consumer privacy and data security.
For information about the Company’s pending legal proceedings, see Note 28, “Commitments and Contingencies,” to the Consolidated Financial Statements. 20 Changes in the availability of insurance coverage or in the ability of insurers to meet their obligations could result in the Company being exposed to significant losses.
For information about the Company’s pending legal proceedings, see Note 29, “Commitments and Contingencies,” to the Consolidated Financial Statements. Changes in the availability of insurance coverage or in the ability of insurers to meet their obligations could result in the Company being exposed to significant losses.
The software, systems and services provided by our third-party providers may not meet our expectations, contain errors or weaknesses, become compromised or experience breaches or outages. The Company’s ability to prevent or remediate such an occurrence is limited.
The software, systems and services provided by our third-party providers (including offshore service providers) may not meet our expectations, contain errors or weaknesses, become compromised or experience breaches or outages. The Company’s ability to prevent or remediate such an occurrence is limited.
An increase in interest rates or credit spreads generally reduces the carrying value of the Company’s investment portfolio, particularly fixed income securities, and limited liability investment companies and limited partnerships accounted for under the equity method of accounting (“Equity Method Limited Liability Investments”) that invest in distressed and mezzanine debt of other companies that exhibit debt-like characteristics.
An increase in interest rates or credit spreads generally reduces the carrying value of the Company’s investment portfolio, particularly fixed maturities, 22 and limited liability investment companies and limited partnerships accounted for under the equity method of accounting (“Equity Method Limited Liability Investments”) that invest in distressed and mezzanine debt of other companies that exhibit debt-like characteristics.
This can include factors directly related to the Company, such as an increase in the catastrophic risk retained by Kemper’s insurance subsidiaries, or developments in industry or general economic conditions. A downgrade by A.M.
This can include factors directly related to the Company, such as an increase in the catastrophic risk retained by Kemper’s insurance subsidiaries, or developments in industry or general economic conditions.
Kemper has a significant concentration of personal automobile insurance business in California and Florida, and negative developments in the regulatory, legal or economic conditions in these states may adversely affect the Company’s profitability. California and Florida represented 71% of the Company’s total personal automobile insurance gross written premiums in 2023.
Kemper has a significant concentration of personal automobile insurance business in California and Florida, and negative developments in the regulatory, legal or economic conditions in these states may adversely affect the Company’s profitability. California and Florida represented 80% of the Company’s total personal automobile insurance gross written premiums in 2024.
The Company could be adversely affected by future changes in U.S. Federal or Bermuda income tax laws. Changes to tax laws or interpretation of such laws could increase Kemper’s corporate tax and reduce earnings.
The Company could be adversely affected by future changes in U.S. Federal or Bermuda income tax laws. Changes to tax laws or interpretation of such laws could increase Kemper’s corporate tax and reduce earnings. Such events could also reduce the value of Kemper’s tax assets.
Kemper’s business depends on its reputation with agents and customers. The Company or its third party services providers may experience cybersecurity or business disruption events beyond our control that could affect our reputation or our corporate or brand image. It may be difficult to control or effectively manage negative publicity or regulatory consequences.
The Company or its third party services providers may experience cybersecurity or business disruption events beyond our control that could affect our reputation or our corporate or brand image. It may be difficult to control or effectively manage negative publicity or regulatory consequences.
The following are examples of economic market conditions that could adversely affect the Company’s financial condition, liquidity, and results of operations: • Volatility in debt and equity markets • Changes in interest rates • Increases in inflation • Reduced availability of credit • Economic downturns • Increased unemployment and reduced consumer spending Stressed conditions, volatility and disruptions in global capital markets or financial asset classes could adversely affect our investment portfolio and the Company’s ability to access the capital markets.
The following are examples of economic market conditions that could adversely affect the Company’s financial condition, liquidity, and results of operations: • Volatility in debt and equity markets • Changes in interest rates • Increases in inflation • Reduced availability of credit • Economic downturns • Increased unemployment and reduced consumer spending • Changes in government policies • International trade practices, including tariffs or other excise taxes 24 Stressed conditions, volatility and disruptions in global capital markets or financial asset classes could adversely affect our investment portfolio and the Company’s ability to access the capital markets.
A change in any one or more of the factors, such as that relating to Florida PIP coverage, will likely result in a projected ultimate loss that is different than the previous projected ultimate loss and may have a material impact on the Company’s estimates.
A change in any one or more of the factors will likely result in a projected ultimate loss that is different than the previous projected ultimate loss and may have a material impact on the Company’s estimates.
A decline in equity values will result in losses being recognized by the Company in the period such change in fair value occurs, which may be significant. In addition, a decline in equity values may result in a decrease in dividend income.
A decline in equity values will result in losses being recognized by the Company in the period such change in fair value occurs, which may be significant. In addition to a decline in equity values, issuer-specific concerns may result in a decrease in dividend income, resulting in a decline in net investment income.
The likelihood and severity of such events cannot be predicted and are difficult to estimate. Changes in the availability and cost of catastrophe reinsurance and in the ability of reinsurers to meet their obligations could result in Kemper’s insurance subsidiaries retaining more risk and could adversely and materially affect the Company’s results of operations, financial condition and/or liquidity.
Changes in the availability and cost of catastrophe reinsurance and in the ability of reinsurers to meet their obligations could result in Kemper’s insurance subsidiaries retaining more risk and could adversely and materially affect the Company’s results of operations, financial condition and/or liquidity.
The estimates underlying future policyholder benefits must take into consideration many factors that are dependent on the outcome of future events including, but not limited to, the reporting and settlement of claims and policyholder behavior.
The reserves established by the Company are inherently uncertain estimates and could prove to be inadequate. The estimates underlying future policyholder benefits must take into consideration many factors that are dependent on the outcome of future events including, but not limited to, the reporting and settlement of claims and policyholder behavior.
A decline in interest rates would adversely affect the Company’s investment income as it invests cash in new investments that may yield less than the portfolio’s average rate.
A decline in interest rates would adversely affect the Company’s investment income due to a decline in yield on its fixed maturities that pay floating rate interest or as it invests cash in new investments that may yield less than the portfolio’s average rate.
It is possible that tax law could be changed through a technical corrections bill or with entirely new legislation or be interpreted by regulatory authorities in a manner different than the Company’s interpretation.
It is possible that tax law could be changed or be interpreted by regulatory authorities in a manner different than the Company’s interpretation.
While Kemper seeks to comply with each of those mandates, frequent and recent changes in the legal and regulatory environment create a difficulty in implementation, a lack of clarity and some requirements that may be overlapping or inconsistent.
Kemper operates under multiple cybersecurity and privacy regulations, imposed at both the state and federal level. While Kemper seeks to comply with each of those mandates, frequent and recent changes in the legal and regulatory environment create a difficulty in implementation, a lack of clarity and some requirements that may be overlapping or inconsistent.
Negative events and publicity or regulatory action could quickly and materially damage perceptions of Kemper and its business, which, in turn, could negatively impact the Company through loss of customers or agents, loss of business opportunities, employee retention or other difficulties.
Negative events and publicity or regulatory action could quickly and materially damage perceptions of Kemper and its business, which, in turn, could negatively impact the Company through loss of customers or agents, loss of business opportunities, employee retention or other difficulties. 21 Failure to maintain the availability of critical systems could result in business interruption, lost business, reputational harm, penalties and other costs.
The reserves established by the Company are inherently uncertain estimates and could prove to be inadequate to cover its ultimate losses and expenses.
The process of estimating property and casualty insurance reserves is complex and imprecise. The reserves established by the Company are inherently uncertain estimates and could prove to be inadequate to cover its ultimate losses and expenses.
These difficulties increase the risk that the Company will be subject to regulatory proceedings, litigation, fines, and other adverse consequences that may have a material impact on the Company’s financial condition and results of operations. Cybersecurity events, business interruptions or other exposures may cause potential deterioration in Kemper’s reputation with an adverse impact financial condition or results of operations.
These difficulties increase the risk that the Company will be subject to regulatory proceedings, litigation, fines, and other adverse consequences that may have a material impact on the Company’s financial condition and results of operations.
These estimates can be inaccurate or may change over time due to many variables, including changes driven by the evolving legal and regulatory landscape and economic, technological, and other environmental conditions in which the Company operates and the rising costs of insurance claims from increased litigation (in part as a result of proliferation of class-action suits and growth in third party litigation funding), increase in so-called "nuclear verdicts" leading to higher jury awards, broader definitions of liability, other effects of legal system abuse and societal trends referred to as social inflation.
In addition, these estimates could be impacted by the rising costs of insurance claims from increased litigation (in part as a result of proliferation of class-action suits and growth in third party litigation funding), the increase in so-called "nuclear verdicts" leading to higher jury awards, broader definitions of liability, and other effects of legal and societal trends referred to as legal system abuse or social inflation.
Significant legislative changes relating to Florida PIP coverage have recently become effective, but it is too early to determine the ultimate impact of these changes. Further, both California and Florida have regulations that limit the after-tax return on underwriting profit allowed for an insurer. Changes in any of these conditions could negatively impact the Company's results of operations.
Further, both California and Florida have regulations that limit the after-tax return on underwriting profit allowed for an insurer. Changes in any of these conditions could negatively impact the Company's results of operations.
In addition, laws and regulations requiring prior approval of policy forms and premium rates may limit the ability of Kemper’s property and casualty insurance subsidiaries to increase rates or deductibles on a timely basis, which may result in additional losses or lower returns than otherwise would have occurred in an unregulated market.
In addition, laws and regulations requiring prior approval of policy forms and premium rates may limit the ability of Kemper’s property and casualty insurance subsidiaries to increase rates or deductibles on a timely basis, which may result in additional losses or lower returns than otherwise would have occurred in an unregulated market. 17 Risks Relating to Estimating Life Insurance Reserves Estimating future policyholder benefits for determining life insurance reserves is inherently uncertain, and the Company’s results of operations may be materially impacted if the Company’s Life Insurance Reserves are insufficient.
Certain technology-based service providers provide a sizable portion of our IT infrastructure, platforms software and related IT services. From time to time these systems have been, and may again be, adversely affected or disrupted by cyber attacks, other data breaches, natural and man-made catastrophes, human action or error or other significant events.
From time to time these systems have been, and may again be, adversely affected or disrupted by cyber attacks, other data breaches, natural and man-made catastrophes, human action or error or other significant events.
A reduction in income tax rates could also reduce the demand for tax-preferenced securities and result in a decline in the value of the Company’s investment portfolio of such securities. 23 The Company’s entire investment portfolio is subject to broad risks inherent in the financial markets, including, but not limited to, inflation, regulatory changes, inactive capital markets, governmental and social stability, economic outlooks, unemployment, and recession.
The Company’s entire investment portfolio is subject to broad risks inherent in the financial markets, including, but not limited to, inflation, regulatory changes, inactive capital markets, governmental and social stability, economic outlooks, unemployment, and recession.
A finding that the Company has breached these regulations could result in litigation, fines, and expenses that materially adversely impact financial condition or results of operations. Kemper operates under multiple cybersecurity and privacy regulations, imposed at both the state and federal level.
We are subject to extensive cybersecurity and privacy regulation through policies and requirements imposed by state and federal authorities. These policies and regulations are complex, difficult to implement and sometimes contradictory. A finding that the Company has breached these regulations could result in litigation, fines, and expenses that materially adversely impact financial condition or results of operations.
It is not possible for the Company to predict such shifts in legal or regulatory enforcement or to accurately estimate the impact they may have on the Company and its operations. 19 One area where the legal and regulatory landscape experienced significant change is in connection with the mandated use of death verification databases by life insurance companies.
It is not possible for the Company to predict such shifts in legal or regulatory enforcement or to accurately estimate the impact they may have on the Company and its operations.
A failure of such third-party 21 systems to perform effectively, maintain information security, or provide uninterrupted service and access to those systems, could materially adversely affect Kemper’s business. For example, the Company could be prevented from conducting business functions, including the timely payment and/or processing of claims, or the information of customers could be compromised.
A failure of such third-party providers or their software or systems to perform effectively, maintain information security, or provide uninterrupted service and access to those systems, could materially adversely affect Kemper’s business.
