Core Insights - Kemper reported revenue of $1.23 billion for the quarter ended June 2025, reflecting an 8.9% increase year-over-year, and EPS of $1.30, down from $1.42 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $1.22 billion by 0.34%, while the EPS fell short of the consensus estimate of $1.52 by 14.47% [1] Financial Performance Metrics - Total Incurred Loss and LAE Ratio for Specialty Property & Casualty Insurance - Commercial Automobile was 72.4%, better than the average estimate of 74% [4] - Total Incurred Loss and LAE Ratio for Specialty Property & Casualty Insurance - Personal Automobile was 80.4%, compared to the average estimate of 72.4% [4] - Net investment income was reported at $95.9 million, below the average estimate of $104.91 million, representing a year-over-year increase of 3.1% [4] - Earned Premiums for Specialty Property & Casualty Insurance totaled $1.01 billion, exceeding the average estimate of $991.78 million, with a year-over-year change of 17.2% [4] - Earned premiums for Life and Health Insurance were $100.5 million, slightly below the average estimate of $101.6 million, showing a year-over-year decrease of 0.3% [4] - Earned Premiums for Specialty Property & Casualty Insurance - Commercial Automobile reached $221.5 million, surpassing the average estimate of $215.67 million, marking a 29.5% increase year-over-year [4] - Earned Premiums for Specialty Property & Casualty Insurance - Personal Automobile were $789.3 million, exceeding the average estimate of $773.66 million, with a year-over-year change of 14.1% [4] - Other income was reported at $3.1 million, below the average estimate of $3.8 million, with a year-over-year change of 3000% [4] - Net investment income for Life and Health Insurance was $44.7 million, below the average estimate of $49.9 million, reflecting a year-over-year increase of 46.6% [4] Stock Performance - Kemper's shares have returned -3.4% over the past month, while the Zacks S&P 500 composite increased by 1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Company Performance - Kemper reported quarterly earnings of $1.3 per share, missing the Zacks Consensus Estimate of $1.52 per share, and down from $1.42 per share a year ago, representing an earnings surprise of -14.47% [1] - The company posted revenues of $1.23 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.34%, and up from $1.13 billion year-over-year [2] - Over the last four quarters, Kemper has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Outlook - Kemper shares have lost about 8.3% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $1.57 on $1.26 billion in revenues, and for the current fiscal year, it is $6.34 on $4.98 billion in revenues [7] Industry Context - The Zacks Industry Rank for Insurance - Multi line is currently in the top 38% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5][6]

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) This report is a Quarterly Report on Form 10-Q for Kemper Corporation, detailing its filing period and key registrant information - This is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by Kemper Corporation (KMPR) with the SEC[1](index=1&type=chunk)[2](index=2&type=chunk) Registrant Information | Field | Value | | :--- | :--- | | Registrant Name | Kemper Corporation | | State of Incorporation | DE | | Commission File Number | 001-18298 | | Trading Symbol (Common Stock) | KMPR | | Exchange (Common Stock) | NYSE | | Shares Outstanding (as of Aug 1, 2025) | 62,742,781 | | Filer Status | Large accelerated filer | [Index](index=2&type=section&id=Index) The index provides a structured overview of the report's content, including financial statements, management's discussion, and risk disclosures - The index provides a structured overview of the report's content, including financial statements, management's discussion and analysis, market risk disclosures, controls and procedures, legal proceedings, risk factors, equity sales, market information, and exhibits[7](index=7&type=chunk)[8](index=8&type=chunk) [Caution Regarding Forward-Looking Statements](index=3&type=section&id=Caution%20Regarding%20Forward-Looking%20Statements) This section outlines various forward-looking statements and the significant risk factors that could impact the company's future performance [Factors related to the legal and regulatory environment](index=3&type=section&id=Factors%20related%20to%20the%20legal%20and%20regulatory%20environment) This section highlights risks associated with the evolving legal and regulatory landscape, including increased operating costs from new requirements, adverse litigation outcomes, governmental actions, and uncertainties in regulatory approvals for insurance rates and products - Evolving policies, practices, and interpretations by regulators and courts may increase operating costs and potential liabilities[16](index=16&type=chunk) - Adverse outcomes in litigation, investigations, or other legal/regulatory proceedings pose a risk[16](index=16&type=chunk) - Uncertainties related to regulatory approval of insurance rates, policy forms, and other business matters are significant[16](index=16&type=chunk) [Factors relating to insurance claims and related reserves](index=3&type=section&id=Factors%20relating%20to%20insurance%20claims%20and%20related%20reserves) This section details risks related to insurance claims and reserves, such as the frequency and severity of catastrophes, the impact of interest rates on life policyholder benefit reserves, changes in assumptions for loss and loss adjustment expenses (LAE) reserves, and the effects of inflation and legal system abuse on claim costs - The incidence, frequency, and severity of catastrophes (natural disasters, pandemics, terrorist attacks) can significantly impact claims[16](index=16&type=chunk) - Changes in interest rates may cause material fluctuations in life policyholder benefit reserves[16](index=16&type=chunk) - Inflation's impact on material costs, medical costs, and claim severity, along with increased litigation and higher jury awards (social inflation), can raise insurance claim costs[16](index=16&type=chunk)[19](index=19&type=chunk) [Factors related to the Company's ability to compete](index=4&type=section&id=Factors%20related%20to%20the%20Company's%20ability%20to%20compete) This section outlines competitive risks, including the ability to achieve economies of scale, integrate acquired businesses, manage technology, and respond to heightened competition from new entrants, alternative distribution channels, and evolving product offerings - Success in realizing economies of scale, integrating acquired businesses, and implementing significant business initiatives is crucial[19](index=19&type=chunk) - Difficulties with technology, data, and network security (including cyber attacks) could negatively impact business operations[19](index=19&type=chunk) - Heightened competition, new technologies (telematics), and product developments by competitors pose significant challenges[19](index=19&type=chunk) [Factors related to the business environment](index=4&type=section&id=Factors%20related%20to%20the%20business%20environment) This section addresses broader business environment risks, such as changes in general economic conditions (financial markets, interest rates, inflation, unemployment), performance of investments, industry trends, consumer behavior, and regulatory/accounting/tax changes affecting earnings or product demand - Changes in general economic conditions, including financial market performance, interest rates, inflation, and unemployment rates, can impact the business[19](index=19&type=chunk) - Absolute and relative performance of the Company's investments is a key risk factor[19](index=19&type=chunk) - Regulatory, accounting, or tax changes may affect earnings, product costs/demand, or after-tax returns from investments[19](index=19&type=chunk) [Other risks and uncertainties](index=5&type=section&id=Other%20risks%20and%20uncertainties) This section includes additional risks such as required participation in state windpools, changes in distribution channels, increased costs for executive talent, and cybersecurity risks, emphasizing that forward-looking statements are not guarantees of future performance - The Company is subject to risks from required participation in state windpools and joint underwriting associations, residual market assessments, and assessments for insurance industry insolvencies[21](index=21&type=chunk) - Increased costs and risks related to cybersecurity (data breaches, cyber attacks) could materially affect operations[21](index=21&type=chunk) - The Company assumes no obligation to correct or update any forward-looking statements publicly[20](index=20&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents Kemper Corporation's unaudited condensed consolidated financial statements and comprehensive explanatory notes [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Kemper Corporation and its subsidiaries, including statements of income, comprehensive income, balance sheets, cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The Condensed Consolidated Statements of Income present the revenues, expenses, and net income for Kemper Corporation for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Income (3 Months Ended June 30) | Metric | Jun 30, 2025 (Millions) | Jun 30, 2024 (Millions) | | :--- | :--- | :--- | | Total Revenues | $1,225.6 | $1,129.9 | | Total Expenses | $1,138.1 | $1,038.0 | | Income before Income Taxes | $87.5 | $91.9 | | Net Income attributable to Kemper Corporation | $72.6 | $75.4 | | Basic EPS | $1.13 | $1.17 | | Diluted EPS | $1.12 | $1.16 | Condensed Consolidated Statements of Income (6 Months Ended June 30) | Metric | Jun 30, 2025 (Millions) | Jun 30, 2024 (Millions) | | :--- | :--- | :--- | | Total Revenues | $2,418.6 | $2,272.9 | | Total Expenses | $2,211.3 | $2,094.4 | | Income before Income Taxes | $207.3 | $178.5 | | Net Income attributable to Kemper Corporation | $172.3 | $146.7 | | Basic EPS | $2.69 | $2.28 | | Diluted EPS | $2.66 | $2.26 | - For the three months ended June 30, 2025, Net Income attributable to Kemper Corporation decreased by **$2.8 million** (from $75.4 million to $72.6 million) compared to the same period in 2024[23](index=23&type=chunk) - For the six months ended June 30, 2025, Net Income attributable to Kemper Corporation increased by **$25.6 million** (from $146.7 million to $172.3 million) compared to the same period in 2024[23](index=23&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) The Condensed Consolidated Statements of Comprehensive Income detail the net income and other comprehensive income (OCI) components, such as changes in unrealized gains/losses on investment securities and postretirement benefit costs, for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (3 Months Ended June 30) | Metric | Jun 30, 2025 (Millions) | Jun 30, 2024 (Millions) | | :--- | :--- | :--- | | Net Income | $69.8 | $74.4 | | Other Comprehensive Income, Net of Taxes | $3.8 | $17.7 | | Total Comprehensive Income | $73.6 | $92.1 | | Comprehensive Income attributable to Kemper Corporation | $76.2 | $93.1 | Condensed Consolidated Statements of Comprehensive Income (6 Months Ended June 30) | Metric | Jun 30, 2025 (Millions) | Jun 30, 2024 (Millions) | | :--- | :--- | :--- | | Net Income | $166.8 | $144.6 | | Other Comprehensive Income, Net of Taxes | $47.0 | $43.5 | | Total Comprehensive Income | $213.8 | $188.1 | | Comprehensive Income attributable to Kemper Corporation | $219.1 | $190.2 | - For the three months ended June 30, 2025, Other Comprehensive Income, Net of Taxes, decreased significantly to **$3.8 million** from $17.7 million in the prior year[26](index=26&type=chunk) - For the six months ended June 30, 2025, Other Comprehensive Income, Net of Taxes, increased to **$47.0 million** from $43.5 million in the prior year[26](index=26&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets provide a snapshot of Kemper Corporation's financial position, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Selected Items) | Metric | Jun 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :--- | :--- | :--- | | Total Assets | $12,601.1 | $12,630.4 | | Total Investments | $8,645.5 | $8,888.5 | | Total Insurance Reserves | $5,900.0 | $5,811.6 | | Total Liabilities | $9,655.6 | $9,846.1 | | Total Shareholders' Equity | $2,945.5 | $2,784.3 | - Total Assets slightly decreased from **$12,630.4 million** at December 31, 2024, to **$12,601.1 million** at June 30, 2025[29](index=29&type=chunk) - Total Shareholders' Equity increased by **$161.2 million**, from $2,784.3 million at December 31, 2024, to **$2,945.5 million** at June 30, 2025[32](index=32&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows detail the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (6 Months Ended June 30) | Metric | Jun 30, 2025 (Millions) | Jun 30, 2024 (Millions) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $269.6 | $65.9 | | Net Cash Provided by Investing Activities | $361.4 | $32.6 | | Net Cash Used in Financing Activities | $(519.4) | $(55.2) | | Net increase in cash | $111.6 | $43.3 | | Cash, End of Period | $177.0 | $107.4 | - Net Cash Provided by Operating Activities significantly increased to **$269.6 million** for the six months ended June 30, 2025, from $65.9 million in the prior year[35](index=35&type=chunk) - Net Cash Provided by Investing Activities rose substantially to **$361.4 million** for the six months ended June 30, 2025, from $32.6 million in the prior year[35](index=35&type=chunk) - Net Cash Used in Financing Activities increased to **$519.4 million** for the six months ended June 30, 2025, primarily due to