A decrease in the amount of reinsurance coverage that these subsidiaries purchase generally should increase their risk of a more severe loss.
A decrease in the amount of reinsurance coverage that these subsidiaries purchase generally should increase their risk of a more severe loss, and this risk could increase if climate change or other factors results in higher than anticipated losses for reinsurers.
Changes in tax laws may have a detrimental effect on the after-tax return of the Company’s investment portfolio.
Changes in tax laws may have a detrimental effect on the after-tax return of the Company’s investment portfolio. A reduction in income tax rates could also reduce the demand for tax-preferenced securities and result in a decline in the value of the Company’s investment portfolio of such securities.
For example, laws and regulations may limit the rate or timing at which insurers may not renew insurance policies in catastrophe-prone areas or require insurers to participate in wind pools and joint underwriting associations. Generally, participation in these pools and associations is based 17 on an insurer’s market share determined on a state-wide basis.
For example, laws and regulations may limit the rate or timing at which insurers may not renew insurance policies in catastrophe-prone areas.
Failure to maintain the availability of critical systems could result in business interruption, lost business, reputational harm, penalties and other costs. The Company’s business operations rely on the continuous availability of its own computer systems, systems and software hosted by vendors, and computer systems used by third party administrators and contractors working on behalf of the Company.
The Company’s business operations rely on the continuous availability of its own computer systems, systems and software hosted by vendors, and computer systems used by third party administrators and contractors working on behalf of the Company. Certain technology-based service providers provide a sizable portion of our IT infrastructure, platforms software and related IT services.
For example, during the COVID-19 pandemic, the Company experienced increased mortality that had an adverse impact on our Life business. In addition, the occurrence of a pandemic or other catastrophes in a concentrated geographic area could have a severe disruptive effect on the Company’s workforce and business operations.
In addition, the occurrence of a pandemic or other catastrophes in a concentrated geographic area could have a severe disruptive effect on the Company’s workforce and business operations. The likelihood and severity of such events cannot be predicted and are difficult to estimate.
Consequently, the dynamic nature of regulatory, legal, competitive and economic conditions in these states affects Kemper’s revenues and profitability. For example, in Florida, recent court decisions were unfavorable to the insurance industry relating to Florida PIP coverage and have resulted in increased severity in PIP coverage and significant adverse loss and LAE reserve development in 2023.
Consequently, the dynamic nature of regulatory, legal, competitive and economic conditions in these states affects Kemper’s revenues and profitability. Significant legislative changes relating to Florida PIP coverage have recently become effective, but it 19 is too early to determine the ultimate impact of these changes.
Removed
In recent periods, these estimates have been impacted by reserve developments related to Florida personal injury protection (“PIP”) coverage.
Added
For example, changes in international trade practices, such as the increase or imposition of tariffs and the resulting inflationary pressure, could lead to our estimates being inaccurate.
Removed
See the risk factor below titled “ Kemper has a significant concentration of personal automobile insurance business in California and Florida, and negative developments in the regulatory, legal or economic conditions in these states may adversely affect the Company’s profitability. ” The process of estimating property and casualty insurance reserves is complex and imprecise.
Added
These estimates can be inaccurate or may change over time due to many variables, including changes driven by the evolving legal and regulatory landscape and economic, technological, and other environmental conditions in which the Company operates. The process of estimating life insurance reserves is complex and imprecise.
Removed
Accordingly, even though Kemper’s property and casualty insurance subsidiaries may not incur a direct insured loss as a result of managing direct catastrophe exposures, they may incur indirect losses from required participation in pools and associations.
Added
For example, the Company could be prevented from conducting business functions, including the timely payment and/or processing of claims, or the information of the Company or its customers could be compromised. Any such failures could adversely impact the ability to serve existing customers and attract new business, and could create regulatory and litigation exposure.
Removed
Risks Relating to Estimating Life Insurance Reserves Estimating future policyholder benefits for determining life insurance reserves is inherently uncertain, and the Company’s results of operations may be materially impacted if the Company’s Life Insurance Reserves are insufficient.
Added
Cybersecurity events, business interruptions or other exposures may cause potential deterioration in Kemper’s reputation with an adverse impact on the Company’s financial condition or results of operations. Kemper’s business depends on its reputation with agents and customers.
Removed
In recent periods, these estimates have been impacted by the effect the COVID-19 pandemic and the related governmental responses have had on certain of these variables.
Removed
See the risk factor below titled “ The impact of COVID-19 and related economic conditions could materially affect Kemper’s results of operations, financial position and/or liquidity .” The process of estimating life insurance reserves is complex and imprecise. The reserves established by the Company are inherently uncertain estimates and could prove to be inadequate.
Removed
Best in the ratings of Kemper’s insurance subsidiaries below A- could result in a substantial loss of business if independent agents and brokers or policyholders move to other companies with higher claims-paying and financial strength ratings. Any substantial loss of business could materially and adversely affect the financial condition and results of operations of such subsidiaries.
Removed
A majority of states now have laws requiring insurers to proactively use such databases, including the Social Security Administration’s Death Master File (the “DMF”), in order to ascertain if an insured may be deceased. Kemper cannot predict whether additional states will enact similar legislation.
Removed
These laws require the insurer to initiate the claims process even though the insureds’ beneficiaries have not submitted a claim and the insurer was otherwise unaware of the insured’s death.
Removed
In a related development, many states expanded their unclaimed property laws, particularly as they relate to life insurance proceeds, and have examined life insurance companies with respect to the reporting and remittance of such proceeds under these laws.
Removed
The push to alter practices previously considered lawful and appropriate relative to both claims handling and remittance of life insurance proceeds has led to the Company’s involvement in compliance audits, market conduct examinations and litigation.
Removed
The Company has a comprehensive process in place to compare life insurance records against the DMF and other databases to determine if any of its insureds may be deceased. See Note 2, “Summary of Accounting Policies and Accounting Changes” to the Consolidated Financial Statements for further details.
Removed
Risks Relating to Security of Personal Data, Availability of Critical Systems, and Technology Initiatives Failure to protect against cyber attacks or other exposures that compromise data, including personal data, held by the Company could result in business interruption, legal and consulting fees, regulatory penalties, litigation, lost business, reputational harm, and other liabilities and expenses.
Removed
Any such failures could adversely impact the ability to serve existing customers and attract new business, and could create regulatory and litigation exposure. We are subject to extensive cybersecurity and privacy regulation through policies and requirements imposed by state and federal authorities. These policies and regulations are complex, difficult to implement and sometimes contradictory.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed10 unchanged
Biggest changeThe Company’s current CISO has significant experience in information security, as do members of the information security team. The Company participates in certain industry cybersecurity intelligence and risk sharing organizations, such as FS-ISAC and the Domestic Security Alliance Council. Kemper’s information security program is an element of the Company’s broader Enterprise Risk Management (ERM) framework.
Biggest changeThe Company’s current CISO has significant experience in information security, as do members of the information security team. The Company participates in certain industry cybersecurity intelligence, risk sharing organizations and law enforcement organizations. Kemper’s information security program is an element of the Company’s broader Enterprise Risk Management (ERM) framework.
The Company assesses third parties as a part of the procurement process, including through pre-acquisition diligence. Contractual provisions based on regulatory requirements and industry standards are used in the 25 contracting process, and the Company conducts on-going performance monitoring of key vendors. Security audits are also performed on certain vendors to review compliance with contractual requirements and industry standards.
The Company assesses third parties as a part of the procurement process, including through pre-acquisition diligence. Contractual provisions based on regulatory requirements and industry standards are used in the contracting process, and the Company conducts on-going performance monitoring of key vendors. Security audits are also performed on certain vendors to review compliance with contractual requirements and industry standards.
Through its role in providing oversight for the Company’s ERM framework, the Risk Committee of the Kemper Board of Directors (the “Risk Committee”) provides oversight of the Company’s information security program. On a quarterly basis, management discusses Kemper’s information security program, cybersecurity risks, and related developments with the Risk Committee.
Through its role in providing oversight for the Company’s ERM framework, the Risk Committee of the Kemper Board of Directors (the “Risk Committee”) provides oversight of the Company’s information security program. On a quarterly basis, management discusses Kemper’s information security program, cybersecurity risks, and related developments with the Risk 25 Committee.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−1 removed0 unchanged
Biggest changeIncluded in Kemper’s owned and occupied properties is a corporate data processing facility with aggregate square footage of approximately 110,000 square feet. Leased Facilities The Company leases four floors, or approximately 92,000 square feet, in an 83-story office building in Chicago, Illinois, for its corporate headquarters. The lease expires on December 31, 2033.
Biggest changeLeased Facilities The Company leases four floors, or approximately 92,000 square feet, in an 83-story office building in Chicago, Illinois, for its corporate headquarters. The lease expires on December 31, 2033. Kemper’s property and casualty insurance subsidiaries lease facilities with an aggregate square footage of approximately 500,000 at 91 locations in twelve states.
Item 2. Properties. Owned Properties Kemper’s subsidiaries together own and occupy eleven buildings located in seven states consisting of approximately 337,000 square feet in the aggregate. Kemper’s subsidiaries hold, solely for investment purposes, additional properties that are not occupied by Kemper or its subsidiaries.
Item 2. Properties. Owned Properties Kemper’s subsidiaries together own and occupy ten buildings located in seven states consisting of approximately 227,000 square feet in the aggregate. Kemper’s subsidiaries hold, solely for investment purposes, additional properties that are not occupied by Kemper or its subsidiaries.
Leased properties with aggregate square footage of 335,000 are not currently utilized in the Company's operations and are not expected to be utilized by the Company throughout the remainder of their respective lease terms.
The properties utilized in the Company’s operations consist of facilities suitable for general office space, call centers and data processing operations. Leased properties with aggregate square footage of 190,000 are not currently utilized in the Company's operations and are not expected to be utilized by the Company throughout the remainder of their respective lease terms.
Kemper’s property and casualty insurance subsidiaries lease facilities with an aggregate square footage of approximately 624,000 at 92 locations in eleven states. The latest expiration date of the existing leases is in June 2031. Kemper’s life insurance subsidiaries lease facilities with aggregate square footage of approximately 379,000 at 96 locations in 23 states.
The latest expiration date of the existing leases is in September 2031. Kemper’s life insurance subsidiaries lease facilities with aggregate square footage of approximately 373,000 at 96 locations in 23 states. The latest expiration date of the existing leases is in October 2029. The properties described above are in good condition.
Removed
The latest expiration date of the existing leases is in September 2029. The properties described above are in good condition. The properties utilized in the Company’s operations consist of facilities suitable for general office space, call centers and data processing operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−3 removed2 unchanged
Biggest changeThese purchases were made in the open market in accordance with applicable federal securities laws, including Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. 27 Kemper Common Stock Performance Graph The following graph assumes $100 invested on December 31, 2018 in (i) Kemper common stock, (ii) the S&P MidCap 400 Index and (iii) the S&P Supercomposite Insurance Index, in each case with dividends reinvested.
Biggest changeShares repurchased and retired during the three months ended December 31, 2024 were as follows: Total Maximum Number of Shares Dollar Value of Shares Average Purchased as Part that May Yet Be Total Price of Publicly Purchased Under Number of Shares Paid per Announced Plans the Plans or Programs Period Purchased Share or Programs (Dollars in Millions) October 2024 165,511 $ 60.14 165,511 $ 136.7 November 2024 63,250 $ 63.16 63,250 $ 132.8 December 2024 — $ — — $ 132.8 These purchases were made in the open market in accordance with applicable federal securities laws, including Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. 27 Kemper Common Stock Performance Graph The following graph assumes $100 invested on December 31, 2019 in (i) Kemper common stock, (ii) the S&P MidCap 400 Index and (iii) the S&P Supercomposite Insurance Index, in each case with dividends reinvested.
DOLLARS PER SHARE Three Months Ended Year Ended Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Dec 31, 2023 Cash Dividends Paid to Shareholders (per share) $ 0.31 $ 0.31 $ 0.31 $ 0.31 $ 1.24 Three Months Ended Year Ended DOLLARS PER SHARE Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Dec 31, 2022 Cash Dividends Paid to Shareholders (per share) $ 0.31 $ 0.31 $ 0.31 $ 0.31 $ 1.24 Kemper’s insurance subsidiaries are subject to various state insurance laws that may restrict the ability of these insurance subsidiaries to pay dividends without prior regulatory approval.
DOLLARS PER SHARE Three Months Ended Year Ended Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Dec 31, 2024 Dec 31, 2024 Cash Dividends Paid to Shareholders (per share) $ 0.31 $ 0.31 $ 0.31 $ 0.31 $ 1.24 Three Months Ended Year Ended DOLLARS PER SHARE Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Dec 31, 2023 Cash Dividends Paid to Shareholders (per share) $ 0.31 $ 0.31 $ 0.31 $ 0.31 $ 1.24 Kemper’s insurance subsidiaries are subject to various state insurance laws that may restrict the ability of these insurance subsidiaries to pay dividends without prior regulatory approval.
See MD&A, “Liquidity and Capital Resources” and Note 17, “Shareholders’ Equity,” to the Consolidated Financial Statements for information on Kemper’s ability and intent to pay dividends.
See MD&A, “Liquidity and Capital Resources” and Note 18, “Shareholders’ Equity,” to the Consolidated Financial Statements for information on Kemper’s ability and intent to pay dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Kemper’s common stock is traded on the NYSE under the symbol of “KMPR.” Holders As of January 31, 2024, the number of record holders of Kemper’s common stock was 2,575.
Market Information Kemper’s common stock is traded on the NYSE under the symbol of “KMPR.” Holders As of January 31, 2025, the number of record holders of Kemper’s common stock was 2,408. 26 Dividends Quarterly information pertaining to payment of dividends on Kemper’s common stock is presented below.
As of December 31, 2023, the remaining share repurchase authorization was $171.6 million under the repurchase program. During the years ended 2023 and 2022, Kemper did not repurchase any of its common stock.
As of December 31, 2024, the remaining share repurchase authorization was $132.8 million under the repurchase program.
Removed
Dividends Quarterly information pertaining to payment of dividends on Kemper’s common stock is presented below.
Added
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Removed
During 2021, Kemper repurchased and retired approximately 2,085,000 shares of its common stock under its share repurchase authorization for an aggregate cost of $161.7 million and an average cost per share of $77.58.
Added
Company / Index 2019 2020 2021 2022 2023 2024 Kemper Corporation $ 100.00 $ 100.84 $ 78.55 $ 67.40 $ 68.44 $ 95.28 S&P MidCap 400 Index 100.00 113.66 141.80 123.28 143.54 163.54 S&P Supercomposite Insurance Index 100.00 98.70 128.18 140.14 154.07 195.70 28
Removed
Company / Index 2018 2019 2020 2021 2022 2023 Kemper Corporation $ 100.00 $ 118.29 $ 119.29 $ 92.92 $ 79.73 $ 80.96 S&P MidCap 400 Index 100.00 126.20 143.44 178.95 155.58 181.15 S&P Supercomposite Insurance Index 100.00 128.53 126.87 164.76 180.12 198.03 28

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

156 edited+22 added−108 removed103 unchanged
Biggest changeDOLLARS IN MILLIONS 2023 2022 2021 Net Premiums Written $ 3,305.4 $ 3,934.4 $4,057.3 Earned Premiums $ 3,632.5 $ 4,046.4 $ 3,948.5 Net Investment Income 168.3 140.7 152.5 Change in Value of Alternative Energy Partnership Investments 1.6 (9.9) (29.0) Other Income 4.5 6.0 4.1 Total Revenues 3,806.9 4,183.2 4,076.1 Incurred Losses and LAE related to: Current Year: Non-catastrophe Losses and LAE 2,974.5 3,569.2 3,480.3 Catastrophe Losses and LAE 34.5 23.0 15.7 Prior Years: Non-catastrophe Losses and LAE 135.2 (14.6) 97.4 Catastrophe Losses and LAE (2.3) 0.6 0.3 Total Incurred Losses and LAE 3,141.9 3,578.2 3,593.7 Insurance Expenses 741.3 801.9 774.5 Segment Adjusted Operating Loss (76.3) (196.9) (292.1) Income Tax Benefit 19.2 49.5 96.0 Total Segment Adjusted Net Operating Loss $ (57.1) $ (147.4) $ (196.1) Ratios Based On Earned Premiums Current Year Non-catastrophe Losses and LAE Ratio 82.0 % 88.2 % 88.1 % Current Year Catastrophe Losses and LAE Ratio 0.9 0.6 0.4 Prior Years Non-catastrophe Losses and LAE Ratio 3.7 (0.4) 2.5 Prior Years Catastrophe Losses and LAE Ratio (0.1) — — Total Incurred Loss and LAE Ratio 86.5 88.4 91.0 Insurance Expense Ratio 20.4 19.8 19.6 Combined Ratio 106.9 % 108.2 % 110.6 % Underlying Combined Ratio Current Year Non-catastrophe Losses and LAE Ratio 82.0 % 88.2 % 88.1 % Insurance Expense Ratio 20.4 19.8 19.6 Underlying Combined Ratio 102.4 % 108.0 % 107.7 % Non-GAAP Measure Reconciliation Combined Ratio 106.9 % 108.2 % 110.6 % Less: Current Year Catastrophe Losses and LAE Ratio 0.9 0.6 0.4 Prior Years Non-catastrophe Losses and LAE Ratio 3.7 (0.4) 2.5 Prior Years Catastrophe Losses and LAE Ratio (0.1) — — Underlying Combined Ratio 102.4 % 108.0 % 107.7 % 37 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) SPECIALTY PROPERTY & CASUALTY INSURANCE (Continued) INSURANCE RESERVES DOLLARS IN MILLIONS Dec 31, 2023 Dec 31, 2022 Insurance Reserves: Personal Automobile $ 1,711.9 $ 1,875.8 Commercial Automobile 596.8 445.3 Total Insurance Reserves $ 2,308.7 $ 2,321.1 Insurance Reserves: Loss and Allocated LAE Reserves: Case and Allocated LAE $ 999.9 $ 1,099.9 Incurred But Not Reported 1,132.8 1,041.2 Total Loss and LAE Reserves 2,132.7 2,141.1 Unallocated LAE Reserves 176.0 180.0 Total Insurance Reserves $ 2,308.7 $ 2,321.1 See MD&A, “Critical Accounting Estimates,” under the caption “Property and Casualty Insurance Reserves for Losses and Loss Adjustment Expenses” for additional information pertaining to the Company’s process of estimating property and casualty insurance reserves for losses and LAE, development of property and casualty insurance losses and LAE from prior accident years, also referred to as “reserve development” in the discussion of segment results, estimated variability of property and casualty insurance reserves for losses and LAE, and a discussion of some of the variables that may impact development of property and casualty insurance losses and LAE and the estimated variability of property and casualty insurance reserves for losses and LAE.
Biggest change(Dollars in Millions) 2024 2023 2022 Net Premiums Written $ 3,685.4 $ 3,305.4 $ 3,934.4 Earned Premiums $ 3,576.4 $ 3,632.5 $ 4,046.4 Net Investment Income 189.6 168.3 140.7 Change in Value of Alternative Energy Partnership Investments 1.4 1.6 (9.9) Other Income 4.7 4.5 6.0 Total Revenues 3,772.1 3,806.9 4,183.2 Incurred Losses and LAE related to: Current Year: Non-catastrophe Losses and LAE 2,514.8 2,974.5 3,569.2 Catastrophe Losses and LAE 19.9 34.5 23.0 Prior Years: Non-catastrophe Losses and LAE 6.3 135.2 (14.6) Catastrophe Losses and LAE 0.7 (2.3) 0.6 Total Incurred Losses and LAE 2,541.7 3,141.9 3,578.2 Insurance Expenses 759.5 741.3 801.9 Segment Adjusted Operating Income (Loss) 470.9 (76.3) (196.9) Income Tax Expense (Benefit) 94.6 (19.2) (49.5) Total Segment Adjusted Net Operating Income (Loss) $ 376.3 $ (57.1) $ (147.4) Ratios Based On Earned Premiums Current Year Non-catastrophe Losses and LAE Ratio 70.3 % 82.0 % 88.2 % Current Year Catastrophe Losses and LAE Ratio 0.6 0.9 0.6 Prior Years Non-catastrophe Losses and LAE Ratio 0.2 3.7 (0.4) Prior Years Catastrophe Losses and LAE Ratio — (0.1) — Total Incurred Loss and LAE Ratio 71.1 86.5 88.4 Insurance Expense Ratio 21.2 20.4 19.8 Combined Ratio 92.3 % 106.9 % 108.2 % Underlying Combined Ratio Current Year Non-catastrophe Losses and LAE Ratio 70.3 % 82.0 % 88.2 % Insurance Expense Ratio 21.2 20.4 19.8 Underlying Combined Ratio 91.5 % 102.4 % 108.0 % Non-GAAP Measure Reconciliation Combined Ratio 92.3 % 106.9 % 108.2 % Less: Current Year Catastrophe Losses and LAE Ratio 0.6 0.9 0.6 Prior Years Non-catastrophe Losses and LAE Ratio 0.2 3.7 (0.4) Prior Years Catastrophe Losses and LAE Ratio — (0.1) — Underlying Combined Ratio 91.5 % 102.4 % 108.0 % 37 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) SPECIALTY PROPERTY & CASUALTY INSURANCE (Continued) INSURANCE RESERVES (Dollars in Millions) Dec 31, 2024 Dec 31, 2023 Insurance Reserves: Personal Automobile $ 1,626.0 $ 1,711.9 Commercial Automobile 721.9 596.8 Total Insurance Reserves $ 2,347.9 $ 2,308.7 Insurance Reserves: Loss and Allocated LAE Reserves: Case and Allocated LAE $ 921.8 $ 999.9 Incurred But Not Reported 1,250.6 1,132.8 Total Loss and LAE Reserves 2,172.4 2,132.7 Unallocated LAE Reserves 175.5 176.0 Total Insurance Reserves 1 $ 2,347.9 $ 2,308.7 1 Includes $9.4 million attributable to Kemper Reciprocal as of December 31, 2024, which is reported as a consolidated variable interest entity.
Adjusted Consolidated Net Operating Loss Adjusted Consolidated Net Operating Loss is an after-tax, non-GAAP financial measure and is computed by excluding from Net Loss attributable to Kemper Corporation the after-tax impact of: (i) Income (Loss) from Change in Fair Value of Equity and Convertible Securities; (ii) Net Realized Investment (Losses) Gains; (iii) Impairment Losses; (iv) Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs; (v) Debt Extinguishment, Pension Settlement and Other Charges; (vi) Goodwill Impairment Charges; (vii) Non-Core Operations; and (viii) Significant non-recurring or infrequent items that may not be indicative of ongoing operations Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, and (b) there has been no similar charge or gain within the prior two years.
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) Net Realized Investment Gains (Losses); (iii) Impairment Losses; (iv) Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs; (v) Debt Extinguishment, Pension Settlement and Other Charges; (vi) Goodwill Impairment Charges; (vii) Non-Core Operations; and (viii) Significant non-recurring or infrequent items that may not be indicative of ongoing operations Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, and (b) there has been no similar charge or gain within the prior two years.
The Company’s investments in these limited liability investment companies and limited partnerships are reported either as Equity Method Limited Liability Investments, Other Equity Interests and included in Equity Securities at Fair Value, or Equity Securities at Modified Cost, depending on the accounting method used to report the investment.
The Company’s investments in these limited liability investment companies and limited partnerships are reported either as Equity Method Limited Liability Investments, Other Equity Interests included in Equity Securities at Fair Value, or Equity Securities at Modified Cost, depending on the accounting method used to report the investment.
Such insurance laws applicable to the Company’s US based subsidiaries generally restrict the amount of dividends paid in an annual period to the greater of statutory net income from the previous year or 10% of statutory capital and surplus.
Such insurance laws applicable to the Company’s US based insurance subsidiaries generally restrict the amount of dividends paid in an annual period to the greater of statutory net income from the previous year or 10% of statutory capital and surplus.