debt repayment and common stock repurchases[37](index=37&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) The Condensed Consolidated Statements of Shareholders' Equity provide a detailed breakdown of changes in equity components, including common stock, paid-in capital, retained earnings, and accumulated other comprehensive loss, for the three and six months ended June 30, 2025 and 2024 Shareholders' Equity Changes (3 Months Ended June 30, 2025) | Item | Amount (Millions) | | :--- | :--- | | Balance, March 31, 2025 | $2,911.5 | | Net Income | $69.8 | | Other Comprehensive Income, Net of Taxes | $3.8 | | Cash Dividends Paid | $(20.8) | | Repurchases of Common Stock | $(28.5) | | Balance, June 30, 2025 | $2,945.5 | Shareholders' Equity Changes (6 Months Ended June 30, 2025) | Item | Amount (Millions) | | :--- | :--- | | Balance, December 31, 2024 | $2,784.3 | | Net Income | $166.8 | | Other Comprehensive Income, Net of Taxes | $47.0 | | Cash Dividends Paid | $(41.0) | | Repurchases of Common Stock | $(32.5) | | Balance, June 30, 2025 | $2,945.5 | - Total Shareholders' Equity increased from **$2,784.3 million** at December 31, 2024, to **$2,945.5 million** at June 30, 2025, driven by net income and other comprehensive income, partially offset by dividends and share repurchases[43](index=43&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures and explanations for the condensed consolidated financial statements, covering accounting policies, segment information, insurance reserves, investments, fair value measurements, debt, and other critical financial details [Note 1 - Basis of Presentation and Accounting Policies](index=15&type=section&id=Note%201%20-%20Basis%20of%20Presentation%20and%20Accounting%20Policies) This note outlines the basis for preparing the unaudited condensed consolidated financial statements in accordance with GAAP and SEC rules, including the consolidation of subsidiaries and a variable interest entity (VIE). It also discusses the adoption of new accounting guidance and guidance not yet adopted, noting no material impact from recent pronouncements - The financial statements are prepared in accordance with GAAP and SEC rules, consolidating Kemper Corporation, its subsidiaries, and a VIE where it is the primary beneficiary[44](index=44&type=chunk)[45](index=45&type=chunk) - No recently issued accounting pronouncements adopted prior to July 1, 2025, had a material impact on the interim financial statements[47](index=47&type=chunk) - The Company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[49](index=49&type=chunk)[50](index=50&type=chunk) [Note 2 - Net Income Per Unrestricted Share](index=16&type=section&id=Note%202%20-%20Net%20Income%20Per%20Unrestricted%20Share) This note provides a reconciliation of the numerator and denominator used to calculate basic and diluted net income per unrestricted share for the three and six months ended June 30, 2025 and 2024 Net Income Per Unrestricted Share (3 Months Ended June 30) | Metric | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Net Income attributable to Kemper Corporation (Millions) | $72.6 | $75.4 | | Weighted-average Unrestricted Shares Outstanding (Thousands) | 63,938.9 | 64,395.0 | | Basic Net Income Per Unrestricted Share | $1.13 | $1.17 | | Diluted Net Income Per Unrestricted Share | $1.12 | $1.16 | Net Income Per Unrestricted Share (6 Months Ended June 30) | Metric | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Net Income attributable to Kemper Corporation (Millions) | $172.3 | $146.7 | | Weighted-average Unrestricted Shares Outstanding (Thousands) | 63,912.9 | 64,324.7 | | Basic Net Income Per Unrestricted Share | $2.69 | $2.28 | | Diluted Net Income Per Unrestricted Share | $2.66 | $2.26 | - Approximately **1.2 million** and **1.1 million** shares were excluded from diluted EPS calculations for the three and six months ended June 30, 2025, respectively, due to their anti-dilutive effect[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 3 - Business Segments](index=16&type=section&id=Note%203%20-%20Business%20Segments) This note details Kemper's two operating segments: Specialty Property & Casualty Insurance and Life Insurance, along with Corporate and Other operations and Non-Core Operations. It provides segment-specific financial data, including assets, earned premiums, revenues, expenses, and adjusted net operating income, used by management to evaluate performance - The Company operates through two segments: Specialty Property & Casualty Insurance (specialty personal auto, commercial auto) and Life Insurance (individual life, accident, supplemental health, property insurance)[54](index=54&type=chunk)[55](index=55&type=chunk) Total Segment Assets (Millions) | Segment | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $6,661.9 | $6,352.9 | | Life Insurance | $4,814.8 | $4,731.7 | | Total Segment Assets | $11,476.7 | $11,084.6 | Total Segment Earned Premiums (6 Months Ended June 30, Millions) | Segment | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $1,973.0 | $1,702.6 | | Life Insurance | $200.2 | $198.1 | | Non-Core Operations | $45.5 | $164.9 | | Total Earned Premiums | $2,218.7 | $2,065.6 | Total Segment Adjusted Net Operating Income (6 Months Ended June 30, Millions) | Segment | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $176.9 | $171.5 | | Life Insurance | $29.8 | $11.7 | | Total Segment Adjusted Net Operating Income | $206.7 | $183.2 | [Note 4 - Property and Casualty Insurance Reserves](index=21&type=section&id=Note%204%20-%20Property%20and%20Casualty%20Insurance%20Reserves) This note details the activity and estimation process for Property and Casualty Insurance Reserves, including incurred and paid losses and loss adjustment expenses (LAE). It highlights adverse prior year development for the six months ended June 30, 2025, primarily due to evolving loss patterns and higher defense costs in Commercial Automobile, partially offset by favorable development in Specialty Personal Automobile Property and Casualty Insurance Reserve Activity (6 Months Ended June 30, Millions) | Metric | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Reserves, Net of Reinsurance at Beginning of Year | $2,587.6 | $2,652.7 | | Total Incurred Losses and LAE | $1,454.8 | $1,376.2 | | Total Paid Losses and LAE | $1,401.9 | $1,488.0 | | Reserves, Net of Reinsurance at End of Period | $2,640.5 | $2,540.9 | - For the six months ended June 30, 2025, net adverse prior year development was **$14.4 million**, driven by evolving loss patterns and higher defense costs in Commercial Automobile, partially offset by favorable development in Specialty Personal Automobile[63](index=63&type=chunk) - The Company believes any future development in loss and LAE reserves will not materially affect Shareholders' Equity but could impact consolidated financial results for a given period[65](index=65&type=chunk) [Note 5 - Liability for Future Policyholder Benefits](index=22&type=section&id=Note%205%20-%20Liability%20for%20Future%20Policyholder%20Benefits) This note describes the estimation of the liability for future policyholder benefits for the Life Insurance segment, including significant assumption inputs like mortality, lapses, and discount rates. It provides a summary of balances and changes in present value of expected net premiums and future policyholder benefits - The liability for future policyholder benefits is estimated based on mortality, lapses, and discount rates, adjusted for actual vs expected experience[66](index=66&type=chunk) Net Liability for Future Policyholder Benefits (Millions) | Metric | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Net Liability for Future Policyholder Benefits, post-flooring | $2,660.3 | $2,688.1 | | Deferred Profit Liability | $444.5 | $374.1 | | Total Life and Health Insurance Reserves | $3,235.3 | $3,202.0 | - The weighted-average liability duration for future policyholder benefits was **13.7 years** at June 30, 2025, with a current discount rate of **5.74%**[68](index=68&type=chunk) [Note 6 - Investments](index=24&type=section&id=Note%206%20-%20Investments) This note provides detailed information on the Company's investment portfolio, including fixed maturities, equity securities, equity method limited liability investments, loans to policyholders, and other investments. It presents amortized cost, fair values, unrealized gains/losses, and credit loss allowances, along with a breakdown of net investment income and realized investment gains/losses Investments in Fixed Maturities (Millions) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Amortized Cost | $7,484.3 | $7,295.0 | | Fair Value | $6,669.1 | $6,409.6 | | Gross Unrealized Gains | $26.1 | $14.8 | | Gross Unrealized Losses | $(828.7) | $(889.5) | | Allowance for Credit Losses | $(12.6) | $(10.7) | Net Investment Income (6 Months Ended June 30, Millions) | Category | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Total Investment Income | $211.1 | $207.0 | | Total Investment Expenses | $14.0 | $13.6 | | Net Investment Income | $197.1 | $193.4 | - Net Realized Investment (Losses) Gains for the six months ended June 30, 2025, was **$0.8 million**, a decrease from $8.1 million in the prior year, primarily due to decreased gains on sales of fixed maturity investments[91](index=91&type=chunk) [Note 7 - Derivatives](index=30&type=section&id=Note%207%20-%20Derivatives) This note discusses the Company's use of derivative instruments, primarily Ultra-Long Treasury Futures, to manage interest rate risk. It details their fair value, accounting treatment (cash flow hedges), and the impact of Treasury Locks on interest expense from discontinued hedging relationships - The Company uses exchange-traded ultra-long Treasury futures to manage exposure to upcoming changes in benchmark interest rates, qualifying them as cash flow hedges[95](index=95&type=chunk) Ultra-Long Treasury Futures Derivatives (Millions) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Gross Notional Amount | $75.0 | $75.0 | | Estimated Fair Value (Assets) | $3.0 | $0.0 | | Estimated Fair Value (Liabilities) | $0.0 | $(3.7) | - The Company amortized the remaining **$0.1 million** pre-tax derivative loss on the 2016 Treasury Lock into earnings during Q1 2025 due to the redemption of associated Senior Notes[100](index=100&type=chunk) [Note 8 - Fair Value Measurements](index=32&type=section&id=Note%208%20-%20Fair%20Value%20Measurements) This note provides detailed disclosures on fair value measurements for assets and liabilities, categorizing them into Level 1, Level 2, and Level 3 based on the observability of inputs. It includes quantitative information on unobservable inputs for Level 3 fixed maturity investments and details investments valued using the net asset value (NAV) practical expedient Fair Value Measurements of Assets (Jun 30, 2025, Millions) | Category | Level 1 | Level 2 | Level 3 | Measured at NAV | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | :--- | | Fixed Maturities | $102.9 | $6,224.8 | $341.4 | $0.0 | $6,669.1 | | Equity Securities at Fair Value | $60.8 | $20.1 | $4.8 | $198.4 | $284.1 | | Other Investments (Derivatives) | $0.0 | $3.0 | $0.0 | $0.0 | $3.0 | | Total Assets | $163.7 | $6,247.9 | $346.2 | $198.4 | $6,956.2 | - The majority of the Company's fixed maturity investments are classified as Level 2, valued using nationally recognized pricing providers that incorporate market information and models[107](index=107&type=chunk) Total Investments Reported at Fair Value Using NAV (Millions) | Category | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Equity Method Limited Liability Investments | $176.2 | $186.3 | | Other Equity Interests at Fair Value | $198.4 | $183.6 | | Other Investments (Modified Cost) | $1.8 | $1.8 | | Total | $376.4 | $371.7 | [Note 9 - Variable Interest Entities](index=40&type=section&id=Note%209%20-%20Variable%20Interest%20Entities) This note explains the Company's involvement with Variable Interest Entities (VIEs), specifically Kemper Reciprocal (consolidated as primary beneficiary) and an Alternative Energy Partnership (accounted for using the equity method). It details the rationale for consolidation or non-consolidation and the associated financial impacts - Kemper consolidates Kemper Reciprocal because its management company (AIF) directs its operations and Kemper would absorb significant losses[129](index=129&type=chunk) - The Company contributed an additional **$7.0 million** of surplus to Kemper Reciprocal during the first six months of 2025, totaling **$29.0 million** as of June 30, 2025[130](index=130&type=chunk) - The Alternative Energy Partnership is accounted for using the equity method, with the Company's maximum loss exposure limited to its carrying value of **$17.4 million** at June 30, 2025[134](index=134&type=chunk)[135](index=135&type=chunk) [Note 10 - Deferred Policy Acquisition Costs](index=41&type=section&id=Note%2010%20-%20Deferred%20Policy%20Acquisition%20Costs) This note presents the balances and changes in Deferred Policy Acquisition Costs (DPAC) for the Specialty Property & Casualty Insurance, Life Insurance, and Non-Core Operations segments. It explains that these costs are deferred and amortized over the expected life of the contracts Deferred Policy Acquisition Costs (6 Months Ended June 30, Millions) | Segment | Dec 31, 2024 Balance | Capitalizations | Amortization Expense | Jun 30, 2025 Balance | | :--- | :--- | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $162.8 | $278.3 | $(266.0) | $175.1 | | Life Insurance | $463.1 | $32.6 | $(14.1) | $481.6 | | Non-Core Operations | $4.1 | $3.2 | $(4.2) | $3.1 | | Total | $630.0 | $314.1 | $(284.3) | $659.8 | - DPAC for property and casualty