Similarly, if, due to changes in claims handling procedures, actual claim reserves are set at levels higher than past experience, the estimate produced by the incurred loss development methodology would tend to be overstated if the actuary did not identify and adjust for the impact of the changes in claims handling procedures. 67 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CRITICAL ACCOUNTING ESTIMATES (Continued) The final step in the quarterly loss and LAE reserving process involves a comprehensive review of the actuarial indications by the Company’s chief reserving actuary and corporate management who apply their collective judgment and determine the appropriate estimated level of reserves to record.
Similarly, if, due to changes in claims handling procedures, actual claim reserves are set at levels higher than past experience, the estimate produced by the incurred loss development methodology would tend to be overstated if the actuary did not identify and adjust for the impact of the changes in claims handling procedures. 59 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CRITICAL ACCOUNTING ESTIMATES (Continued) The final step in the quarterly loss and LAE reserving process involves a comprehensive review of the actuarial indications by the Company’s chief reserving actuary and corporate management who apply their collective judgment and determine the appropriate estimated level of reserves to record.
Additional information pertaining to the estimation of, and development of, the Company’s Property and Casualty Insurance Reserves is contained in Item 1 of Part I of this 2023 Annual Report under the heading “Property and Casualty Loss and Loss Adjustment Expense Reserves.” Goodwill Recoverability The Company tests goodwill for recoverability at the reporting unit level on an annual basis, or whenever events or circumstances indicate the fair value of a reporting unit may have declined below its carrying value.
Additional information pertaining to the estimation of, and development of, the Company’s Property and Casualty Insurance Reserves is contained in Item 1 of Part I of this 2024 Annual Report under the heading “Property and Casualty Loss and Loss Adjustment Expense Reserves.” Goodwill Recoverability The Company tests goodwill for recoverability at the reporting unit level on an annual basis, or whenever events or circumstances indicate the fair value of a reporting unit may have declined below its carrying value.
Conversely, an increase in the fair value or disposal of an investment with a previously established credit allowance will result in the reversal of impairment losses reported in the Consolidated Statements of Loss in the period.
Conversely, an increase in the fair value or disposal of an investment with a previously established credit allowance will result in the reversal of impairment losses reported in the Consolidated Statements of Income (Loss) in the period.
The prices that the Company might realize from actual sales of investments are likely to vary from their respective estimated fair values at December 31, 2023 due to changing market conditions and limitations inherent in the estimation process. The classification of a company’s investment in a financial instrument may affect its reported results.
The prices that the Company might realize from actual sales of investments are likely to vary from their respective estimated fair values at December 31, 2024 due to changing market conditions and limitations inherent in the estimation process. The classification of a company’s investment in a financial instrument may affect its reported results.
Coverage under the catastrophe reinsurance program is provided in various contracts and layers. The Company’s Property & Casualty Insurance business also purchase reinsurance from the FHCF for hurricane losses in Florida at retentions lower than its catastrophe reinsurance program. The Company had no material recoveries under its catastrophe reinsurance treaties for the years ended December 31, 2023, 2022 and 2021.
Coverage under the catastrophe reinsurance program is provided in various contracts and layers. The Company’s Property & Casualty Insurance business also purchase reinsurance from the FHCF for hurricane losses in Florida at retentions lower than its catastrophe reinsurance program. The Company had no material recoveries under its catastrophe reinsurance treaties for the years ended December 31, 2024, 2023 and 2022.
LOSS AND LAE RESERVE DEVELOPMENT Increases (decreases) in the Company’s property and casualty loss and LAE reserves for the years ended December 31, 2023, 2022 and 2021 to recognize adverse (favorable) loss and LAE reserve development from prior accident years in continuing operations, hereinafter also referred to as “reserve development” in the discussion of segment results, are presented below .
LOSS AND LAE RESERVE DEVELOPMENT Increases (decreases) in the Company’s property and casualty loss and LAE reserves for the years ended December 31, 2024, 2023 and 2022 to recognize adverse (favorable) loss and LAE reserve development from prior accident years in continuing operations, hereinafter also referred to as “reserve development” in the discussion of segment results, are presented below .
Such determination would result in an impairment loss in the period such determination is made. 64 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CRITICAL ACCOUNTING ESTIMATES (Continued) Life Insurance Reserves Company’s Life Insurance Reserves are reported using the Company’s estimate of its liability for future policyholder benefits.
Such determination would result in an impairment loss in the period such determination is made. 56 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CRITICAL ACCOUNTING ESTIMATES (Continued) Life Insurance Reserves Company’s Life Insurance Reserves are reported using the Company’s estimate of its liability for future policyholder benefits.
The fair value calculated in the second quarter of 2023 was lower than the carrying value of the business, resulting in a pre-tax impairment 68 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CRITICAL ACCOUNTING ESTIMATES (Continued) charge of $49.6 million and an after-tax impairment charge of $45.5 million.
The fair value calculated in the second quarter of 2023 was lower than the carrying value of the business, resulting in a pre-tax impairment 60 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CRITICAL ACCOUNTING ESTIMATES (Continued) charge of $49.6 million and an after-tax impairment charge of $45.5 million.
There we re no outstanding borrowings under the credit agreement on either December 31, 2023 or December 31, 2022. Common Stock Offering Kemper is authorized to issue 20 million shares of $0.10 par value preferred stock and 100 million shares of $0.10 par value common stock. No preferred shares were issued or outstanding at December 31, 2023 and 2022.
There we re no outstanding borrowings under the credit agreement on either December 31, 2024 or December 31, 2023. Common Stock Offering Kemper is authorized to issue 20 million shares of $0.10 par value preferred stock and 100 million shares of $0.10 par value common stock. No preferred shares were issued or outstanding at December 31, 2024 and 2023.
Depending on the terms of a particular policy, future premiums from the policyholder may be required for the policy to remain in force. The Company estimates that future cash inflows would total $4.5 billion using the same assumptions used to estimate the cash outflows.
Depending on the terms of a particular policy, future premiums from the policyholder may be required for the policy to remain in force. The Company estimates that future cash inflows would total $4.3 billion using the same assumptions used to estimate the cash outflows.
For preferred stock equity securities, the Company assumed an adverse and instantaneous increase of 100 basis points in market interest rates from their levels at both December 31, 2023 and 2022. All other variables were held constant.
For preferred stock equity securities, the Company assumed an adverse and instantaneous increase of 100 basis points in market interest rates from their levels at both December 31, 2024 and 2023. All other variables were held constant.
Income (Loss) from Change in Fair Value of Equity and Convertible Securities, Net Realized Investment (Losses) Gains and Impairment Losses related to investments included in the Company’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the insurance underwriting process.
Change in Fair Value of Equity and Convertible Securities, Net Realized Investment Gains (Losses) and Impairment Losses related to investments included in the Company’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the insurance underwriting process.
The Company measured equity price sensitivity assuming an adverse and instantaneous 30% decrease in the Standard and Poor’s Stock Index (the “S&P 500”) from its level at December 31, 2023 and 2022, with all other variables held constant.
The Company measured equity price sensitivity assuming an adverse and instantaneous 30% decrease in the Standard and Poor’s Stock Index (the “S&P 500”) from its level at December 31, 2024 and 2023, with all other variables held constant.
See the “Reinsurance” subsection of the “Property and Casualty Insurance Business” and “Life Insurance Business” sections of Item 1(c), “Description of Business,” and Note 25, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for additional information on the Company’s reinsurance programs.
See the “Reinsurance” subsection of the “Property and Casualty Insurance Business” and “Life Insurance Business” sections of Item 1(c), “Description of Business,” and Note 26, “Catastrophe Reinsurance,” to the Consolidated Financial Statements for additional information on the Company’s reinsurance programs.
For Debt, the Company assumed an adverse and instantaneous decrease of 100 basis points in market interest rates from their levels at December 31, 2023 and 2022. All other variables were held constant.
For Debt, the Company assumed an adverse and instantaneous decrease of 100 basis points in market interest rates from their levels at December 31, 2024 and 2023. All other variables were held constant.
For the interest rate sensitivity analysis presented below, the Company assumed an adverse and instantaneous increase of 100 basis points in the yield curve at both December 31, 2023 and 2022 for Investments in Fixed Maturities.
For the interest rate sensitivity analysis presented below, the Company assumed an adverse and instantaneous increase of 100 basis points in the yield curve at both December 31, 2024 and 2023 for Investments in Fixed Maturities.
The most directly comparable GAAP financial measure is Net Loss attributable to Kemper Corporation.
The most directly comparable GAAP financial measure is Net Income (Loss) attributable to Kemper Corporation.
Changes in these factors from their December 31, 2023 evaluation date could result in the Company determining that a decline in the fair value exists for an investment held and evaluated at December 31, 2023.
Changes in these factors from their December 31, 2024 evaluation date could result in the Company determining that a decline in the fair value exists for an investment held and evaluated at December 31, 2024.
ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry. 33 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CATASTROPHES (Continued) The number of ISO-classified catastrophic events and catastrophe losses and LAE, net of reinsurance recoveries, (excluding loss and LAE reserve development) by range of loss and business segment for the years ended December 31, 2023, 2022 and 2021 are presented below.
ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry. 34 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CATASTROPHES (Continued) The number of ISO-classified catastrophic events and catastrophe losses and LAE, net of reinsurance recoveries, (excluding loss and LAE reserve development) by range of loss and business segment for the years ended December 31, 2024, 2023 and 2022 are presented below.
The effective income tax rate for 2023 and 2022 differs from the federal statutory income tax rate due primarily to investments in Company-Owned Life Insurance, tax-exempt investment income and dividends received deductions.
The effective income tax rate for 2024 and 2023 differs from the federal statutory income tax rate primarily due to investments in Company-Owned Life Insurance, Tax-Exempt Investment Income and Dividends Received Deductions.
As a result of the analysis, the Company determined that a valuation allowance was required as of December 31, 2023 against certain foreign deferred tax assets which had been recorded during 2023.
As a result of the analysis, the Company determined that a valuation allowance was required as of December 31, 2024 against certain foreign deferred tax assets which had been recorded during 2024.
The FASB issues Accounting Standards Updates (“ASUs”) to amend the authoritative literature in the FASB ASC. The Company has adopted all recently issued accounting pronouncements with effective dates prior to January 1, 2024.
The FASB issues Accounting Standards Updates (“ASUs”) to amend the authoritative literature in the FASB ASC. The Company has adopted all recently issued accounting pronouncements with effective dates prior to January 1, 2025.
The following table summarizes the fair value of the Company’s investments in governmental fixed maturities at December 31, 2023 and 2022. Dec 31, 2023 Dec 31, 2022 DOLLARS IN MILLIONS Fair Value Percentage of Total Investments Fair Value Percentage of Total Investments U.S.
The following table summarizes the fair value of the Company’s investments in governmental fixed maturities at December 31, 2024 and 2023. Dec 31, 2024 Dec 31, 2023 DOLLARS IN MILLIONS Fair Value Percentage of Total Investments Fair Value Percentage of Total Investments U.S.
The Company has elected the fair value option for investments in fixed maturities with equity conversion features. As of December 31, 2023, the Company no longer holds any investments with equity conversion features.
The Company has elected the fair value option for investments in fixed maturities with equity conversion features. As of December 31, 2024, the Company no longer holds any investments with equity conversion features.
At December 31, 2023, approximately 96.2% of the Company’s fixed maturity investment portfolio was rated investment-grade, which the Company defines as a security issued by a high quality obligor with at least a relatively stable credit profile and where it is highly likely that all contractual payments of principal and interest will timely occur and carry a rating from the National Association of Insurance Commissioners (“NAIC”) of 1 or 2.
At December 31, 2024, approximately 95.7% of the Company’s fixed maturity investment portfolio was rated investment-grade, which the Company defines as a security issued by a high quality obligor with at least a relatively stable credit profile and where it is highly likely that all contractual payments of principal and interest will timely occur and carry a rating from the National Association of Insurance Commissioners (“NAIC”) of 1 or 2.
See Note 2, “Summary of Accounting Policies and Accounting Changes” to the Consolidated Financial Statements for discussion on adoption of these ASUs and impacts to the Company’s financial statements. For all recently issued accounting pronouncements with effective dates after December 31, 2023, the Company is currently evaluating the impact of this guidance on its financial statements. 69 Item 7A.
See Note 2, “Summary of Accounting Policies and Accounting Changes” to the Consolidated Financial Statements for discussion on adoption of these ASUs and impacts to the Company’s financial statements. For all recently issued accounting pronouncements with effective dates after December 31, 2024, the Company is currently evaluating the impact of this guidance on its financial statements. 61 Item 7A.
The Company’s investments in common stock equity securities were correlated with the S&P 500 using the portfolio’s weighted-average beta of 0.35 and 0.41 at December 31, 2023 and 2022, respectively. Beta measures a stock’s relative volatility in relation to the rest of the stock market, with the S&P 500 having a beta coefficient of 1.00.
The Company’s investments in common stock equity securities were correlated with the S&P 500 using the portfolio’s weighted-average beta of 0.34 and 0.35 at December 31, 2024 and 2023, respectively. Beta measures a stock’s relative volatility in relation to the rest of the stock market, with the S&P 500 having a beta coefficient of 1.00.
The Equity Securities at Fair Value portfolio’s weighted-average beta was calculated using each security’s assumed forward looking betas based on underlying investment characteristics weighted by the fair value of such securities as of December 31, 2023 and 2022. For equity securities without observable market inputs, the Company assumed a beta of 1.00 at December 31, 2023 and 2022. 70
The Equity Securities at Fair Value portfolio’s weighted-average beta was calculated using each security’s assumed forward looking betas based on underlying investment characteristics weighted by the fair value of such securities as of December 31, 2024 and 2023. For equity securities without observable market inputs, the Company assumed a beta of 1.00 at December 31, 2024 and 2023. 62
The Company’s effective income tax rate, which was 21.6%, 22.7% and 50.9% for 2023, 2022, and 2021 respectively, differs from the federal corporate income tax rate due primarily to (1) the effects of tax-exempt investment income, (2) nontaxable income associated with the change in cash surrender value on Company-Owned Life Insurance, (3) Alternative Energy Partnership Investment and general business tax credits, (4) a permanent difference between the amount of long-term equity-based compensation expense recognized under GAAP and the amount deductible in the computation of Federal taxable income (5) a permanent difference associated with nondeductible executive compensation, (6) an impairment of non-tax deductible goodwill, (7) impact of tax legislation in foreign jurisdictions, and (8) a change in valuation allowance.
The Company’s effective income tax rate, which was 19.6%, 21.6% and 22.7% for 2024, 2023, and 2022 respectively, differs from the federal corporate income tax rate due primarily to (1) the effects of tax-exempt investment income, (2) nontaxable income associated with the change in cash surrender value on Company-Owned Life Insurance, (3) Alternative Energy Partnership Investment and general business tax credits, (4) a permanent difference between the amount of long-term equity-based compensation expense recognized under GAAP and the amount deductible in the computation of Federal taxable income (5) a permanent difference associated with nondeductible executive compensation, (6) an impairment of non-tax deductible goodwill, (7) impact of deferred taxes in foreign jurisdictions, and (8) a change in valuation allowance.
These catastrophic events and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and winter storms. Such events result in insured losses that are, and will continue to be, a material factor in the results of operations and financial position of the Company’s property and casualty insurance companies.
These catastrophic events and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and winter storms. Such events result in insured losses that are and may be a material factor in the results of operations and financial position of the Company’s property and casualty insurance companies.
Equity Securities The Company recognized Impairment Losses in the Consolidated Statements of Loss for the year ended December 31, 2023 primarily related to investments in Equity Securities at Modified Cost where the Company has the intent or requirement to sell.
Equity Securities The Company recognized Impairment Losses in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024 primarily related to investments in Equity Securities at Modified Cost where the Company has the intent or requirement to sell.
For these advances, United Insurance held pledged securities in a custodial account with the FHLB of Chicago with a fair value of $629.3 million at December 31, 2023. The fair value of the collateral pledged must be maintained at certain specified levels above the borrowed amount, which can vary depending on the assets pledged.
For these advances, United Insurance held pledged securities in a custodial account with the FHLB of Chicago with a fair value of $619.3 million at December 31, 2024. The fair value of the collateral pledged must be maintained at certain specified levels above the borrowed amount, which can vary depending on the assets pledged.
The Company believes that Adjusted Consolidated Net Operating Loss provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded.
Adjusted Consolidated Net Operating Income (Loss) The Company believes that the non-GAAP financial measure of Adjusted Consolidated Net Operating Income (Loss) provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded.
Year Ended Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 DOLLARS IN MILLIONS Number of Events Losses and LAE Number of Events Losses and LAE Number of Events Losses and LAE Range of Losses and LAE Per Event: Below $5 68 $ 77.7 59 $ 54.6 65 $ 56.1 $5 - $10 3 19.0 2 10.2 2 16.5 $10 - $15 — — 1 14.5 — — $15 - $20 — — — — 2 35.2 $20 - $25 — — — — — — Greater Than $25 — — — — — — Total 71 $ 96.7 62 $ 79.3 69 $ 107.8 Specialty Property & Casualty Insurance $ 34.5 $ 23.0 $ 15.7 Life Insurance 2.2 1.8 13.0 Non-Core Operations 60.0 54.5 79.1 Total Catastrophe Losses and LAE $ 96.7 $ 79.3 $ 107.8 Catastrophe Reinsurance The Company primarily manages its exposure to catastrophes and other natural disasters through a combination of geographical diversification, restrictions on the amount and location of new business production in such regions, modifications of, and/or limitations to coverages and deductibles for certain perils in such regions and a catastrophe reinsurance program for the Company’s Property & Casualty Insurance business.
Year Ended Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 DOLLARS IN MILLIONS Number of Events Losses and LAE Number of Events Losses and LAE Number of Events Losses and LAE Range of Losses and LAE Per Event: Below $5 69 $ 47.7 68 $ 77.7 59 $ 54.6 $5 - $10 3 17.6 3 19.0 2 10.2 $10 - $15 — — — — 1 14.5 $15 - $20 — — — — $20 - $25 — — — — Greater Than $25 — — — — Total 72 $ 65.3 71 $ 96.7 62 $ 79.3 Specialty Property & Casualty Insurance $ 19.9 $ 34.5 $ 23.0 Life Insurance 2.2 2.2 1.8 Non-Core Operations 43.2 60.0 54.5 Total Catastrophe Losses and LAE $ 65.3 $ 96.7 $ 79.3 Catastrophe Reinsurance The Company primarily manages its exposure to catastrophes and other natural disasters through a combination of geographical diversification, restrictions on the amount and location of new business production in such regions, modifications of, and/or limitations to coverages and deductibles for certain perils in such regions and a catastrophe reinsurance program for the Company’s Property & Casualty Insurance business.
CONTRACTUAL OBLIGATIONS Estimated cash disbursements pertaining to the Company’s contractual obligations at December 31, 2023 are presented below.
CONTRACTUAL OBLIGATIONS Estimated cash disbursements pertaining to the Company’s contractual obligations at December 31, 2024 are presented below.
The Company estimates that its specialty personal automobile insurance loss and LAE reserves could have varied by $57.9 million in either direction at December 31, 2023 for all accident years combined under this scenario. In addition to the factors described above, other factors may also impact loss reserve development in future periods.
The Company estimates that its specialty personal automobile insurance loss and LAE reserves could have varied by $41.8 million in either direction at December 31, 2024 for all accident years combined under this scenario. In addition to the factors described above, other factors may also impact loss reserve development in future periods.
Both the reported and fair values of the Company’s investments in fixed maturities classified as available for sale were $6,881.9 million at December 31, 2023. Equity securities with readily determinable fair values are recorded as Equity Securities at Fair Value with changes in fair values recognized into income for the period reported.
Both the reported and fair values of the Company’s investments in fixed maturities classified as available for sale were $6,409.6 million at December 31, 2024. Equity securities with readily determinable fair values are recorded as Equity Securities at Fair Value with changes in fair values recognized into income for the period reported.
Additional information pertaining to these investments at December 31, 2023 and 2022 is presented below.
Additional information pertaining to these investments at December 31, 2024 and 2023 is presented below.
See Note 14, “Goodwill and Intangibles,” for more information. The Company performed a qualitative goodwill impairment assessment for all remaining reporting units with goodwill as of October 1, 2023.
See Note 15, “Goodwill and Intangibles,” for more information. The Company performed a qualitative goodwill impairment assessment for all remaining reporting units with goodwill as of October 1, 2024.
United Insurance had outstanding advances from the FHLB of Chicago totaling $557.4 million at December 31, 2023. These advances were made in connection with the Company’s spread lending program. The proceeds related to these advances were used to purchase fixed maturity securities to earn incremental net investment income.
United Insurance had outstanding advances from the FHLB of Chicago totaling $541.3 million at December 31, 2024. These advances were made in connection with the Company’s spread lending program. The proceeds related to these advances were used to purchase fixed maturity securities to earn incremental net investment income.
Total amortized cost of Long-term Debt outstanding at December 31, 2023 and December 31, 2022 was: (Dollars in Millions) Dec 31, 2023 Dec 31, 2022 Senior Notes 4.350% Senior Notes due February 15, 2025 $ 449.6 $ 449.3 2.400% Senior Notes due September 30, 2030 397.0 396.6 3.800% Senior Notes due February 23, 2032 396.0 395.5 5.875% Fixed-Rate Reset Junior Subordinated Debentures due 2062 146.6 145.5 Total Long-term Debt Outstanding $ 1,389.2 $ 1,386.9 See Note 23, “Debt,” to the Consolidated Financial Statements for more information regarding the Company’s long-term debt.
Total amortized cost of Long-term Debt, Current and Non-Current, outstanding at December 31, 2024 and December 31, 2023 was: (Dollars in Millions) Dec 31, 2024 Dec 31, 2023 Senior Notes Current: 4.350% Senior Notes due February 15, 2025 $ 449.9 $ — Non-Current 4.350% Senior Notes due February 15, 2025 — 449.6 2.400% Senior Notes due September 30, 2030 397.5 397.0 3.800% Senior Notes due February 23, 2032 396.5 396.0 5.875% Fixed-Rate Reset Junior Subordinated Debentures due 2062 147.7 146.6 Total Long-term Debt Outstanding $ 1,391.6 $ 1,389.2 See Note 24, “Debt,” to the Consolidated Financial Statements for more information regarding the Company’s long-term debt.
Kemper made capital contributions to insurance subsidiaries of $489.1 million, $270.0 million and $126.0 million during 2023, 2022 and 2021, respectively. Sources and Uses of Funds The Company directly held cash and investments totaling $464.5 million at December 31, 2023, compared to $417.6 million at December 31, 2022.
Kemper made capital contributions to insurance subsidiaries of $18.0 million, $489.1 million and $270.0 million during 2024, 2023 and 2022, respectively. Sources and Uses of Funds The Company directly held cash and investments totaling $547.6 million at December 31, 2024, compared to $464.5 million at December 31, 2023.
As of December 31, 2023, the Company had $149.7 million notional amount of derivatives holdings. The Company measures its sensitivity to market risk by evaluating the change in its financial assets and liabilities relative to fluctuations in interest rates and equity prices.
As of December 31, 2024, the Company had $75.0 million notional amount of derivatives holdings. The Company measures its sensitivity to market risk by evaluating the change in its financial assets and liabilities relative to fluctuations in interest rates and equity prices.
Goodwill impairment charges are excluded because they are infrequent and non-recurring charges. Non-Core Operations includes the results of our Preferred Insurance business which we expect to fully exit. These results are excluded because they are irrelevant to our ongoing operations and do not qualify for Discontinued Operations under Generally Accepted Accounting Principles ("GAAP").
Goodwill Impairment Charges are excluded because they are infrequent and non-recurring charges. Non-Core Operations includes the results of our Preferred Insurance business which we expect to fully exit. These 31 NON-GAAP FINANCIAL MEASURES (Continued) results are excluded because they are irrelevant to our ongoing operations and do not qualify for Discontinued Operations under GAAP.