contracts are amortized over the period premiums are earned, while for life insurance, they are amortized on a constant level basis over the expected contract life[136](index=136&type=chunk) - No changes were made to future assumptions for deferred policy acquisition costs during the six months ended June 30, 2025 and 2024[137](index=137&type=chunk) [Note 11 - Receivables from Policyholders - Allowance for Expected Credit Losses](index=42&type=section&id=Note%2011%20-%20Receivables%20from%20Policyholders%20-%20Allowance%20for%20Expected%20Credit%20Losses) This note presents the balances of Receivables from Policyholders, net of the allowance for expected credit losses, and a roll forward of changes in the allowance for the three and six months ended June 30, 2025 and 2024 Allowance for Expected Credit Losses (6 Months Ended June 30, Millions) | Segment | Beginning of Year | Provision | Write-offs | End of Period | | :--- | :--- | :--- | :--- | :--- | | Specialty | $2.6 | $26.6 | $(27.4) | $1.8 | | Life | $0.0 | $0.1 | $(0.1) | $0.0 | | Non-Core Operations | $0.3 | $0.2 | $(0.3) | $0.2 | | Total Allowance | $2.9 | $26.9 | $(27.8) | $2.0 | Receivable Balance, End of Period (6 Months Ended June 30, Millions) | Segment | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Specialty | $1,031.8 | $952.5 | | Life | $11.1 | $11.2 | | Non-Core Operations | $7.4 | $29.5 | | Total | $1,050.3 | $993.2 | [Note 12 - Other Comprehensive Income and Accumulated Other Comprehensive Loss](index=44&type=section&id=Note%2012%20-%20Other%20Comprehensive%20Income%20and%20Accumulated%20Other%20Comprehensive%20Loss) This note details the changes in Accumulated Other Comprehensive Loss (AOCI) by component, including unrealized gains/losses on investments, postretirement benefit costs, cash flow hedges, and changes in discount rates for future life policyholder benefits, for the three and six months ended June 30, 2025 and 2024 Changes in Accumulated Other Comprehensive Loss (6 Months Ended June 30, Millions) | Component | Jan 1, 2025 Balance | OCI Before Reclassifications | Reclassified from AOCI | Jun 30, 2025 Balance | | :--- | :--- | :--- | :--- | :--- | | Net Unrealized Losses on Fixed Maturities | $(687.8) | $56.0 | $0.1 | $(631.7) | | Net Unrealized Losses on Investments with an Allowance for Credit Losses | $(3.2) | $4.8 | $(3.8) | $(2.2) | | Net Unrecognized Postretirement Benefit Income | $8.4 | $0.0 | $(0.8) | $7.6 | | Loss on Cash Flow Hedges | $(2.2) | $0.8 | $0.0 | $(1.4) | | Change in Discount Rate on Future Life Policyholder Benefits | $380.3 | $(10.3) | $0.0 | $370.0 | | Total | $(304.5) | $51.3 | $(4.5) | $(257.7) | - Accumulated Other Comprehensive Loss improved from **$(304.5) million** at January 1, 2025, to **$(257.7) million** at June 30, 2025, primarily due to a decrease in net unrealized losses on fixed maturities[147](index=147&type=chunk) [Note 13 - Shareholders' Equity](index=46&type=section&id=Note%2013%20-%20Shareholders'%20Equity) This note provides details on common stock repurchases and the Employee Stock Purchase Plan (ESPP). It highlights the Company's share repurchase authorization and the shares repurchased during the reporting periods, as well as shares issued under the ESPP - Kemper repurchased approximately **446,000 shares** of common stock for **$28.5 million** (average $64.04/share) during the three months ended June 30, 2025[149](index=149&type=chunk) - For the six months ended June 30, 2025, Kemper repurchased approximately **509,000 shares** for **$32.5 million** (average $63.90/share)[150](index=150&type=chunk) - As of June 30, 2025, the remaining share repurchase authorization was **$100.3 million**[148](index=148&type=chunk) - The Company issued **28,000 shares** under the ESPP for the six months ended June 30, 2025, at an average discounted price of **$55.73 per share**[152](index=152&type=chunk) [Note 14 - Amortization of Intangible Assets](index=46&type=section&id=Note%2014%20-%20Amortization%20of%20Intangible%20Assets) This note presents the amortization expense on definite life intangible assets incurred by the Company for its segments and corporate operations for the three and six months ended June 30, 2025 and 2024 Total Amortization Expense (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Three Months Ended | $11.9 | $11.3 | | Six Months Ended | $23.2 | $23.4 | - For the six months ended June 30, 2025, Specialty Property & Casualty Insurance segment had amortization expense of **$8.8 million**, and Life Insurance segment had **$3.3 million**[153](index=153&type=chunk) [Note 15 - Policyholder Obligations](index=46&type=section&id=Note%2015%20-%20Policyholder%20Obligations) This note details the Company's policyholder obligations, primarily consisting of FHLB Funding Agreements and Universal Life-type Policyholder Account Balances. It provides information on advances received, repayments made, and collateral pledged under FHLB agreements, as well as crediting rates and guaranteed minimum benefits for Universal Life policies Policyholder Obligations (Millions) | Obligation | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | FHLB Funding Agreements | $546.2 | $541.3 | | Universal Life-type Policyholder Account Balances | $95.1 | $96.4 | | Total | $641.3 | $637.7 | - During the six months ended June 30, 2025, United Insurance received **$30.0 million** in advances from FHLB of Chicago and made **$25.1 million** in repayments[155](index=155&type=chunk) - The fair value of collateral pledged for FHLB funding agreements was **$653.4 million** at June 30, 2025[158](index=158&type=chunk) [Note 16 - Debt](index=47&type=section&id=Note%2016%20-%20Debt) This note provides information on the Company's debt obligations, including the amended and extended credit agreement, long-term debt (Senior Notes and Junior Subordinated Debentures), and short-term debt. It details the redemption of the 2025 Senior Notes and the interest expense incurred - The credit agreement was amended and extended to March 15, 2027, increasing borrowing capacity to **$600.0 million** (with an accordion feature for an additional **$200.0 million**). No outstanding borrowings existed at June 30, 2025[160](index=160&type=chunk) Long-term Debt Outstanding (Millions) | Debt Type | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | 4.350% Senior Notes due Feb 15, 2025 (Current) | $0.0 | $449.9 | | 2.400% Senior Notes due Sep 30, 2030 (Non-Current) | $397.7 | $397.5 | | 3.800% Senior Notes due Feb 23, 2032 (Non-Current) | $396.7 | $396.5 | | 5.875% Fixed-Rate Reset Junior Subordinated Debentures due 2062 (Non-Current) | $148.2 | $147.7 | | Total Long-term Debt Outstanding | $942.6 | $1,391.6 | - Kemper completed the redemption of the entire **$450.0 million** aggregate principal of 4.350% senior notes due February 15, 2025, on February 11, 2025[162](index=162&type=chunk) - Interest Expense decreased by **$7.5 million** for the six months ended June 30, 2025, to **$20.4 million**, compared to $27.9 million in the prior year, primarily due to the redemption of the 2025 Senior Notes[168](index=168&type=chunk) [Note 17 - Leases](index=50&type=section&id=Note%2017%20-%20Leases) This note provides information on the Company's operating leases for office space, vehicles, and equipment. It presents the right-of-use assets and lease liabilities, lease costs, weighted-average lease terms, and discount rates, along with future minimum lease payments Operating Lease Balances (Millions) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Operating Lease Right-of-Use Assets | $43.5 | $33.9 | | Operating Lease Liabilities | $59.5 | $51.6 | Total Lease Cost (6 Months Ended June 30, Millions) | Metric | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Total Lease Cost | $10.4 | $10.2 | - The weighted-average remaining lease term for operating leases was **5.4 years**, with a weighted-average discount rate of **4.7%** at June 30, 2025[175](index=175&type=chunk) [Note 18 - Income Taxes](index=51&type=section&id=Note%2018%20-%20Income%20Taxes) This note discusses the Company's income tax status, including open tax years, the impact of the One Big Beautiful Bill Act (OBBBA), and the effective income tax rates for the reporting periods. It also details tax-exempt investment income, nontaxable increases in Company-Owned Life Insurance, and nondeductible executive compensation - The Company is evaluating the potential impacts of the recently signed One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements[180](index=180&type=chunk) - The effective income tax rate for the six months ended June 30, 2025, was **19.6%**, compared to 19.0% for the same period in 2024[181](index=181&type=chunk) - For the six months ended June 30, 2025, federal income taxes paid, net of refunds, were **$20.5 million**, and state income taxes paid, net of refunds, were **$1.7 million**[183](index=183&type=chunk) [Note 19 - Commitments and Contingencies](index=51&type=section&id=Note%2019%20-%20Commitments%20and%20Contingencies) This note states that the Company is involved in various legal proceedings in the ordinary course of business but does not believe any pending matters will have a material effect on its condensed consolidated financial statements - The Company is involved in legal proceedings, but does not believe any pending matters will have a material effect on its financial statements[184](index=184&type=chunk) [Note 20 - Subsequent Events](index=51&type=section&id=Note%2020%20-%20Subsequent%20Events) This note discloses a subsequent event where Kemper's Board of Directors approved a new share repurchase authorization of $500.0 million on August 4, 2025, in addition to the remaining $48.8 million from a previous authorization, totaling approximately $548.8 million - On August 4, 2025, Kemper's Board approved a new **$500.0 million** share repurchase authorization, bringing the total authorization to approximately **$548.8 million**[185](index=185&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Kemper Corporation's financial condition and results of operations, including a discussion of non-GAAP financial measures, a summary of overall results, detailed analysis of revenues, segment performance (Specialty Property & Casualty and Life Insurance), investment results, expenses, income taxes, liquidity, capital resources, and critical accounting estimates [Non-GAAP Financial Measures](index=52&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the non-GAAP financial measures used by the Company, including Adjusted Consolidated Net Operating Income, Underlying Losses and Loss Adjustment Expenses (LAE), and Underlying Combined Ratio. These measures are used to provide a clearer view of underlying operational performance by excluding certain volatile or non-recurring items - Adjusted Consolidated Net Operating Income excludes after-tax impacts of items like changes in fair value of securities, realized investment gains/losses, impairment losses, acquisition/disposition costs, debt extinguishment charges, goodwill impairment, and non-core operations[188](index=188&type=chunk)[190](index=190&type=chunk) - Underlying Losses and LAE exclude catastrophe losses and prior-year reserve development to reveal underlying Property & Casualty Insurance segment trends[191](index=191&type=chunk)[193](index=193&type=chunk) - The Underlying Combined Ratio is calculated by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio[192](index=192&type=chunk) [Summary of Results](index=53&type=section&id=Summary%20of%20Results) This section summarizes Kemper's financial performance, highlighting changes in Net Income attributable to Kemper Corporation and Adjusted Consolidated Net Operating Income for the three and six months ended June 30, 2025, compared to the prior year. It attributes changes to segment performance, investment losses, and non-core operations Net Income Attributable to Kemper Corporation (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $72.6 | $75.4 | $(2.8) | | Six Months Ended | $172.3 | $146.7 | $25.6 | Adjusted Consolidated Net Operating Income (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $84.1 | $91.7 | $(7.6) | | Six Months Ended | $190.5 | $161.4 | $29.1 | - The decrease in Net Income for the three months ended June 30, 2025, was primarily due to lower Adjusted Consolidated Net Operating Income and increased impairment losses, partially offset by reduced losses from Non-Core Operations[199](index=199&type=chunk) - The increase in Adjusted Consolidated Net Operating Income for the six months ended June 30, 2025, was driven by improvements in the Life Insurance segment (higher net investment income) and Specialty Property & Casualty Insurance segment (rate increases, higher business volumes)[203](index=203&type=chunk)[204](index=204&type=chunk) [Revenues](index=55&type=section&id=Revenues) This section analyzes the changes in total revenues, earned premiums, net investment income, and impairment losses for the three and six months ended June 30, 2025. It highlights the growth in earned premiums from the Specialty Property & Casualty Insurance segment and the impact of reduced losses from Non-Core Operations Total Revenues (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $1,225.6 | $1,129.9 | $95.7 | | Six Months Ended | $2,418.6 | $2,272.9 | $145.7 | - Earned Premiums increased by **$148.2 million** for the three months and **$270.4 million** for the six months ended June 30, 2025, in the Specialty Property & Casualty Insurance segment due to rate increases and higher business volumes[207](index=207&type=chunk)[210](index=210&type=chunk) - Net Investment Income increased by **$2.9 million** for the three months and **$3.7 million** for the six months ended June 30, 2025, primarily due to reduced losses from alternative investments[208](index=208&type=chunk)[211](index=211&type=chunk) - Impairment losses increased by **$3.5 million** for the three months ended June 30, 2025, due to an increase in the allowance for credit losses on fixed maturity securities[208](index=208&type=chunk) [Specialty Property & Casualty Insurance](index=56&type=section&id=Specialty%20Property%20%26%20Casualty%20Insurance) This section provides a detailed analysis of the Specialty Property & Casualty Insurance segment's performance, including earned premiums, investment income, incurred losses and LAE, insurance expenses, and combined ratios. It breaks down performance by personal automobile and commercial automobile insurance, highlighting the impact of rate increases, business volumes, claim severity, and prior year reserve development [Overall](index=57&type=section&id=Overall) The Specialty Property & Casualty Insurance segment's Adjusted Net Operating Income decreased for the three months but increased for the six months ended June 30, 2025. This was driven by higher earned premiums from rate increases and business volumes, but offset by a deterioration in the Underlying Combined Ratio and adverse prior year development, particularly in commercial automobile Specialty P&C Segment Adjusted Net Operating Income (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $79.0 | $102.3 | $(23.3) | | Six Months Ended | $176.9 | $171.5 | $5.4 | Specialty P&C Earned Premiums (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $1,010.8 | $862.6 | $148.2 | | Six Months Ended | $1,973.0 | $1,702.6 | $270.4 | - The Combined Ratio for the Specialty P&C segment deteriorated to **95.4%** for the three months and **94.1%** for the six months ended June 30, 2025, from 90.7% and 92.7% respectively in the prior year[214](index=214&type=chunk) - Adverse prior year loss and LAE reserve development for the six months ended June 30, 2025, was **$14.7 million**, an increase of $9.6 million from the prior year, primarily due to emerging loss patterns on bodily injury coverages[227](index=227&type=chunk) [Specialty Personal Automobile Insurance](index=59&type=section&id=Specialty%20Personal%20Automobile%20Insurance) This sub-section focuses on the performance of the Specialty Personal Automobile Insurance product line. It details changes in earned premiums, incurred losses and LAE, and combined ratios, highlighting the impact of rate increases, business volumes, increased claim severity, and favorable prior year reserve development Specialty Personal Auto Earned Premiums (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $789.3 | $691.5 | $97.8 | | Six Months Ended | $1,543.0 | $1,366.8 | $176.2 | - The Underlying Combined Ratio for Specialty Personal Automobile Insurance deteriorated to **94.5%** for the three months and **93.3%** for the six months ended June 30, 2025, driven by increased loss costs, particularly claim severity[231](index=231&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk) - Favorable loss and LAE reserve development for the six months ended June 30, 2025, was **$9.3 million**, an improvement of $17.0 million from the prior year, due to improved loss patterns in bodily injury and property damage coverages[234](index=234&type=chunk) [Commercial Automobile Insurance](index=61&type=section&id=Commercial%20Automobile%20Insurance) This sub-section analyzes the Commercial Automobile Insurance product line, detailing earned premiums, incurred losses and LAE, and combined ratios. It emphasizes the impact of higher average earned premium per exposure, targeted mix shifts, increased claim severity, and significant adverse prior year development Commercial Auto Earned Premiums (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $221.5 | $171.1 | $50.4 | | Six Months Ended | $430.0 | $335.8 | $94.2 | - The Combined Ratio for Commercial Automobile Insurance deteriorated to **99.0%** for the three months and **97.2%** for the six months ended June 30, 2025, primarily due to adverse prior year development[236](index=236&type=chunk)[237](index=237&type=chunk)[239](index=239&type=chunk) - Adverse loss and LAE reserve development for the six months ended June 30, 2025, was **$24.0 million**, an increase of $26.6 million from the prior year, driven by evolving loss patterns and higher defense costs associated with attorney-represented bodily injury coverages[239](index=239&type=chunk) [Life Insurance](index=63&type=section&id=Life%20Insurance) This section analyzes the Life Insurance segment's financial performance, including earned premiums, net investment income, policyholders' benefits, and adjusted net operating income. It highlights the significant increase in net operating income driven by higher net investment income and reduced losses from alternative investments [Overall](index=63&type=section&id=Overall) The Life Insurance segment reported a significant increase in Total Segment Adjusted Net Operating Income for both the three and six months ended June 30, 2025, primarily driven by higher net investment income due to reduced losses on alternative investments Life Insurance Segment Adjusted Net Operating Income (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $12.6 | $(0.2) | $12.8 | | Six Months Ended | $29.8 | $11.7 | $18.1 | Life Insurance Net Investment Income (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $44.7 | $30.5 | $14.2 | | Six Months Ended | $93.1 | $74.8 | $18.3 | - The increase in net investment income was primarily due to lower losses on alternative investments, with the three months ended June 30, 2024, including a **$15.1 million** pre-tax loss from a real estate investment valuation adjustment[247](index=247&type=chunk) [Investment Results](index=64&type=section&id=Investment%20Results) This section provides a detailed overview of the Company's investment performance, including net investment income, changes in unrealized gains and losses, fair value of equity and convertible securities, net realized investment gains/losses, and impairment losses. It also covers investment quality, concentrations, and investments in limited liability companies and partnerships [Net Investment Income](index=64&type=section&id=Net%20Investment%20Income) Net Investment Income increased for both the three and six months ended June 30, 2025, primarily driven by reduced losses and increased earnings on alternative investments, partially offset by lower yields from Fixed Maturities Net Investment Income (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $95.9 | $93.0 | $2.9 | | Six Months Ended | $197.1 | $193.4 | $3.7 | - The increase in Net Investment Income was mostly driven by reduced losses on alternative investments for the three-month period and increased earnings on alternative investments for the six-month period[253](index=253&type=chunk)[254](index=254&type=chunk) [Change in Unrealized Gains and Losses on Investments](index=65&type=section&id=Change%20in%20Unrealized%20Gains%20and%20Losses%20on%20Investments) Unrealized losses on investments decreased for both the three and six months ended June 30, 2025, primarily due to decreases in interest rates - Unrealized losses on investments decreased by **$2.1 million** for the three months and **$72.6 million** for the six months ended June 30, 2025, primarily due to decreases in interest rates[255](index=255&type=chunk) [Change in Fair Value of Equity and Convertible Securities](index=65&type=section&id=Change%20in%20Fair%20Value%20of%20Equity%20and%20Convertible%20Securities) This section details the changes in the fair value of equity and convertible securities, showing a net decrease for both the three and six months ended June 30, 2025 Change in Fair Value of Equity and Convertible Securities (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Three Months Ended | $(0.5) | $(1.2) | | Six Months Ended | $(0.4) | $2.2 | - For the six months ended June 30, 2025, the change in fair value of equity and convertible securities was a loss of **$0.4 million**, compared to a gain of $2.2 million in the prior year[256](index=256&type=chunk) [Net Realized (Losses) Gains on Sales of Investments](index=66&type=section&id=Net%20Realized%20(Losses)%20Gains%20on%20Sales%20of%20Investments) This section presents the components of net realized investment losses and gains, showing a net loss for the three months and a net gain for the six months ended June 30, 2025. The six-month period saw a decrease in gains compared to the prior year, primarily due to lower gains on fixed maturity sales Net Realized Investment (Losses) Gains (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | | Three Months Ended | $(0.1) | $1.5 | | Six Months Ended | $0.8 | $8.1 | - For the six months ended June 30, 2025, net realized investment gains decreased by **$7.3 million** compared to the same period in 2024, primarily due to decreased gains on sales of fixed maturity investments[212](index=212&type=chunk)[257](index=257&type=chunk) [Impairment Losses](index=66&type=section&id=Impairment%20Losses) This section details impairment losses recognized on the investment portfolio, primarily on fixed maturities, for the three and six months ended June 30, 2025 and 2024 Impairment Losses (Millions) | Investment Type | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Fixed Maturities | $(3.6) | $0.2 | $(3.3) | $(0.8) | | Equity Securities at Modified Cost | $0.0 | $0.0 | $0.0 | $(0.4) | | Total Impairment Losses | $(3.6) | $(0.1) | $(3.3) | $(1.6) | - Impairment losses increased by **$3.5 million** for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to an increase in the allowance for credit losses on fixed maturity securities[208](index=208&type=chunk)[259](index=259&type=chunk) [Investment Quality and Concentrations](index=67&type=section&id=Investment%20Quality%20and%20Concentrations) This section summarizes the credit quality of the Company's fixed maturity investment portfolio, noting that approximately 94.2% was rated investment-grade at June 30, 2025. It also provides a breakdown of governmental and non-governmental fixed maturities by industry and issuer concentration - At June 30, 2025, approximately **94.2%** of the Company's fixed maturity investment portfolio was rated investment-grade (NAIC 1 or 2)[260](index=260&type=chunk) Fixed Maturity Investment Portfolio by NAIC Rating (Jun 30, 2025, Millions) | NAIC Rating | Fair Value | Percentage of Total | | :--- | :--- | :--- | | 1 (AAA, AA, A) | $4,739.9 | 71.1% | | 2 (BBB) | $1,541.1 | 23.1% | | 3-4 (BB, B) | $333.1 | 5.0% | | 5-6 (CCC or Lower) | $55.0 | 0.8% | | Total | $6,669.1 | 100.0% | - The largest non-governmental fixed maturity industry concentration at June 30, 2025, was Finance, Insurance and Real Estate, accounting for **24.3%** of total investments[264](index=264&type=chunk) [Investments in Limited Liability Companies and Limited Partnerships](index=70&type=section&id=Investments%20in%20Limited%20Liability%20Companies%20and%20Limited%20Partnerships) This section details the Company's investments in various limited liability investment companies and limited partnerships, primarily focusing on mezzanine debt, senior debt, and leveraged buyouts. It provides unfunded commitments and reported values for these investments Investments in Limited Liability Companies and Limited Partnerships (Jun 30, 2025, Millions) | Asset Class | Unfunded Commitment | Reported Value | | :--- | :--- | :--- | | Equity Method Limited Liability Investments | $89.0 | $176.2 | | Other Equity Interests at Fair Value | $139.5 | $198.4 | | Other Investments | $1.7 | $19.2 | | Total | $230.2 | $393.8 | - The Company expects to fund its **$230.2 million** in unfunded commitments over the next several years, primarily from distributions from these investments[268](index=268&type=chunk) [Insurance, Interest, and Other Expenses](index=71&type=section&id=Insurance,%20Interest,%20and%20Other%20Expenses) This section analyzes the Company's insurance, interest, and other expenses for the three and six months ended June 30, 2025 and 2024. It highlights increases in insurance expenses due to growth in the Specialty Property & Casualty segment and decreases in other expenses and interest expense Total Insurance, Interest, and Other Expenses (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended | $309.0 | $293.6 | $15.4 | | Six Months Ended | $614.9 | $594.0 | $20.9 | - Insurance Expenses increased by **$27.4 million** for the six months ended June 30, 2025, primarily due to growth in the Specialty Property & Casualty Insurance segment from higher business volumes[271](index=271&type=chunk) - Interest expense decreased by **$7.5 million** for the six months ended June 30, 2025, primarily due to the redemption of **$450 million** of 4.350% senior notes[273](index=273&type=chunk) [Income Taxes](index=71&type=section&id=Income%20Taxes) This section discusses the Company's income tax expense and effective tax rates, explaining the differences from the federal statutory rate due to factors like tax-exempt investment income, nontaxable increases in Company-Owned Life Insurance, and nondeductible executive compensation. It also notes the impact of foreign tax benefits and valuation allowances - The effective income tax rate was **19.6%** for the six months ended June 30, 2025, compared to 19.0% for the same period in 2024[274](index=274&type=chunk) - Nontaxable increase in cash surrender value on Company-Owned Life Insurance was **$20.7 million** for the six months ended June 30, 2025, up from $16.1 million in the prior year[276](index=276&type=chunk) - A tax benefit of **$4.4 million** was recorded for the six months ended June 30, 