The components of Impairment Losses in the Consolidated Statements of Loss for the year ended December 31, 2023, 2022, 2021 were: 2023 2022 2021 DOLLARS IN MILLIONS Amount Number of Issuers Amount Number of Issuers Amount Number of Issuers Fixed Maturities $ (0.1) 21 $ (25.8) 57 $ (6.4) 17 Equity Securities at Modified Cost (0.5) 1 — — (4.2) 13 Real Estate — — — — (0.4) 1 Other (0.5) 6 — — — — Impairment Losses 1 $ (1.1) $ (25.8) $ (11.4) I Includes losses from intent-to-sell securities of $(2.0) million, $(23.8) million and $(6.6) million for the years ended December 31, 2023, 2022 and 2021, respectively.
The components of Impairment Losses in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024, 2023, 2022 were: 2024 2023 2022 (Dollars in Millions) Amount Number of Issuers Amount Number of Issuers Amount Number of Issuers Fixed Maturities $ (4.8) 20 $ (0.1) 21 $ (25.8) 57 Equity Securities at Modified Cost (0.4) 3 (0.5) 1 — — Real Estate (0.4) 7 — — — — Other (0.2) 1 (0.5) 6 — — Impairment Losses 1 $ (5.8) $ (1.1) $ (25.8) I Includes losses from intent-to-sell securities and direct write-down securities of $3.3 million, $2.0 million and $23.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Life Insurance Reserves by business segment at December 31, 2023 and 2022 were: DOLLARS IN MILLIONS 2023 2022 Business Segments: Life Insurance: Life Insurance $ 3,417.7 $ 3,271.9 Accident & Health Insurance 4.7 4.3 Total Life Insurance Reserves $ 3,422.4 $ 3,276.2 These assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current).
Life Insurance Reserves by business segment at December 31, 2024 and 2023 were: DOLLARS IN MILLIONS 2024 2023 Business Segments: Life Insurance: Life Insurance $ 3,195.1 $ 3,417.7 Accident & Health Insurance 4.6 4.7 Total Life Insurance Reserves $ 3,199.7 $ 3,422.4 These assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current).
Kemper’s insurance subsidiaries collectively paid $640.9 million, $311.7 million and $347.0 million in dividends to Kemper in 2023, 2022 and 2021, respectively. In 2024, Kemper’s US based insurance subsidiaries capacity to pay dividends to Kemper without prior regulatory approval is estimated to be zero as of the filing date.
Kemper’s insurance subsidiaries collectively paid $213.3 million, $640.9 million and $311.7 million in dividends to Kemper in 2024, 2023 and 2022, respectively. In 2025, Kemper’s US based insurance subsidiaries capacity to pay dividends to Kemper without prior regulatory approval is estimated to be $211.7 million as of the filing date.
Experience may develop adversely such that additional reserves must be established. Adverse experience could arise out of a number of factors, including, but not limited to, severe short-term events, such as a pandemic or changes to policyholder behavior during stressed economic periods, or due to misestimation of long-term assumptions such as mortality, interest rates and lapse assumptions.
Adverse experience could arise out of a number of factors, including, but not limited to, severe short-term events, such as a pandemic or changes to policyholder behavior during stressed economic periods, or due to misestimation of long-term assumptions such as mortality, interest rates and lapse assumptions.
DOLLARS IN MILLIONS 2023 2022 2021 Earned Premiums $ 387.6 $ 571.5 $ 579.0 Net Investment Income 193.4 216.5 202.7 Change in Value of Alternative Energy Partnership Investments 0.7 (5.3) (15.8) Other Loss (0.2) (0.6) (1.3) Total Revenues 581.5 782.1 764.6 Policyholders’ Benefits and Incurred Losses and LAE 243.4 360.8 388.5 Insurance Expenses 275.8 343.3 369.6 Segment Adjusted Operating Income 62.3 78.0 6.5 Income Tax (Expense) Benefit (10.5) (9.2) 18.5 Total Segment Adjusted Net Operating Income $ 51.8 $ 68.8 $ 25.0 INSURANCE RESERVES DOLLARS IN MILLIONS Dec 31, 2023 Dec 31, 2022 Insurance Reserves: Future Policyholder Benefits $ 3,375.6 $ 3,218.5 Incurred Losses and LAE Reserves: Life 42.1 53.3 Accident and Health 4.7 4.3 Property 2.9 2.3 Total Incurred Losses and LAE Reserves 49.7 59.9 Total Insurance Reserves $ 3,425.3 $ 3,278.4 See Note 2 “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial Statements under the sub-caption “Insurance Reserves” for additional discussion. 2023 Compared with 2022 Total Segment Adjusted Net Operating Income in the Life Insurance segment was $51.8 million in 2023, compared to $68.8 million in 2022.
(Dollars in Millions) 2024 2023 2022 Earned Premiums $ 393.9 $ 387.6 $ 571.5 Net Investment Income 170.6 193.4 216.5 Change in Value of Alternative Energy Partnership Investments 0.6 0.7 (5.3) Other Income (Loss) 0.5 (0.2) (0.6) Total Revenues 565.6 581.5 782.1 Policyholders’ Benefits and Incurred Losses and LAE 234.5 243.4 360.8 Insurance Expenses 272.1 275.8 343.3 Segment Adjusted Operating Income 59.0 62.3 78.0 Income Tax Expense 8.8 10.5 9.2 Total Segment Adjusted Net Operating Income $ 50.2 $ 51.8 $ 68.8 INSURANCE RESERVES (Dollars in Millions) Dec 31, 2024 Dec 31, 2023 Insurance Reserves: Future Policyholder Benefits $ 3,154.3 $ 3,375.6 Incurred Losses and LAE Reserves: Life 40.8 42.1 Accident and Health 4.6 4.7 Property 2.7 2.9 Total Incurred Losses and LAE Reserves 48.1 49.7 Total Insurance Reserves $ 3,202.4 $ 3,425.3 See Note 2 “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial Statements under the sub-caption “Insurance Reserves” for additional discussion. 2024 Compared with 2023 The Life Insurance Segment reported Total Segment Adjusted Net Operating Income of $50.2 million in 2024, compared to $51.8 million in 2023.
See MD&A, “Critical Accounting Estimates,” of this 2023 Annual Report for additional information pertaining to the Company’s process of estimating property and casualty insurance reserves for losses and LAE, and the estimated variability 34 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) LOSS AND LAE RESERVE DEVELOPMENT (Continued) thereof, development of property and casualty insurance losses and LAE, and a discussion of some of the variables that may impact them.
See MD&A, “Critical Accounting Estimates,” of this 2024 Annual Report for additional information pertaining to the Company’s process of estimating property and casualty insurance reserves for losses and LAE, and the estimated variability thereof, development of property and casualty insurance losses and LAE, and a discussion of some of the variables that may impact them. 36 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) SPECIALTY PROPERTY & CASUALTY INSURANCE Selected financial information for the Specialty Property & Casualty Insurance segment is presented below.
Income (Loss) from Change in Fair Value of Equity and Convertible Securities The components of Income (Loss) from Change in Fair Value of Equity and Convertible Securities for the years ended December 31, 2023 and 2022 are presented below.
Change in Fair Value of Equity and Convertible Securities The components of Change in Fair Value of Equity and Convertible Securities for the years ended December 31, 2024 and 2023 are presented below.
Overall 2023 Compared with 2022 The Specialty Property & Casualty Insurance segment reported Total Segment Adjusted Net Operating Loss of $57.1 million for the year ended December 31, 2023, compared to Total Segment Adjusted Net Operating Loss of $147.4 million in 2022.
Overall 2024 Compared with 2023 The Specialty Property & Casualty Insurance segment reported Total Segment Adjusted Net Operating Income of $376.3 million for the year ended December 31, 2024, compared to Total Segment Adjusted Net Operating Loss of $57.1 million in 2023.
The fair value of the Company’s investments measured and reported at fair value was $7,122.4 million at December 31, 2023, of which $6,738.7 million, or 94%, were investments that were based on quoted market prices or significant fair value inputs that are observable, $192.3 million, or 3%, were investments where at least one significant fair value inputs was unobservable and $191.4 million or 3% were investments for which fair value is measured using the net asset value (“NAV”) per share practical expedient.
The fair value of the Company’s investments measured and reported at fair value was $6,624.4 million at December 31, 2024, of which $6,231.8 million, or 94%, were investments that were based on quoted market prices or significant fair value inputs that are observable, $209.0 million, or 3%, were investments where at least one significant fair value inputs was unobservable and $183.6 million or 3% were investments for which fair value is measured using the net asset value (“NAV”) per share practical expedient.
The Company periodically uses short-term FHLB borrowings for a combination of cash management and risk management purposes, in addition to long-term FHLB borrowings for spread lending purposes. During 2023, United Insurance received advances of $122.5 million from the FHLB of Chicago and made repayments of $166.1 million.
The Company periodically uses short-term FHLB borrowings for a combination of cash management and risk management purposes, in addition to long-term FHLB borrowings for spread lending purposes. During 2024, United Insurance received advances of $101.7 million from the FHLB of Chicago and made repayments of $117.8 million.
Accordingly, both the reported and fair values of the Company’s investments in Equity Securities at Fair Value were $225.8 million at December 31, 2023.
Accordingly, both the reported and fair values of the Company’s investments in Equity Securities at Fair Value were $218.5 million at December 31, 2024.
Management believes that its property and casualty insurance subsidiaries maintain adequate levels of liquidity in the event that they were to experience several future catastrophic events over a relatively short period of time. Information about the Company’s cash flows for the years ended December 31, 2023, 2022 and 2021 is presented below.
Management believes that its property and casualty insurance subsidiaries maintain adequate levels of liquidity in the event that they were to experience several future catastrophic events over a relatively short period of time. 53 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) LIQUIDITY AND CAPITAL RESOURCES (Continued) Information about the Company’s cash flows for the years ended December 31, 2024, 2023 and 2022 is presented below.
Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2021 related primarily to investments in Fixed Maturities where the Company established an allowance for expected credit loss.
Fixed Maturities Impairment Losses recognized in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024 related primarily to investments in securities with direct write-downs and in Fixed Maturities where the Company established an allowance for expected credit losses.
Earned Premiums in the Specialty Property & Casualty Insurance segment decreased by $413.9 million in 2023, compared to 2022 due to a decrease in new business resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.
Earned Premiums in the Specialty Property & Casualty Insurance segment decreased by $56.1 million in 2024, compared to 2023, due to lower average business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.
Unfunded Commitment in Millions Reported Value in Millions Asset Class Dec 31, 2023 Dec 31, 2023 Dec 31, 2022 Reported as Equity Method Limited Liability Investments: Mezzanine Debt $ 43.1 $ 125.4 $ 114.3 Real Estate — 41.9 43.3 Senior Debt 39.9 19.0 21.6 Leveraged Buyout 0.6 8.6 8.9 Secondary Transactions 1.7 7.9 9.3 Distressed Debt — 7.9 9.4 Growth Equity — 1.2 1.2 Hedge Fund — 0.1 0.5 Other — 9.7 8.5 Total Equity Method Limited Liability Investments 85.3 221.7 217.0 Alternative Energy Partnership Investments — 17.3 16.3 Reported as Other Equity Interests at Fair Value: Mezzanine Debt 67.0 124.0 106.0 Senior Debt 10.6 24.8 21.9 Leveraged Buyout 10.0 19.0 21.6 Distressed Debt 13.0 12.4 12.5 Growth Equity 6.5 6.4 5.4 Secondary Transactions 3.1 2.8 3.5 Hedge Funds — 1.9 18.1 Real Estate 0.2 0.1 — Other — — 0.1 Total Reported as Other Equity Interests at Fair Value 110.4 191.4 189.1 Reported as Equity Securities at Modified Cost: Other — 4.8 8.3 Total Reported as Equity Securities at Modified Cost — 4.8 8.3 Total Investments in Limited Liability Companies and Limited Partnerships $ 195.7 $ 435.2 $ 430.7 The Company expects that it will be required to fund its commitments over the next several years.
Unfunded Commitment in Millions Reported Value in Millions Asset Class Dec 31, 2024 Dec 31, 2024 Dec 31, 2023 Reported as Equity Method Limited Liability Investments: Senior Debt $ 48.2 $ 19.1 $ 19.0 Mezzanine Debt 40.8 116.7 125.4 Secondary Transactions 1.6 5.5 7.9 Leveraged Buyout 0.6 7.5 8.6 Growth Equity — — 1.2 Hedge Fund — 0.1 0.1 Distressed Debt — 4.4 7.9 Real Estate — 27.3 41.9 Other 0.1 5.7 9.7 Total Equity Method Limited Liability Investments 91.3 186.3 221.7 Alternative Energy Partnership Investments — 17.6 17.3 Reported as Other Equity Interests at Fair Value: Mezzanine Debt 67.0 116.9 124.0 Leveraged Buyout 30.4 19.2 19.0 Distressed Debt 15.0 11.7 12.4 Senior Debt 8.4 26.3 24.8 Growth Equity 8.0 7.0 6.4 Secondary Transactions 1.6 2.4 2.8 Hedge Funds — — 1.9 Other 0.2 0.1 0.1 Total Reported as Other Equity Interests at Fair Value 130.6 183.6 191.4 Reported as Equity Securities at Modified Cost: Other — 1.8 4.8 Total Reported as Equity Securities at Modified Cost — 1.8 4.8 Total Investments in Limited Liability Companies and Limited Partnerships $ 221.9 $ 389.3 $ 435.2 The Company expects that it will be required to fund its commitments over the next several years.
Net Cash Provided by (Used in) Investing Activities Net cash provided by Investing Activities was $107.9 million in 2023, compared to $108.4 million used in 2022, a year over year increase of $216.3 million.
Net Cash (Used in) Provided by Investing Activities Net cash used in Investing Activities was $244.4 million in 2024, compared to $107.9 million provided by in 2023, a year over year decrease of $352.3 million.
DOLLARS IN MILLIONS 2023 2022 2021 Increase (Decrease) in Total Loss and LAE Reserves Related to Prior Years: Non-catastrophe $ 168.9 $ (10.5) $ 112.1 Catastrophe (9.1) (4.1) (5.4) Increase (Decrease) in Total Loss and LAE Reserves Related to Prior Years $ 159.8 $ (14.6) $ 106.7 See MD&A, “Specialty Property & Casualty Insurance,” MD&A, “Life Insurance,” and Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for additional information on the Company’s reserve development.
DOLLARS IN MILLIONS 2024 2023 2022 Increase (Decrease) in Total Loss and LAE Reserves Related to Prior Years: Non-catastrophe $ 23.8 $ 168.9 $ (10.5) Catastrophe 6.0 (9.1) (4.1) Increase (Decrease) in Total Loss and LAE Reserves Related to Prior Years $ 29.8 $ 159.8 $ (14.6) 35 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) LOSS AND LAE RESERVE DEVELOPMENT (Continued) See MD&A, “Specialty Property & Casualty Insurance,” MD&A, “Life Insurance,” and Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for additional information on the Company’s reserve development.
If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the 49 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) INVESTMENT RESULTS (Continued) Consolidated Statements of Loss in the period that the declines are evaluated.
If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the Consolidated Statements of Income (Loss) in the period that the declines are evaluated.
DOLLARS IN MILLIONS 2023 2022 Preferred Stocks $ 1.8 $ (8.9) Common Stocks — (0.4) Other Equity Interests: Exchange Traded Funds 0.6 (46.5) Limited Liability Companies and Limited Partnerships 2.3 (21.2) Total Other Equity Interests 2.9 (67.7) Income (Loss) from Change in Fair Value of Equity Securities 4.7 (77.0) Income (Loss) from Change in Fair Value of Convertible Securities — (2.9) Income (Loss) from Change in Fair Value of Equity and Convertible Securities $ 4.7 $ (79.9) 48 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) INVESTMENT RESULTS (Continued) Net Realized (Losses) Gains on Sales of Investments The components of Net Realized Investment (Losses) Gains for the year ended December 31, 2023, 2022 and 2021 are presented below.
(Dollars in Millions) 2024 2023 Preferred Stocks $ 1.0 $ 1.8 Common Stocks 2.2 — Other Equity Interests: Exchange Traded Funds (0.6) 0.6 Limited Liability Companies and Limited Partnerships (5.3) 2.3 Total Other Equity Interests (5.9) 2.9 Change in Fair Value of Equity Securities (2.7) 4.7 Change in Fair Value of Convertible Securities — — Change in Fair Value of Equity and Convertible Securities $ (2.7) $ 4.7 Net Realized Gains (Losses) on Sales of Investments The components of Net Realized Investment Gains (Losses) for the year ended December 31, 2024, 2023 and 2022 are presented below.
Federal Home Loan Bank Agreements Kemper’s subsidiaries, United Insurance Company of America (“United Insurance”), Trinity Universal Insurance Company (“Trinity”), and AAC are members of the Federal Home Loan Banks (“FHLBs”) of Chicago, Dallas and Chicago, respectively.
Federal Home Loan Bank Agreements Kemper’s subsidiaries, United Insurance Company of America (“United Insurance”), Trinity Universal Insurance Company (“Trinity”), and American Access Casualty Company (“AAC”) are members of the Federal Home Loan Banks (“FHLBs”) of Chicago, Dallas and Chicago, respectively. AAC became a member of the FHLB of Chicago in May 2022.
Equity Securities Net Realized Gains and Losses on Sale of Equity Securities for the year ended December 31, 2023 primarily related to disposals of equity securities and preferred stock. Net Realized Gains and Losses on Sale of Equity Securities for the year ended December 31, 2022 primarily relate disposals of equity method limited liability investments and preferred stock.
Equity Securities Net realized gains and losses on sales of equity securities for the year ended December 31, 2024 primarily related to disposals of equity securities and preferred stock. Net realized gains and losses on sales of equity securities for the year ended December 31, 2023 primarily related to disposals of equity securities and preferred stock.
The amount of expense recognized for long-term equity-based compensation expense under GAAP was $1.4 million higher than the amount that would be deductible under the IRC in 2023, compared to $6.3 million higher in 2022 and $1.3 million lower in 2021.
The amount of expense recognized for long-term equity-based compensation expense under GAAP was $0.5 million lower than the amount that would be deductible under the IRC in 2024, compared to $1.4 million higher in 2023. The amount of nondeductible executive compensation was $16.8 million in 2024, compared to $8.5 million in 2023.
Had the Company elected the fair value option for all of its investments in financial instruments, the Company’s reported net loss for the year ended December 31, 2023, would have increased by $1,030.2 million.
Had the Company elected the fair value option for all of its investments in financial instruments, the Company’s reported net income for the year ended December 31, 2024, would have decreased by $162.7 million.
Tax-exempt investment income and dividends received deductions were $22.7 million in 2023, compared to $25.1 million in 2022, and $21.8 million in 2021. The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $29.2 million in 2023, compared to $37.9 million in 2022, and $25.7 million in 2021.
Tax-exempt investment income and dividends received deductions were $16.0 million in 2024, compared to $22.7 million in 2023. The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $35.6 million in 2024, compared to $29.2 million in 2023.
NAIC Rating Rating Dec 31, 2023 Dec 31, 2022 Fair Value in Millions Percentage of Total Fair Value in Millions Percentage of Total 1 AAA, AA, A $ 4,962.0 72.1 % $ 4,896.4 71.0 % 2 BBB 1,657.3 24.1 1,687.4 24.5 3-4 BB, B 204.4 3.0 239.7 3.5 5-6 CCC or Lower 58.2 0.8 71.3 1.0 Total Investments in Fixed Maturities $ 6,881.9 100.0 % $ 6,894.8 100.0 % Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $25.5 million and $32.8 million at December 31, 2023 and 2022, respectively.
DOLLARS IN MILLIONS Dec 31, 2024 Dec 31, 2023 NAIC Rating Rating Amortized Cost Fair Value Percentage of Total Amortized Cost Fair Value Percentage of Total 1 AAA, AA, A $ 5,253.1 $ 4,576.4 71.4 % $ 5,471.8 $ 4,962.0 72.1 % 2 BBB 1,749.3 1,557.6 24.3 1,803.7 1,657.3 24.1 3-4 BB, B 233.0 221.7 3.5 227.1 204.4 3.0 5-6 CCC or Lower 59.6 53.9 0.8 63.2 58.2 0.8 Total Investments in Fixed Maturities $ 7,295.0 $ 6,409.6 100.0 % $ 7,565.8 $ 6,881.9 100.0 % Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $14.2 million and $25.5 million at December 31, 2024 and 2023, respectively.
Accordingly, the sum of the amounts presented above for Life and Health Insurance Policy Benefits significantly exceeds the amount of Life and Health Insurance Reserves reported on the Company’s Consolidated Balance Sheets at December 31, 2023. In addition to the contractual obligations included above, the Company had certain investment commitments totaling $195.7 million at December 31, 2023.
Accordingly, the sum of the amounts presented above for Life and Health Insurance Policy Benefits significantly exceeds the amount of Life and Health Insurance Reserves reported on the Company’s Consolidated Balance Sheets at December 31, 2024. 54 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) CONTRACTUAL OBLIGATIONS (Continued) In addition to the contractual obligations included above, the Company had certain investment commitments totaling $221.9 million at December 31, 2024.
DOLLARS IN MILLIONS 2023 2022 Change from 2022 to 2023 2021 Change from 2021 to 2022 Net Loss Attributable to Kemper Corporation $ (272.1) $ (286.6) $ 14.5 $ (123.7) $ (162.9) Less: Income (Loss) from Change in Fair Value of Equity and Convertible Securities $ 3.7 $ (63.1) $ 66.8 $ 90.5 $ (153.6) Net Realized Investment (Losses) Gains (14.7) 3.4 (18.1) 51.2 (47.8) Impairment Losses (0.9) (20.4) 19.5 (8.7) (11.7) Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs (95.0) (61.3) (33.7) (34.7) (26.6) Debt Extinguishment, Pension Settlement and Other Charges (55.5) (2.9) (52.6) — (2.9) Goodwill Impairment Charge (45.5) — (45.5) — — Non-Core Operations (17.0) (25.9) 8.9 (12.5) (13.4) Adjusted Consolidated Net Operating Loss $ (47.2) $ (116.4) $ 69.2 $ (209.5) $ 93.1 Components of Adjusted Consolidated Net Operating Loss: Segment Adjusted Net Operating (Loss) Income: Specialty Property & Casualty Insurance $ (57.1) $ (147.4) $ 90.3 $ (196.1) $ 48.7 Life Insurance 51.8 68.8 (17.0) 25.0 43.8 Total Segment Adjusted Net Operating Loss (5.3) (78.6) 73.3 (171.1) 92.5 Corporate and Other Adjusted Net Operating Loss (42.1) (37.8) (4.3) (38.4) 0.6 Less: Net Loss Attributable to Noncontrolling Interest (0.2) — (0.2) — — Adjusted Consolidated Net Operating Loss $ (47.2) $ (116.4) $ 69.2 $ (209.5) $ 93.1 31 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) SUMMARY OF RESULTS (Continued) Net Loss attributable to Kemper Corporation 2023 Compared with 2022 Net Loss attributable to Kemper Corporation decreased by $14.5 million in 2023, compared to 2022, due primarily to lower Adjusted Consolidated Net Operating Losses and favorable changes in the Change in Fair Value of Equity and Convertible Securities.
DOLLARS IN MILLIONS 2024 2023 Change from 2023 to 2024 2022 Change from 2022 to 2023 Net Income (Loss) attributable to Kemper Corporation $ 317.8 $ (272.1) $ 589.9 $ (286.6) $ 14.5 Less: Change in Fair Value of Equity and Convertible Securities $ (2.1) $ 3.7 $ (5.8) $ (63.1) $ 66.8 Net Realized Investment Gains (Losses) 10.4 (14.7) 25.1 3.4 (18.1) Impairment Losses (4.6) (0.9) (3.7) (20.4) 19.5 Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs (31.8) (95.0) 63.2 (61.3) (33.7) Debt Extinguishment, Pension Settlement and Other Charges (7.4) (55.5) 48.1 (2.9) (52.6) Goodwill Impairment Charge — (45.5) 45.5 — (45.5) Non-Core Operations (28.2) (17.0) (11.2) (25.9) 8.9 Adjusted Consolidated Net Operating Income (Loss) $ 381.5 $ (47.2) $ 428.7 $ (116.4) $ 69.2 Components of Adjusted Consolidated Net Operating Income (Loss): Segment Adjusted Net Operating Income (Loss): Specialty Property & Casualty Insurance $ 376.3 $ (57.1) $ 433.4 $ (147.4) $ 90.3 Life Insurance 50.2 51.8 (1.6) 68.8 (17.0) Total Segment Adjusted Net Operating Income (Loss) 426.5 (5.3) 431.8 (78.6) 73.3 Corporate and Other Adjusted Net Operating Loss (50.3) (42.1) (8.2) (37.8) (4.3) Less: Net Loss attributable to Noncontrolling Interest (5.3) (0.2) (5.1) — (0.2) Adjusted Consolidated Net Operating Income (Loss) $ 381.5 $ (47.2) $ 428.7 $ (116.4) $ 69.2 Net Income (Loss) attributable to Kemper Corporation 2024 Compared with 2023 Net Income (Loss) attributable to Kemper Corporation increased by $589.9 million in 2024, compared to 2023, due primarily to higher Adjusted Consolidated Net Operating Income and lower Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs from the completion of certain strategic initiatives and lower costs in connection with the 2023 cost structure optimization initiatives.