2025, related to income taxes in foreign jurisdictions, and an increase in valuation allowance of **$4.4 million** was recorded for foreign deferred tax assets[280](index=280&type=chunk)[281](index=281&type=chunk) [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Kemper's liquidity and capital management, including its credit agreement, long-term debt, Federal Home Loan Bank (FHLB) agreements, common stock repurchases, dividends, and subsidiary dividends. It also analyzes the sources and uses of funds from operating, investing, and financing activities [Amended and Extended Credit Agreement](index=72&type=section&id=Amended%20and%20Extended%20Credit%20Agreement) The Company's credit agreement was amended and extended to March 15, 2027, increasing borrowing capacity to $600.0 million with an additional $200.0 million accordion feature. There were no outstanding borrowings under this agreement at June 30, 2025, or December 31, 2024 - The credit agreement's borrowing capacity increased to **$600.0 million**, with an accordion feature for an additional **$200.0 million**, and the maturity date extended to March 15, 2027[283](index=283&type=chunk) - No outstanding borrowings existed under the credit agreement at June 30, 2025, or December 31, 2024[283](index=283&type=chunk) [Long-term Debt](index=73&type=section&id=Long-term%20Debt) This section details the Company's long-term debt obligations, including Senior Notes and Junior Subordinated Debentures. It highlights the redemption of the 4.350% Senior Notes due February 15, 2025, which significantly reduced total long-term debt outstanding Long-term Debt Outstanding (Millions) | Debt Type | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | 4.350% Senior Notes due Feb 15, 2025 (Current) | $0.0 | $449.9 | | 2.400% Senior Notes due Sep 30, 2030 (Non-Current) | $397.7 | $397.5 | | 3.800% Senior Notes due Feb 23, 2032 (Non-Current) | $396.7 | $396.5 | | 5.875% Fixed-Rate Reset Junior Subordinated Debentures due 2062 (Non-Current) | $148.2 | $147.7 | | Total Long-term Debt Outstanding | $942.6 | $1,391.6 | - The total long-term debt outstanding decreased from **$1,391.6 million** at December 31, 2024, to **$942.6 million** at June 30, 2025, primarily due to the redemption of the 2025 Senior Notes[284](index=284&type=chunk) [Federal Home Loan Bank Agreements](index=73&type=section&id=Federal%20Home%20Loan%20Bank%20Agreements) This section describes the Company's subsidiaries' memberships with Federal Home Loan Banks (FHLBs) and their ability to borrow through advance programs. It details advances received and repaid, outstanding advances, and collateral pledged for spread lending purposes - United Insurance had outstanding advances from the FHLB of Chicago totaling **$546.2 million** at June 30, 2025, for its spread lending program[286](index=286&type=chunk) - For these advances, United Insurance held pledged securities with a fair value of **$653.4 million** at June 30, 2025[287](index=287&type=chunk) - The fair value of pledged collateral must be maintained at specified levels, potentially requiring additional collateral or repayment if values decline[287](index=287&type=chunk) [Common Stock Repurchases](index=73&type=section&id=Common%20Stock%20Repurchases) This section details the Company's common stock repurchase program, including the authorized amounts and shares repurchased during the three and six months ended June 30, 2025. It notes the remaining authorization and the average cost per share - Kemper repurchased approximately **446,000 shares** for **$28.5 million** (average $64.04/share) during the three months ended June 30, 2025[289](index=289&type=chunk) - For the six months ended June 30, 2025, approximately **509,000 shares** were repurchased for **$32.5 million** (average $63.90/share)[290](index=290&type=chunk) - As of June 30, 2025, the remaining share repurchase authorization was **$100.3 million**[288](index=288&type=chunk) [Dividends to Shareholders](index=74&type=section&id=Dividends%20to%20Shareholders) This section reports the quarterly dividends paid to common shareholders and the total dividends and dividend equivalents paid for the six months ended June 30, 2025 and 2024 - Kemper paid a quarterly dividend of **$0.32 per common share** in Q2 2025, up from $0.31 in Q2 2024[291](index=291&type=chunk) - Total dividends and dividend equivalents paid were **$41.0 million** for the six months ended June 30, 2025, compared to $39.8 million in the prior year[291](index=291&type=chunk) [Subsidiary Dividends](index=74&type=section&id=Subsidiary%20Dividends) This section notes that Kemper's insurance subsidiaries paid $281.4 million in dividends to Kemper during the first six months of 2025, with an estimated remaining capacity of $129.0 million for payments without prior regulatory approval - Kemper's insurance subsidiaries paid **$281.4 million** in dividends to Kemper during the first six months of 2025[292](index=292&type=chunk) - The remaining capacity for subsidiary dividends without prior regulatory approval is estimated at **$129.0 million** as of the filing date[292](index=292&type=chunk) [Sources and Uses of Funds](index=74&type=section&id=Sources%20and%20Uses%20of%20Funds) This section outlines the primary sources and uses of funds for Kemper and its insurance subsidiaries. It highlights that cash available for investment depends on operating and financing cash flows, and discusses how insurance companies manage liquidity during periods of growth or significant catastrophic events - Primary sources of funds for Kemper include directly held cash/investments, subsidiary dividends, and credit agreement borrowings[294](index=294&type=chunk) - Primary sources for insurance subsidiaries are premiums, investment income, and FHLB advances; uses include policyholder benefits, claims, expenses, and investments[295](index=295&type=chunk) - Management believes its property and casualty insurance subsidiaries maintain adequate liquidity for potential catastrophic events[296](index=296&type=chunk) [Net Cash Provided by Operating Activities](index=75&type=section&id=Net%20Cash%20Provided%20by%20Operating%20Activities) Net cash provided by operating activities significantly increased for the six months ended June 30, 2025, driven by growth in the Specialty Property & Casualty business and timing of claim payments, partially offset by lower volumes in Non-Core Operations and increased federal tax payments Net Cash Provided by Operating Activities (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Six Months Ended | $269.6 | $65.9 | $203.7 | - The increase was primarily driven by growth from the Specialty Property & Casualty business due to higher earned premiums and business volumes, and timing of claim payments[299](index=299&type=chunk) [Net Cash Provided by Investing Activities](index=75&type=section&id=Net%20Cash%20Provided%20by%20Investing%20Activities) Net cash provided by investing activities substantially increased for the six months ended June 30, 2025, primarily due to proceeds from sales of short-term investments used to fund debt redemption, partially offset by increased purchases of fixed maturity investments Net Cash Provided by Investing Activities (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Six Months Ended | $361.4 | $32.6 | $328.8 | - The increase was primarily due to proceeds from sales of short-term investments, used to fund the redemption of **$450.0 million** in Senior Notes[300](index=300&type=chunk) [Net Cash Used in Financing Activities](index=75&type=section&id=Net%20Cash%20Used%20in%20Financing%20Activities) Net cash used in financing activities significantly increased for the six months ended June 30, 2025, primarily due to the redemption of the 2025 Senior Notes and common stock repurchases Net Cash Used in Financing Activities (Millions) | Period | Jun 30, 2025 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Six Months Ended | $(519.4) | $(55.2) | $(464.2) | - The increase in cash used was primarily due to the redemption of the 2025 Senior Notes and common stock repurchases during Q2 2025[301](index=301&type=chunk) [Critical Accounting Estimates](index=75&type=section&id=Critical%20Accounting%20Estimates) This section reiterates that the preparation of financial statements requires significant estimates, particularly for investment valuation, life insurance reserves, property and casualty insurance loss reserves, goodwill recoverability, and deferred tax assets. It states that there have been no material changes to these critical accounting estimates since the 2024 Annual Report - Critical accounting policies involve significant estimates for investment valuation, life insurance reserves, P&C insurance loss reserves, goodwill, and deferred tax assets[303](index=303&type=chunk) - No material changes have occurred in the critical accounting estimates or significant accounting policies since the 2024 Annual Report[303](index=303&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disc

[Caution Regarding Forward-Looking Statements](index=1&type=section&id=Caution%20Regarding%20Forward-Looking%20Statements) The Investor Supplement contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors - The Investor Supplement contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors, including changes in insurance claims, interest rates, supply chain disruptions, governmental actions, competition, litigation, investment risks, and cybersecurity risks[2](index=2&type=chunk)[4](index=4&type=chunk) [Non-GAAP Financial Measures (Introduction)](index=1&type=section&id=Non-GAAP%20Financial%20Measures%20Introduction) This document utilizes non-GAAP financial measures for analyzing operating performance, with detailed disclosures and definitions provided on pages 29-32 - This document uses non-GAAP financial measures to analyze operating performance, which may differ from those used by other companies. Detailed disclosures and definitions are provided on pages 29-32[3](index=3&type=chunk) [Consolidated Financial Highlights](index=3&type=section&id=Consolidated%20Financial%20Highlights) This section presents key financial performance indicators and balance sheet positions for Kemper Corporation [Income Statement Highlights](index=3&type=section&id=Income%20Statement%20Highlights) Kemper Corporation reported increased total revenues and net income attributable to Kemper Corporation for both the three and six months ended June 30, 2025, compared to the same periods in 2024. Adjusted Consolidated Net Operating Income also saw significant growth Consolidated Income Highlights (Dollars in Millions, Except Per Share Amounts) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Total Revenues | $1,225.6 | $1,193.0 | $1,129.9 | $2,418.6 | $2,272.9 | | Net Income attributable to Kemper Corp. | $72.6 | $99.7 | $75.4 | $172.3 | $146.7 | | Adjusted Consolidated Net Operating Income | $84.1 | $106.4 | $91.7 | $190.5 | $161.4 | | Basic EPS (Kemper Corp.) | $1.13 | $1.56 | $1.17 | $2.69 | $2.28 | | Adjusted Consolidated Net Operating Income Per Share | $1.31 | $1.67 | $1.43 | $2.98 | $2.51 | | Dividends Paid to Shareholders Per Share | $0.32 | $0.32 | $0.31 | $0.64 | $0.62 | | Return on Shareholders' Equity | 9.9% | 14.0% | 11.5% | 11.9% | 11.3% | | Return on Adjusted Shareholders' Equity | 14.9% | 21.0% | 17.6% | 17.9% | 17.4% | - Total Revenues for Q2 2025 increased by **$95.7 million** (**8.5%**) compared to Q2 2024. For the six months ended June 30, 2025, total revenues increased by **$145.7 million** (**6.4%**) year-over-year[7](index=7&type=chunk) - Net Income attributable to Kemper Corporation for Q2 2025 was **$72.6 million**, a slight decrease from **$75.4 million** in Q2 2024. However, for the six months ended June 30, 2025, it increased to **$172.3 million** from **$146.7 million** in the prior year period[7](index=7&type=chunk) [Balance Sheet Highlights](index=4&type=section&id=Balance%20Sheet%20Highlights) As of June 30, 2025, Kemper Corporation's total assets slightly decreased from December 31, 2024, but shareholders' equity and book value per share showed an increase compared to the prior year period Consolidated Balance Sheet Highlights (Dollars in Millions, Except Per Share Amounts) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total Assets | $12,601.1 | $12,467.3 | $12,630.4 | $12,544.3 | | Insurance Reserves | $5,900.0 | $5,867.1 | $5,811.6 | $5,769.2 | | Debt | $942.6 | $942.1 | $1,391.6 | $1,390.4 | | Kemper Corporation Shareholders' Equity | $2,953.4 | $2,917.6 | $2,788.4 | $2,671.2 | | Book Value Per Share | $46.45 | $45.60 | $43.68 | $41.46 | | Adjusted Book Value Per Share | $31.01 | $30.31 | $29.04 | $27.14 | | Debt to Total Capitalization | 24.2% | 24.4% | 33.3% | 34.2% | - Total Assets as of June 30, 2025, were **$12,601.1 million**, a slight decrease from **$12,630.4 million** at December 31, 2024, but an increase from **$12,544.3 million** at June 30, 2024[11](index=11&type=chunk) - Kemper Corporation Shareholders' Equity increased to **$2,953.4 million** at June 30, 2025, from **$2,671.2 million** at June 30, 2024. Book Value Per Share also rose to **$46.45** from **$41.46** over the same period[11](index=11&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section details the company's revenues and expenses, providing a comprehensive view of its financial performance [Revenues](index=5&type=section&id=Consolidated%20Revenues) Consolidated total revenues for Q2 2025 reached $1,225.6 million, driven by an increase in earned premiums. Net investment income remained stable, while net realized investment losses and impairment losses impacted overall revenue Consolidated Revenues (Dollars in Millions) | Revenue Type | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Earned Premiums | $1,130.8 | $1,087.9 | $1,033.7 | $2,218.7 | $2,065.6 | | Net Investment Income | 95.9 | 101.2 | 93.0 | 197.1 | 193.4 | | Other Income | 3.1 | 2.6 | 3.0 | 5.7 | 5.2 | | Change in Fair Value of Equity and Convertible Securities | (0.5) | 0.1 | (1.2) | (0.4) | 2.2 | | Net Realized Investment (Losses) Gains | (0.1) | 0.9 | 1.5 | 0.8 | 8.1 | | Impairment Losses | (3.6) | 0.3 | (0.1) | (3.3) | (1.6) | | Total Revenues | $1,225.6 | $1,193.0 | $1,129.9 | $2,418.6 | $2,272.9 | - Earned Premiums increased by **$97.1 million** (**9.4%**) in Q2 2025 compared to Q2 2024, and by **$153.1 million** (**7.4%**) for the six months ended June 30, 2025, year-over-year[13](index=13&type=chunk) [Expenses](index=5&type=section&id=Consolidated%20Expenses) Total expenses for Q2 2025 increased to $1,138.1 million, primarily due to higher policyholders' benefits and incurred losses and loss adjustment expenses Consolidated Expenses (Dollars in Millions) | Expense Type | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Policyholders' Benefits and Incurred Losses and LAE | $829.1 | $767.3 | $744.4 | $1,596.4 | $1,500.4 | | Insurance and Other Expenses | 300.0 | 294.5 | 279.7 | 594.5 | 566.1 | | Interest Expense | 9.0 | 11.4 | 13.9 | 20.4 | 27.9 | | Total Expenses | $1,138.1 | $1,073.2 | $1,038.0 | $2,211.3 | $2,094.4 | - Policyholders' Benefits and Incurred Losses and LAE increased by **$84.7 million** (**11.4%**) in Q2 2025 compared to Q2 2024, and by **$96.0 million** (**6.4%**) for the six months ended June 30, 2025, year-over-year[13](index=13&type=chunk) [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section outlines the company's assets, liabilities, and shareholders' equity, reflecting its financial position at period-end [Assets](index=6&type=section&id=Consolidated%20Assets) Total assets as of June 30, 2025, were $12,601.1 million, with fixed maturities and goodwill being the largest components. Short-term investments decreased significantly from December 2024 Consolidated Assets (Dollars in Millions) | Asset Type | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Fixed Maturities at Fair Value | $6,669.1 | $6,558.6 | $6,409.6 | $6,674.7 | | Equity Securities at Fair Value | 284.1 | 232.3 | 218.5 | 226.6 | | Short-term Investments at Cost | 407.6 | 545.3 | 1,037.1 | 539.1 | | Total Investments | 8,645.5 | 8,592.1 | 8,888.5 | 8,668.3 | | Cash | 175.5 | 115.4 | 64.4 | 107.4 | | Receivables from Policyholders | 1,038.7 | 1,052.7 | 977.9 | 988.0 | | Deferred Policy Acquisition Costs | 658.2 | 649.7 | 628.9 | 608.0 | | Goodwill | 1,250.7 | 1,250.7 | 1,250.7 | 1,250.7 | | Total Assets | $12,601.1 | $12,467.3 | $12,630.4 | $12,544.3 | - Short-term Investments decreased significantly from **$1,037.1 million** at December 31, 2024, to **$407.6 million** at June 30, 2025[15](index=15&type=chunk) [Liabilities and Shareholders' Equity](index=7&type=section&id=Consolidated%20Liabilities%20and%20Shareholders'%20Equity) Total liabilities decreased slightly from December 31, 2024, primarily due to a reduction in long-term debt. Kemper Corporation Shareholders' Equity continued to grow, reaching $2,953.4 million as of June 30, 2025 Consolidated Liabilities and Shareholders' Equity (Dollars in Millions) | Liability/Equity Type | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total Insurance Reserves | $5,900.0 | $5,867.1 | $5,811.6 | $5,769.2 | | Unearned Premiums | 1,345.0 | 1,361.6 | 1,264.1 | 1,301.5 | | Long-term Debt, Non-Current | 942.6 | 942.1 | 941.7 | 940.6 | | Long-term Debt, Current | — | — | 449.9 | 449.8 | | Total Liabilities | 9,655.6 | 9,555.8 | 9,846.1 | 9,875.0 | | Total Kemper Corporation Shareholders' Equity | $2,953.4 | $2,917.6 | $2,788.4 | $2,671.2 | | Total Shareholders' Equity | $2,945.5 | $2,911.5 | $2,784.3 | $2,770.4 | - Long-term Debt (current portion) was reduced from **$449.9 million** at December 31, 2024, to **$0** at June 30, 2025, indicating a significant debt repayment[17](index=17&type=chunk) - Kemper Corporation Shareholders' Equity increased by **$282.2 million** (**10.6%**) from **$2,671.2 million** at June 30, 2024, to **$2,953.4 million** at June 30, 2025[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities, illustrating liquidity and capital management [Cash Flows from Operating Activities](index=8&type=section&id=Cash%20Flows%20from%20Operating%20Activities) Net cash provided by operating activities significantly increased to $269.6 million for the six months ended June 30, 2025, compared to $65.9 million in the prior year, driven by higher net income and favorable changes in insurance reserves and unearned premiums Cash Flows from Operating Activities (Six Months Ended June 30, Dollars in Millions) | Metric | 2025 | 2024 | | :--------------------------------------- | :----- | :----- | | Net Income | $166.8 | $144.6 | | Changes in: | | | | Receivables from Policyholders | (64.2) | (32.6) | | Insurance Reserves | 87.3 | (80.7) | | Unearned Premiums | 84.2 | 5.1 | | Net Cash Provided by Operating Activities | $269.6 | $65.9 | - A significant increase in net cash provided by operating activities was observed, rising from **$65.9 million** in 6M 2024 to **$269.6 million** in 6M 2025[19](index=19&type=chunk) [Cash Flows from Investing Activities](index=9&type=section&id=Cash%20Flows%20from%20Investing%20Activities) Net cash provided by investing activities increased substantially to $361.4 million for the six months ended June 30, 2025, primarily due to net sales of short-term investments, offsetting increased purchases of fixed maturities and equity securities Cash Flows from Investing Activities (Six Months Ended June 30, Dollars in Millions) | Metric | 2025 | 2024 | | :--------------------------------------- | :----- | :----- | | Proceeds from Sales/Maturities of Fixed Maturities | $525.4 | $629.2 | | Purchases of Fixed Maturities | (668.8) | (578.4) | | Net Sales (Purchases) of Short-term Investments | 650.6 | (12.6) | | Net Cash Provided by Investing Activities | $361.4 | $32.6 | - Net sales of short-term investments generated **$650.6 million** in 6M 2025, a significant reversal from net purchases of **$12.6 million** in 6M 2024[21](index=21&type=chunk) [Cash Flows from Financing Activities](index=9&type=section&id=Cash%20Flows%20from%20Financing%20Activities) Net cash used in financing activities increased significantly to $519.4 million for the six months ended June 30, 2025, primarily due to the repayment of long-term debt and common stock repurchases Cash Flows from Financing Activities (Six Months Ended June 30, Dollars in Millions) | Metric | 2025 | 2024 | | :--------------------------------------- | :----- | :----- | | Repayment of Long-term Debt | $(450.0) | $— | | Common Stock Repurchases | (32.5) | — | | Dividends Paid | (41.0) | (39.8) | | Net Cash Used in Financing Activities | $(519.4) | $(55.2) | - The company repaid **$450.0 million** in long-term debt and repurchased **$32.5 million** in common stock during the first six months of 2025[21](index=21&type=chunk) [Capital Metrics](index=10&type=section&id=Capital%20Metrics) This section analyzes key capital structure and liquidity indicators, including book value per share and debt ratios [Book Value Per Share](index=10&type=section&id=Book%20Value%20and%20Adjusted%20Book%20Value%20Per%20Share) Both Book Value Per Share and Adjusted Book Value Per Share have shown consistent quarterly increases, reflecting growth in shareholders' equity Book Value Per Share Trends (Dollars in Millions) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Book Value Per Share | $46.45 | $45.60 | $43.68 | $43.30 | $41.46 | $40.24 | | Adjusted Book Value Per Share | $31.01 | $30.31 | $29.04 | $27.88 | $27.14 | $26.19 | [Debt and Total Capitalization](index=10&type=section&id=Debt%20and%20Total%20Capitalization) The company significantly reduced its debt, leading to improved debt-to-capitalization ratios. Total debt decreased from $1,391.6 million at Dec 31, 2024, to $942.6 million at Jun 30, 2025 Debt and Capitalization Ratios (Dollars in Millions) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Debt | $942.6 | $942.1 | $1,391.6 | $1,390.4 | | Kemper Corporation Shareholders' Equity | $2,953.4 | $2,917.6 | $2,788.4 | $2,671.2 | | Total Capitalization | $3,896.0 | $3,859.7 | $4,180.0 | $4,061.6 | | Ratio of Debt to Total Capitalization | 24.2% | 24.4% | 33.3% | 34.2% | | Ratio of Debt to Total Capitalization Excluding AOCI | 22.7% | 22.9% | 31.0% | 31.8% | - The ratio of Debt to Total Capitalization improved from **33.3%** at December 31, 2024, to **24.2%** at June 30, 2025, reflecting debt reduction[23](index=23&type=chunk) [Parent Company Liquidity](index=10&type=section&id=Parent%20Company%20Liquidity) Parent company liquidity increased to $823.2 million at June 30, 2025, supported by available borrowings under the credit agreement Parent Company Liquidity (Dollars in Millions) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Kemper Holding Company Cash and Investments | $223.2 | $161.3 | $547.6 | $376.5 | | Borrowings Available Under Credit Agreement | 600.0 | 600.0 | 512.0 | 458.0 | | Parent Company Liquidity | $823.2 | $761.3 | $1,059.6 | $834.5 | [Debt Outstanding, Federal Home Loan Bank Advances and Ratings](index=11&type=section&id=Debt%20Outstanding%2C%20Federal%20Home%20Loan%20Bank%20Advances%20and%20Ratings) This section provides an overview of the company's outstanding debt, FHLB advances, and credit ratings [Debt Outstanding](index=11&type=section&id=Debt%20Outstanding) Kemper Corporation's total long-term debt outstanding decreased significantly to $942.6 million at June 30, 2025, primarily due to the repayment of the 4.350% Senior Notes due February 15, 2025 Long-term Debt Outstanding (Dollars in Millions) | Debt Type | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | 4.350% Senior Notes due Feb 15, 2025 (Current) | $— | $— | $449.9 | $449.8 | | 2.400% Senior Notes due Sep 30, 2030 | 397.7 | 397.6 | 397.5 | 397.3 | | 3.800% Senior Notes due 2032 | 396.7 | 396.6 | 396.5 | 396.2 | | 5.875% Fixed-Rate Reset Junior Subordinated Debentures Due 2062 | 148.2 | 147.9 | 147.7 | 147.1 | | Total Long-term Debt Outstanding | $942.6 | $942.1 | $1,391.6 | $1,390.4 | - The **4.350% Senior Notes due February 15, 2025**, which amounted to **$449.9 million** at December 31, 2024, were fully repaid by June 30, 2025[25](index=25&type=chunk) [Federal Home Loan Bank Advances](index=11&type=section&id=Federal%20Home%20Loan%20Bank%20Advances) Federal Home Loan Bank advances to insurance subsidiaries, reported as policyholder contract liabilities, remained relatively stable, with $546.2 million outstanding from the Federal Home Loan Bank of Chicago as of June 30, 2025 Federal Home Loan Bank Advances (Dollars in Millions) | Bank | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Federal Home Loan Bank of Chicago | $546.2 | $536.2 | $541.3 | $547.0 | [Debt and Insurance Company Ratings](index=11&type=section&id=Debt%20and%20Insurance%20Company%20Ratings) Kemper's senior unsecured debt maintains ratings of bbb- (A.M. Best), Baa3 (Moody's), and BBB- (S&P), while its insurance subsidiaries hold A- (A.M. Best, S&P) and A3 (Moody's) financial strength ratings Kemper Debt Ratings | Rating Type | A.M. Best | Moody's | S&P | Fitch | | :--------------------------------------- | :-------- | :------ | :---- | :---- | | Senior Unsecured Debt | bbb- | Baa3 | BBB- | BBB | | Junior Unsecured Debt | bb | Ba1 | BB | BB | Insurance Company Financial Strength Ratings | Company | A.M. Best | Moody's | S&P | Fitch | | :--------------------------------------- | :-------- | :------ | :---- | :---- | | Trinity Universal Insurance Company | A- | A3 | A- | A | | United Insurance Company of America | A- | A3 | A- | A | [Segment Revenues](index=12&type=section&id=Segment%20Revenues) This section details revenue performance across the Specialty Property & Casualty and Life Insurance segments [Specialty Property & Casualty Insurance Revenues](index=12&type=section&id=Specialty%20Property%20%26%20Casualty%20Insurance%20Revenues) The Specialty P&C segment reported total revenues of $1,063.1 million in Q2 2025, an increase from $910.8 million in Q2 2024, primarily driven by growth in both Personal and Commercial Automobile earned premiums Specialty P&C Segment Revenues (Dollars in Millions) | Revenue Type | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Personal Automobile Earned Premiums | $789.3 | $753.7 | $691.5 | $1,543.0 | $1,366.8 | | Commercial Automobile Earned Premiums | 221.5 | 208.5 | 171.1 | 430.0 | 335.8 | | Total Specialty P&C Earned Premiums | 1,010.8 | 962.2 | 862.6 | 1,973.0 | 1,702.6 | | Net Investment Income | 49.6 | 50.5 | 46.6 | 100.1 | 87.7 | | Total Specialty P&C Insurance Revenues | $1,063.1 | $1,014.0 | $910.8 | $2,077.1 | $1,793.3 | - Personal Automobile earned premiums increased by **$97.8 million** (**14.1%**) in Q2 2025 compared to Q2 2024. Commercial Automobile earned premiums increased by **$50.4 million** (**29.5%**) over the same period[27](index=27&type=chunk) [Life Insurance Revenues](index=12&type=section&id=Life%20Insurance%20Revenues) The Life Insurance segment reported total revenues of $145.5 million in Q2 2025, an increase from $131.5 million in Q2 2024, primarily due to higher net investment income Life Insurance Segment Revenues (Dollars in Millions) | Revenue Type | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Earned Premium | $100.5 | $99.7 | $100.8 | $200.2 | $198.1 | | Net Investment Income | 44.7 | 48.4 | 30.5 | 93.1 | 74.8 | | Total Life Insurance Revenues | $145.5 | $148.8 | $131.5 | $294.3 | $273.4 | - Net Investment Income for the Life Insurance segment increased