DOLLARS IN MILLIONS Fair Value Percentage of Total Investments Fixed Maturities: States including their Political Subdivisions: California $ 137.4 1.5 % Texas 116.6 1.3 Michigan 83.7 0.9 New York 76.5 0.9 Georgia 73.7 0.8 Louisiana 62.4 0.7 Pennsylvania 57.9 0.7 Florida 57.6 0.6 Colorado 49.1 0.6 Missouri 42.1 0.5 Total $ 757.0 8.5 % 52 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) INVESTMENTS IN LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS The Company owns investments in various limited liability investment companies and limited partnerships that primarily invest in mezzanine debt, distressed debt, real estate and senior debt.
DOLLARS IN MILLIONS Fair Value Percentage of Total Investments Fixed Maturities: States including their Political Subdivisions: California $ 133.2 1.5 % Texas 101.2 1.1 Michigan 81.7 0.9 Georgia 68.8 0.8 New York 59.8 0.7 Pennsylvania 55.7 0.6 Florida 53.0 0.6 Louisiana 37.4 0.4 Virginia 35.6 0.4 Colorado 35.1 0.4 Total $ 661.5 7.4 % 48 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) INVESTMENTS IN LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS The Company owns investments in various limited liability investment companies and limited partnerships that primarily invest in mezzanine debt, senior debt, real estate and leveraged buyouts.
DOLLARS IN MILLIONS 2023 2022 2021 Net Premiums Written $ 2,677.5 $ 3,305.1 $ 3,587.2 Earned Premiums $ 2,977.8 $ 3,496.7 $ 3,533.7 Incurred Losses and LAE related to: Current Year: Non-catastrophe Losses and LAE $ 2,464.0 $ 3,153.9 $ 3,173.9 Catastrophe Losses and LAE 29.6 20.7 14.4 Prior Years: Non-catastrophe Losses and LAE 111.0 (18.1) 85.0 Catastrophe Losses and LAE (2.3) 0.5 0.3 Total Incurred Losses and LAE $ 2,602.3 $ 3,157.0 $ 3,273.6 Ratios Based On Earned Premiums Current Year Non-catastrophe Losses and LAE Ratio 82.8 % 90.2 % 89.8 % Current Year Catastrophe Losses and LAE Ratio 1.0 0.6 0.4 Prior Years Non-catastrophe Losses and LAE Ratio 3.7 (0.5) 2.4 Prior Years Catastrophe Losses and LAE Ratio (0.1) — — Total Incurred Loss and LAE Ratio 87.4 % 90.3 % 92.6 % 2023 Compared with 2022 Earned Premiums on personal automobile insurance decreased by $518.9 million in 2023, compared to 2022, due to a decrease in new business driven by targeted underwriting actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.
DOLLARS IN MILLIONS 2024 2023 2022 Net Premiums Written $ 2,887.7 $ 2,677.5 $ 3,305.1 Earned Premiums $ 2,851.4 $ 2,977.8 $ 3,496.7 Incurred Losses and LAE related to: Current Year: Non-catastrophe Losses and LAE $ 1,984.7 $ 2,464.0 $ 3,153.9 Catastrophe Losses and LAE 14.5 29.6 20.7 Prior Years: Non-catastrophe Losses and LAE (0.9) 111.0 (18.1) Catastrophe Losses and LAE 0.7 (2.3) 0.5 Total Incurred Losses and LAE $ 1,999.0 $ 2,602.3 $ 3,157.0 Ratios Based On Earned Premiums Current Year Non-catastrophe Losses and LAE Ratio 69.6 % 82.8 % 90.2 % Current Year Catastrophe Losses and LAE Ratio 0.5 1.0 0.6 Prior Years Non-catastrophe Losses and LAE Ratio — 3.7 (0.5) Prior Years Catastrophe Losses and LAE Ratio — (0.1) — Total Incurred Loss and LAE Ratio 70.1 % 87.4 % 90.3 % Insurance Expense Ratio 21.8 % 21.0 % 20.1 % Combined Ratio 91.9 % 108.4 % 110.4 % Underlying Combined Ratio Current Year Non-catastrophe Losses and LAE Ratio 69.6 % 82.8 % 90.2 % Insurance Expense Ratio 21.8 % 21.0 % 20.1 % Underlying Combined Ratio 91.4 % 103.8 % 110.3 % Non-GAAP Measure Reconciliation Combined Ratio as Reported 91.9 % 108.4 % 110.4 % Less: Current Year Catastrophe Losses and LAE Ratio 0.5 % 1.0 % 0.6 % Prior Years Non-catastrophe Losses and LAE Ratio — % 3.7 % (0.5) % Prior Years Catastrophe Losses and LAE Ratio — % (0.1) % — % Underlying Combined Ratio 91.4 % 103.8 % 110.3 % 2024 Compared with 2023 Earned Premiums in personal automobile insurance decreased by $126.4 million in 2024, compared to 2023, due to lower average business volumes driven by targeted pricing and underwriting actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.
Furthermore, the amended and extended credit agreement provides for an accordion feature whereby the Company can increase the revolving credit borrowing capacity by an additional $200.0 million for a total of maximum capacity of $800.0 million. Financial covenants within the agreement limit the Company from accessing the maximum capacity. The amount available as of December 31, 2023 was $393.0 million.
Furthermore, the amended and extended credit agreement provides for an accordion feature whereby the Company can increase the revolving credit borrowing capacity by an additional $200.0 million for a total of maximum capacity of $800.0 million.
DOLLARS IN MILLIONS 2023 2022 2021 Fixed Maturities: Gains on Sales $ 5.9 $ 31.6 $ 63.4 Losses on Sales (10.9) (31.9) (2.1) (Losses) Gains on Hedging Activity (11.9) 1.7 — Equity Securities: Gains on Sales 0.6 9.7 4.1 Losses on Sales (2.5) (6.8) (0.7) Equity Method Limited Liability Investments: Gains on Sales — — 0.4 Real Estate: Gains on Sales — — 0.1 Losses on Sales — — (0.4) Other Investments: Gains on Sales 0.2 — — Net Realized Investment (Losses) Gains $ (18.6) $ 4.3 $ 64.8 Gross Gains on Sales $ 6.7 $ 41.3 $ 68.0 Gross Losses on Sales (13.4) (38.7) (3.2) (Losses) Gains on Hedging Activity (11.9) 1.7 — Net Realized Investment (Losses) Gains $ (18.6) $ 4.3 $ 64.8 Fixed Maturities Net Realized Gains and Losses on Sale of Fixed Maturities for the year ended December 31, 2023 primarily relate to normal portfolio management.
(Dollars in Millions) 2024 2023 2022 Fixed Maturities: Gains on Sales $ 20.2 $ 5.9 $ 31.6 Losses on Sales (3.2) (10.9) (31.9) (Losses) Gains on Hedging Activity (7.9) (11.9) 1.7 Equity Securities: Gains on Sales 4.2 0.6 9.7 Losses on Sales (0.1) (2.5) (6.8) Other Investments: Gains on Sales 4.2 0.2 — Losses on Sales (4.2) — — Net Realized Investment Gains (Losses) $ 13.2 $ (18.6) $ 4.3 Gross Gains on Sales $ 28.6 $ 6.7 $ 41.3 Gross Losses on Sales (7.5) (13.4) (38.7) (Losses) Gains on Hedging Activity (7.9) (11.9) 1.7 Net Realized Investment Gains (Losses) $ 13.2 $ (18.6) $ 4.3 44 Kemper Corporation and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued) INVESTMENT RESULTS (Continued) Fixed Maturities Net realized gains and losses on sales of fixed maturities for the year ended December 31, 2024 primarily relate to normal portfolio management.
Adjusted Consolidated Net Operating Loss decreased by $69.2 million in 2023, compared to 2022, due primarily to an improvement in the Specialty Property & Casualty Segment mostly due to personal automobile insurance driven by higher average earned premiums per exposure resulting from rate increases and lower underlying claim frequency that was partially offset by unfavorable prior year loss and LAE development.
Adjusted Consolidated Net Operating Income (Loss) increased by $428.7 million in 2024, compared to 2023, due primarily to an improvement in the Specialty Property & Casualty Insurance segment profitability driven by higher average earned premiums per exposure resulting from rate increases, lower underlying claim frequency, and lower adverse prior year development.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest change(Continued) The estimated adverse effects on the fair value of the Company’s financial instruments at December 31, 2023 using these assumptions were: DOLLARS IN MILLIONS Fair Value Pro Forma Increase (Decrease) Interest Rate Risk Equity Price Risk Total Market Risk ASSETS Investments in Fixed Maturities $ 6,883.6 $ (513.5) $ — $ (513.5) Investments in Equity Securities 225.8 (0.6) (21.5) (22.1) LIABILITIES Debt $ 1,213.4 $ 50.6 $ — $ 50.6 The estimated adverse effects on the fair value of the Company’s financial instruments at December 31, 2022 using these assumptions were: DOLLARS IN MILLIONS Fair Value Pro Forma Increase (Decrease) Interest Rate Risk Equity Price Risk Total Market Risk ASSETS Investments in Fixed Maturities $ 6,894.8 $ (503.3) $ — $ (503.3) Investments in Equity Securities 243.2 (1.2) (24.7) (25.9) LIABILITIES Debt $ 1,195.1 $ 58.7 $ — $ 58.7 The market risk sensitivity analysis assumes that the composition of the Company’s interest rate sensitive assets and liabilities, including, but not limited to, credit quality, and the equity price sensitive assets existing at the beginning of the period remains constant over the period being measured.
Biggest change(Continued) The estimated adverse effects on the fair value of the Company’s financial instruments at December 31, 2024 using these assumptions were: DOLLARS IN MILLIONS Fair Value Pro Forma Increase (Decrease) Interest Rate Risk Equity Price Risk Total Market Risk ASSETS Investments in Fixed Maturities $ 6,411.3 $ (456.2) $ — $ (456.2) Investments in Equity Securities 218.5 (0.5) (19.3) (19.8) LIABILITIES Debt $ 1,278.4 $ 43.3 $ — $ 43.3 The estimated adverse effects on the fair value of the Company’s financial instruments at December 31, 2023 using these assumptions were: DOLLARS IN MILLIONS Fair Value Pro Forma Increase (Decrease) Interest Rate Risk Equity Price Risk Total Market Risk ASSETS Investments in Fixed Maturities $ 6,883.6 $ (513.5) $ — (513.5) Investments in Equity Securities 225.8 (0.6) (21.5) (22.1) LIABILITIES Debt $ 1,213.4 $ 50.6 $ — $ 50.6 The market risk sensitivity analysis assumes that the composition of the Company’s interest rate sensitive assets and liabilities, including, but not limited to, credit quality, and the equity price sensitive assets existing at the beginning of the period remains constant over the period being measured.
The Company’s primary market risk exposures are to changes in interest rates and equity prices. The Company manages its interest rate exposures with respect to Investments in Fixed Maturities by investing primarily in investment-grade securities of moderate effective duration. 71
The Company’s primary market risk exposures are to changes in interest rates and equity prices. The Company manages its interest rate exposures with respect to Investments in Fixed Maturities by investing primarily in investment-grade securities of moderate effective duration. 63

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