by **$14.2 million** (**46.6%**) in Q2 2025 compared to Q2 2024[27](index=27&type=chunk) [Segment Adjusted Operating Results](index=13&type=section&id=Segment%20Adjusted%20Operating%20Results) This section presents the adjusted operating income and net operating income for the Specialty Property & Casualty and Life Insurance segments [Segment Adjusted Operating Income](index=13&type=section&id=Segment%20Adjusted%20Operating%20Income) Total Segment Adjusted Operating Income for Q2 2025 was $113.2 million, a decrease from Q2 2024, primarily due to a decline in the Specialty P&C segment's operating income. However, the Life Insurance segment showed significant improvement Segment Adjusted Operating Income (Dollars in Millions) | Segment | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Specialty Property & Casualty Insurance | $98.9 | $122.1 | $127.9 | $221.0 | $214.4 | | Life Insurance | 14.3 | 20.2 | (1.4) | 34.5 | 12.6 | | Total Segment Adjusted Operating Income | $113.2 | $142.3 | $126.5 | $255.5 | $227.0 | - Specialty P&C Adjusted Operating Income decreased by **$29.0 million** (**22.7%**) in Q2 2025 compared to Q2 2024. Life Insurance Adjusted Operating Income significantly improved from a loss of **$1.4 million** in Q2 2024 to an income of **$14.3 million** in Q2 2025[29](index=29&type=chunk) [Segment Adjusted Net Operating Income](index=13&type=section&id=Segment%20Adjusted%20Net%20Operating%20Income) Adjusted Consolidated Net Operating Income for Q2 2025 was $84.1 million, a decrease from Q2 2024, but the six-month period showed a strong increase to $190.5 million from $161.4 million in the prior year Segment Adjusted Net Operating Income (Dollars in Millions) | Segment | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Specialty Property & Casualty Insurance | $79.0 | $97.9 | $102.3 | $176.9 | $171.5 | | Life Insurance | 12.6 | 17.2 | (0.2) | 29.8 | 11.7 | | Total Segment Adjusted Net Operating Income | $91.6 | $115.1 | $102.1 | $206.7 | $183.2 | | Adjusted Consolidated Net Operating Income | $84.1 | $106.4 | $91.7 | $190.5 | $161.4 | - Adjusted Consolidated Net Operating Income for the six months ended June 30, 2025, increased by **$29.1 million** (**18.0%**) compared to the same period in 2024[29](index=29&type=chunk) [Catastrophe Frequency and Severity](index=14&type=section&id=Catastrophe%20Frequency%20and%20Severity) This section analyzes the impact of catastrophe losses and loss adjustment expenses on consolidated results [Three Months Ended June 30, 2025 vs. 2024](index=14&type=section&id=Catastrophe%20Q2%20Comparison) Consolidated catastrophe losses and LAE significantly decreased in Q2 2025 to $7.7 million from $28.3 million in Q2 2024, with fewer events reported across all segments Catastrophe Losses and LAE (Three Months Ended June 30, Dollars in Millions) | Segment | Q2 2025 Events | Q2 2025 Losses & LAE | Q2 2024 Events | Q2 2024 Losses & LAE | | :--------------------------------------- | :------------- | :------------------- | :------------- | :------------------- | | Specialty Property & Casualty Insurance | 18 | $5.3 | 23 | $10.3 | | Life Insurance | 15 | $0.7 | 24 | $0.4 | | Non-Core Operations | 14 | $1.7 | 24 | $17.6 | | Consolidated | 19 | $7.7 | 27 | $28.3 | - Consolidated catastrophe losses and LAE decreased by **$20.6 million** (**72.8%**) in Q2 2025 compared to Q2 2024[31](index=31&type=chunk) [Six Months Ended June 30, 2025 vs. 2024](index=15&type=section&id=Catastrophe%206M%20Comparison) For the six months ended June 30, 2025, consolidated catastrophe losses and LAE decreased to $14.8 million from $44.3 million in the prior year, indicating a favorable trend in catastrophe impact Catastrophe Losses and LAE (Six Months Ended June 30, Dollars in Millions) | Segment | 6M 2025 Events | 6M 2025 Losses & LAE | 6M 2024 Events | 6M 2024 Losses & LAE | | :--------------------------------------- | :------------- | :------------------- | :------------- | :------------------- | | Specialty Property & Casualty Insurance | 33 | $9.1 | 42 | $14.4 | | Life Insurance | 26 | $1.0 | 36 | $0.6 | | Non-Core Operations | 25 | $4.7 | 42 | $29.3 | | Consolidated | 34 | $14.8 | 46 | $44.3 | - Consolidated catastrophe losses and LAE for the first six months of 2025 decreased by **$29.5 million** (**66.6%**) compared to the same period in 2024[33](index=33&type=chunk) [Specialty Property & Casualty Insurance Segment](index=16&type=section&id=Specialty%20Property%20%26%20Casualty%20Insurance%20Segment) This section provides detailed operational and financial results for the Specialty Property & Casualty insurance business [Results of Operations and Selected Financial Information](index=16&type=section&id=Specialty%20P%26C%20Results%20of%20Operations) The Specialty P&C segment reported strong growth in net premiums written and earned premiums for Q2 and 6M 2025. However, the combined ratio increased to 95.4% in Q2 2025 from 90.7% in Q2 2024, primarily due to higher current year non-catastrophe losses and LAE Specialty P&C Key Financials (Dollars in Millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Premiums Written | $1,001.5 | $1,068.8 | $933.9 | $2,070.3 | $1,798.5 | | Earned Premiums | 1,010.8 | 962.2 | 862.6 | 1,973.0 | 1,702.6 | | Total Incurred Losses and LAE | 749.4 | 686.8 | 602.2 | 1,436.2 | 1,221.3 | | Segment Adjusted Operating Income | 98.9 | 122.1 | 127.9 | 221.0 | 214.4 | | Combined Ratio | 95.4% | 92.7% | 90.7% | 94.1% | 92.7% | | Underlying Combined Ratio | 93.6% | 92.2% | 89.6% | 92.9% | 91.6% | - Net Premiums Written increased by **$67.6 million** (**7.2%**) in Q2 2025 compared to Q2 2024, and by **$271.8 million** (**15.1%**) for the six months ended June 30, 2025, year-over-year[35](index=35&type=chunk) - The Combined Ratio for Specialty P&C increased from **90.7%** in Q2 2024 to **95.4%** in Q2 2025, primarily driven by an increase in the Current Year Non-catastrophe Losses and LAE Ratio from **68.7%** to **72.3%**[35](index=35&type=chunk) [Personal Automobile Insurance](index=18&type=section&id=Personal%20Automobile%20Insurance) Personal Automobile insurance saw increased earned premiums and total revenues in Q2 2025. However, the combined ratio rose to 94.4% from 90.8% in Q2 2024, mainly due to higher current year non-catastrophe losses Personal Automobile Insurance Key Financials (Dollars in Millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Premiums Written | $767.0 | $823.9 | $739.5 | $1,590.9 | $1,412.0 | | Earned Premiums | $789.3 | $753.7 | $691.5 | $1,543.0 | $1,366.8 | | Adjusted Operating Income | 78.2 | 93.4 | 95.2 | 171.6 | 156.8 | | Combined Ratio | 94.4% | 92.0% | 90.8% | 93.2% | 92.9% | | Underlying Combined Ratio | 94.5% | 92.2% | 89.6% | 93.3% | 91.6% | - Earned Premiums for Personal Automobile increased by **$97.8 million** (**14.1%**) in Q2 2025 compared to Q2 2024[39](index=39&type=chunk) - The Current Year Non-catastrophe Losses and LAE Ratio for Personal Automobile increased from **68.2%** in Q2 2024 to **72.5%** in Q2 2025[39](index=39&type=chunk) [Commercial Automobile Insurance](index=19&type=section&id=Commercial%20Automobile%20Insurance) Commercial Automobile insurance experienced significant growth in earned premiums and total revenues. However, the combined ratio increased to 99.0% in Q2 2025 from 90.5% in Q2 2024, largely due to a substantial increase in prior years' non-catastrophe losses and LAE ratio Commercial Automobile Insurance Key Financials (Dollars in Millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Premiums Written | $234.5 | $244.9 | $194.4 | $479.4 | $386.5 | | Earned Premiums | $221.5 | $208.5 | $171.1 | $430.0 | $335.8 | | Adjusted Operating Income | 20.7 | 28.7 | 32.7 | 49.4 | 57.6 | | Combined Ratio | 99.0% | 95.3% | 90.5% | 97.2% | 92.0% | | Underlying Combined Ratio | 90.1% | 92.3% | 90.0% | 91.2% | 91.9% | - Earned Premiums for Commercial Automobile increased by **$50.4 million** (**29.5%**) in Q2 2025 compared to Q2 2024[41](index=41&type=chunk) - The Prior Years Non-catastrophe Losses and LAE Ratio for Commercial Automobile significantly increased from **(0.8)%** in Q2 2024 to **8.4%** in Q2 2025[41](index=41&type=chunk) [Life Insurance Segment](index=20&type=section&id=Life%20Insurance%20Segment) This section presents the operational and financial performance of the Life Insurance business segment [Results of Operations and Selected Financial Information](index=20&type=section&id=Life%20Insurance%20Results%20of%20Operations) The Life Insurance segment showed a strong turnaround, moving from an Adjusted Operating Loss of $1.4 million in Q2 2024 to an income of $14.3 million in Q2 2025. This improvement was largely driven by increased net investment income Life Insurance Segment Key Financials (Dollars in Millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Earned Premiums | $100.5 | $99.7 | $100.8 | $200.2 | $198.1 | | Net Investment Income | 44.7 | 48.4 | 30.5 | 93.1 | 74.8 | | Total Revenues | 145.5 | 148.8 | 131.5 | 294.3 | 273.4 | | Policyholders' Benefits and Incurred Losses and LAE | 63.5 | 62.2 | 63.9 | 125.7 | 126.9 | | Segment Adjusted Operating Income (Loss) | 14.3 | 20.2 | (1.4) | 34.5 | 12.6 | | Total Segment Adjusted Net Operating Income (Loss) | $12.6 | $17.2 | $(0.2) | $29.8 | $11.7 | - Net Investment Income for the Life Insurance segment increased by **$14.2 million** (**46.6%**) in Q2 2025 compared to Q2 2024[43](index=43&type=chunk) - Insurance Reserves for the Life Insurance segment were **$3,237.4 million** at June 30, 2025, slightly higher than **$3,204.6 million** at June 30, 2024[45](index=45&type=chunk) [Expenses](index=22&type=section&id=Expenses) Total insurance, interest, and other expenses for Q2 2025 were $309.0 million, an increase from $293.6 million in Q2 2024, primarily driven by higher policy acquisition costs and business unit operating costs Consolidated Expenses (Dollars in Millions) | Expense Type | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Policy Acquisition Costs, Net of Amortization | $177.1 | $164.3 | $159.1 | $341.4 | $314.0 | | Business Unit Operating Costs | 71.4 | 75.1 | 64.0 | 146.5 | 128.3 | | Corporate Overhead Costs | 44.6 | 46.7 | 49.4 | 91.3 | 98.2 | | Insurance Expenses | 293.1 | 286.1 | 272.5 | 579.2 | 540.5 | | Other Expenses | 6.9 | 8.4 | 7.2 | 15.3 | 25.6 | | Interest Expense | 9.0 | 11.4 | 13.9 | 20.4 | 27.9 | | Total Insurance, Interest, and Other Expenses | $309.0 | $305.9 | $293.6 | $614.9 | $594.0 | - Policy Acquisition Costs, Net of Amortization, increased by **$18.0 million** (**11.3%**) in Q2 2025 compared to Q2 2024[47](index=47&type=chunk) - Corporate Overhead Costs decreased by **$4.8 million** (**9.7%**) in Q2 2025 compared to Q2 2024[47](index=47&type=chunk) [Details of Investment Performance](index=23&type=section&id=Details%20of%20Investment%20Performance) Total investment income for Q2 2025 was $102.6 million, with interest on fixed income securities being the largest component. Net realized investment losses and impairment losses were recorded in Q2 2025 Total Investment Income (Dollars in Millions) | Investment Income Type | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Interest on Fixed Income Securities | $76.9 | $76.4 | $80.2 | $153.3 | $160.0 | | Alternative Investments | (2.2) | 3.0 | (8.5) | 0.8 | (7.2) | | Short-term Investments | 6.0 | 8.6 | 7.3 | 14.6 | 14.6 | | Company-Owned Life Insurance | 10.5 | 10.2 | 8.9 | 20.7 | 16.0 | | Total Investment Income | $102.6 | $108.5 | $98.7 | $211.1 | $207.0 | Net Realized Investment Gains (Losses) and Impairment Losses (Dollars in Millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Realized Investment (Losses) Gains | $(0.1) | $0.9 | $1.5 | $0.8 | $8.1 | | Net Impairment Losses Recognized in Earnings | $(3.6) | $0.3 | $(0.1) | $(3.3) | $(1.6) | - Interest on Fixed Income Securities decreased slightly from **$80.2 million** in Q2 2024 to **$76.9 million** in Q2 2025[49](index=49&type=chunk) [Details of Invested Assets](index=24&type=section&id=Details%20of%20Invested%20Assets) This section outlines the composition of the company's investment portfolio by asset type, rating, and duration [Invested Assets by Type](index=24&type=section&id=Invested%20Assets%20by%20Type) Total investments were $8,645.5 million at June 30, 2025, with fixed maturities constituting the largest portion at 77.2%. Short-term investments saw a significant reduction since December 2024 Invested Assets by Type (Dollars in Millions) | Asset Type | Jun 30, 2025 Value | Jun 30, 2025 % | Dec 31, 2024 Value | Dec 31, 2024 % | | :--------------------------------------- | :----------------- | :------------- | :----------------- | :------------- | | Fixed Maturities at Fair Value | $6,669.1 | 77.2% | $6,409.6 | 72.1% | | Equity Securities at Fair Value | 284.1 | 3.3% | 218.5 | 2.5% | | Short-term Investments at Cost | 407.6 | 4.7% | 1,037.1 | 11.7% | | Company-Owned Life Insurance | 557.1 | 6.4% | 539.2 | 6.1% | | Total Investments | $8,645.5 | 100.0% | $8,888.5 | 100.0% | - Short-term investments decreased from **$1,037.1 million** (**11.7%** of total) at December 31, 2024, to **$407.6 million** (**4.7%** of total) at June 30, 2025[51](index=51&type=chunk) [Fixed Maturities by S&P Equivalent Rating and Duration](index=25&type=section&id=Fixed%20Maturities%20by%20Rating%20and%20Duration) The majority of fixed maturities (71.1%) are rated AAA, AA, or A as of June 30, 2025, indicating a high-quality portfolio. The duration of total fixed maturities decreased slightly to 7.4 years Fixed Maturities by S&P Equivalent Rating (Dollars in Millions) | Rating | Jun 30, 2025 Value | Jun 30, 2025 % | Dec 31, 2024 Value | Dec 31, 2024 % | | :--------------------------------------- | :----------------- | :------------- | :----------------- | :------------- | | AAA, AA, A | $4,739.9 | 71.1% | $4,576.4 | 71.4% | | BBB | 1,541.1 | 23.1% | 1,557.6 | 24.3% | | BB, B | 333.1 | 5.0% | 221.7 | 3.5% | | CCC or Lower | 55.0 | 0.8% | 53.9 | 0.8% | | Total Investments in Fixed Maturities | $6,669.1 | 100.0% | $6,409.6 | 100.0% | - The duration of total investments in fixed maturities decreased from **7.7 years** at December 31, 2024, to **7.4 years** at June 30, 2025[53](index=53&type=chunk) [Investment Concentration](index=26&type=section&id=Investment%20Concentration) The company's non-governmental fixed maturities are primarily concentrated in the Finance, Insurance and Real Estate sector (24.3%), followed by Manufacturing (11.4%). The ten largest state investment exposures in fixed maturities represent 7.5% of total investments Fair Value of Non-governmental Fixed Maturities by Industry (Dollars in Millions) | Industry | Jun 30, 2025 Amount | Jun 30, 2025 % of Total Investments | Dec 31, 2024 Amount | Dec 31, 2024 % of Total Investments | | :--------------------------------------- | :------------------ | :---------------------------------- | :------------------ | :---------------------------------- | | Finance, Insurance and Real Estate | $2,098.9 | 24.3% | $1,969.1 | 22.2% | | Manufacturing | 988.0 | 11.4% | 1,014.3 | 11.4% | | Transportation, Communication and Utilities | 843.5 | 9.8% | 793.0 | 8.9% | | Services | 608.2 | 7.0% | 582.9 | 6.6% | | Total Fair Value of Non-governmental Fixed Maturities | $4,867.3 | 56.3% | $4,683.0 | 52.7% | Ten Largest State Investment Exposures in Fixed Maturities (Dollars in Millions) | State | Jun 30, 2025 Value | Jun 30, 2025 % of Total Investments | | :--------------------------------------- | :----------------- | :---------------------------------- | | California | $133.3 | 1.5% | | Texas | 101.6 | 1.2% | | Michigan | 82.3 | 1.0% | | Georgia | 69.1 | 0.8% | | New York | 60.1 | 0.7% | | Florida | 52.4 | 0.6% | | Pennsylvania | 46.6 | 0.5% | | Virginia | 36.1 | 0.4% | | Louisiana | 35.5 | 0.4% | | Colorado | 34.7 | 0.4% | | Total | $651.7 | 7.5% | [Municipal Bond Securities](index=27&type=section&id=Municipal%20Bond%20Securities) The company holds $1,219.9 million in municipal bond securities as of June 30, 2025, representing 14.1% of total investments. California, Texas, and Michigan are the top three state exposures Municipal Bond Securities by State (Dollars in Millions) | State | Political Subdivision General Obligation | Revenue | State General Obligation | Total Fair Value | % of Total Muni Bond | % of Total Investments | | :--------------------------------------- | :--------------------------------------- | :------ | :----------------------- | :--------------- | :------------------- | :--------------------- | | California | $8.9 | $124.5 | $— | $133.4 | 10.9% | 1.5% | | Texas | 10.5 | 87.6 | 3.5 | 101.6 | 8.3% | 1.2% | | Michigan | — | 71.9 | 10.4 | 82.3 | 6.8% | 1.0% | | Georgia | 2.7 | 61.0 | 5.4 | 69.1 | 5.7% | 0.8% | | New York | 11.3 | 48.8 | — | 60.1 | 4.9% | 0.7% | | Total | $56.1 | $1,093.5 | $70.3 | $1,219.9 | 100.0% | 14.1% | [Investments in Limited Liability Companies and Limited Partnerships](index=28&type=section&id=Investments%20in%20Limited%20Liability%20Companies%20and%20Limited%20Partnerships) Total investments in limited liability companies and limited partnerships amounted to $393.8 million at June 30, 2025, with significant portions reported under equity method and other equity interests at fair value, primarily in mezzanine and senior debt Investments in LLCs and LPs by Asset Class (Dollars in Millions) | Asset Class | Jun 30, 2025 Reported Value | Dec 31, 2024 Reported Value | | :--------------------------------------- | :-------------------------- | :-------------------------- | | **Reported as Equity Method Limited Liability Investments:** | | | | Senior Debt | $19.1 | $19.1 | | Mezzanine Debt | 115.3 | 116.7 | | Real Estate | 24.3 | 27.3 | | Total Equity Method Limited Liability Investments | $176.2 | $186.3 | | **Reported as Other Equity Interests at Fair Value:** | | | | Mezzanine Debt | $115.7 | $116.9 | | Leveraged Buyout | 32.6 | 19.2 | | Senior Debt | 27.5 | 26.3 | | Total Reported as Other Equity Interests at Fair Value | $198.4 | $183.6 | | Total Investments in Limited Liability Companies and Limited Partnerships | $393.8 | $389.3 | - Unfunded commitments for these investments totaled **$230.2 million** as of June 30, 2025[59](index=59&type=chunk) [Definitions of Non-GAAP Financial Measures](index=29&type=section&id=Definitions%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed definitions and reconciliations for key non-GAAP financial metrics used in the report [Adjusted Consolidated Net Operating Income](index=29&type=section&id=Adjusted%20Consolidated%20Net%20Operating%20Income%20Definition) Adjusted Consolidated Net Operating Income is a non-GAAP measure that excludes specific non-recurring or volatile items from Net Income attributable to Kemper Corporation to provide a clearer view of ongoing operational performance - Adjusted Consolidated Net Operating Income is calculated by excluding the after-tax impact of: Change in Fair Value of Equity and Convertible Securities; Net Realized Investment (Losses) Gains; Impairment Losses; Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs; Debt Extinguishment, Pension Settlement and Other Charges; Goodwill Impairment Charges; Non-Core Operations; and Significant non-recurring or infrequent items[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) Reconciliation of Net Income to Adjusted Consolidated Net Operating Income (Dollars in Millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Income attributable to Kemper Corporation | $72.6 | $99.7 | $75.4 | $172.3 | $146.7 | | Less Net (Loss) Income From: | | | | | | | Change in Fair Value of Equity and Convertible Securities | (0.4) | 0.1 | (1.0) | (0.3) | 1.7 | | Net Realized Investment (Losses) Gains | (0.1) | 0.7 | 1.2 | 0.6 | 6.4 | | Impairment Losses | (2.8) | 0.2 | (0.1) | (2.6) | (1.3) | | Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs | (3.8) | (4.2) | (5.1) | (8.0) | (15.2) | | Debt Extinguishment, Pension Settlement and Other Charges | — | 0.4 | 2.1 | 0.4 | 2.1 | | Non-Core Operations | (4.4) | (3.9) | (13.4) | (8.3) | (8.4) | | Adjusted Consolidated Net Operating Income | $84.1 | $106.4 | $91.7 | $190.5 | $161.4 | [Return on Adjusted Shareholders' Equity](index=31&type=section&id=Return%20on%20Adjusted%20Shareholders'%20Equity%20Definition) Return on Adjusted Shareholders' Equity is a non-GAAP measure that annualizes Net Income attributable to Kemper Corporation and divides it by average shareholders' equity, excluding net unrealized gains/losses on fixed maturities, changes in discount rate on future life policyholder benefits, and goodwill - Return on Adjusted Shareholders' Equity is calculated by dividing the period's annualized Net Income attributable to Kemper Corporation by the average shareholders' equity excluding net unrealized gains and losses on fixed maturities, the change in discount rate on future life policyholder benefits and goodwill[67](index=67&type=chunk) Reconciliation of Return on Shareholders' Equity to Return on Adjusted Shareholders' Equity | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Return on Shareholders' Equity | 9.9% | 14.0% | 11.5% | 11.9% | 11.3% | | Return on Adjusted Shareholders' Equity | 14.9% | 21.0% | 17.6% | 17.9% | 17.4% | [Underlying Combined Ratio](index=31&type=section&id=Underlying%20Combined%20Ratio%20Definition) The Underlying Combined Ratio is a non-GAAP measure that excludes the impact of catastrophe losses and prior-year reserve development from the Combined Ratio, providing a clearer view of the Property & Casualty Insurance segment's underlying underwriting performance - Underlying Combined Ratio is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio. It excludes the effect of catastrophes and prior-year reserve development[69](index=69&type=chunk)[70](index=70&type=chunk) [Adjusted Book Value Per Share](index=32&type=section&id=Adjusted%20Book%20Value%20Per%20Share%20Definition) Adjusted Book Value Per Share is a non-GAAP measure that divides shareholders' equity (excluding after-tax impact of net unrealized gains/losses on fixed income securities, changes in discount rate on future life policyholder benefits, and goodwill) by total common shares outstanding - Adjusted Book Value Per Share is calculated by dividing shareholders' equity after excluding the after-tax impact of net unrealized gains and losses on fixed income securities, the change in discount rate on future life policyholder benefits and goodwill by total Common Shares Issued and Outstanding[72](index=72&type=chunk) Reconciliation of Book Value Per Share to Adjusted Book Value Per Share | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Jun 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Book Value Per Share | $46.45 | $45.60 | $43.68 | $41.46 | | Less: Net Unrealized Losses on Fixed Maturities | 10.04 | 9.98 | 10.91 | 10.65 | | Less: Change in Discount Rate on Future Life Policyholder Benefits | (5.82) | (5.72) | (5.96) | (5.56) | | Less: Goodwill | (19.66) | (19.55) | (19.59) | (19.41) | | Adjusted Book Value Per Share | $31.01 | $30.31 | $29.04 | $27.14 |

Company Overview - Kemper (KMPR) is headquartered in Chicago and operates in the Finance sector, with a stock price change of -7.3% since the beginning of the year [3] - The company currently pays a dividend of $0.32 per share, resulting in a dividend yield of 2.08%, which is higher than the Insurance - Multi line industry's yield of 1.72% and the S&P 500's yield of 1.48% [3] Dividend Analysis - Kemper's current annualized dividend of $1.28 has increased by 3.2% from the previous year [4] - Over the past 5 years, Kemper has raised its dividend twice on a year-over-year basis, averaging an annual increase of 0.70% [4] - The company's current payout ratio is 20%, indicating that it pays out 20% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for Kemper's earnings in 2025 is $6.34 per share, reflecting a year-over-year earnings growth rate of 7.64% [5] - The company is viewed as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 2 (Buy) [6]

Group 1 - Kemper's shares have increased by 0.1% over the past four weeks, closing at $63.07, with a mean price target of $82.2 indicating a potential upside of 30.3% [1] - The average of five short-term price targets ranges from a low of $75.00 to a high of $90.00, with a standard deviation of $5.72, suggesting a potential increase of 18.9% to 42.7% from the current price [2] - Analysts show strong agreement in revising earnings estimates higher, which correlates with potential stock price movements, indicating a positive outlook for Kemper [11][12] Group 2 - The Zacks Consensus Estimate for the current year has increased by 0.1% over the last 30 days, with no negative revisions, reflecting optimism about the company's earnings prospects [12] - Kemper currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, suggesting a strong potential upside [13] - While the consensus price target may not be a reliable indicator of the extent of potential gains, it does provide a directional guide for price movement [14]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks may lose momentum when their valuations exceed future growth potential [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Kemper (KMPR) Stock Analysis - Kemper (KMPR) is highlighted as a strong candidate for momentum investing, showing a four-week price change of 0.6% and an 11% gain over the past 12 weeks [4][5] - KMPR has a beta of 1.3, indicating it moves 30% more than the market in either direction, suggesting strong momentum [5] - The stock has a Momentum Score of B, indicating a favorable time to invest [6] - KMPR has received a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investor interest [7] - The stock is currently trading at a Price-to-Sales ratio of 0.87, suggesting it is undervalued at 87 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides KMPR, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies tailored to various investing styles, aimed at outperforming the market [9]

Core Insights - The article emphasizes the importance of value investing and highlights Kemper (KMPR) as a strong value stock based on its Zacks Rank and valuation metrics [3][7]. Valuation Metrics - Kemper has a P/B ratio of 1.38, which is significantly lower than the industry average of 2.65, indicating potential undervaluation [4]. - The P/S ratio for Kemper is 0.88, compared to the industry's average of 1.07, further suggesting that the stock may be undervalued [5]. - Kemper's P/CF ratio stands at 10.24, which is attractive relative to the industry average of 10.48, reinforcing the notion of undervaluation [6]. Investment Outlook - Given the strong earnings outlook and favorable valuation metrics, Kemper is positioned as a compelling value stock at the current time [7].

Group 1 - The stock of Kemper (KMPR) closed at $63.29, showing a 1.3% gain over the past four weeks, with a mean price target of $82.2 indicating a potential upside of 29.9% [1] - The average price targets from analysts range from a low of $75.00 to a high of $90.00, with a standard deviation of $5.72, suggesting a variability in estimates; the lowest estimate indicates an 18.5% increase, while the highest points to a 42.2% upside [2] - Analysts show strong agreement on the company's ability to report better earnings than previously predicted, which supports the view of potential upside [4][11] Group 2 - The Zacks Consensus Estimate for the current year has increased by 1.2% over the past month, with one estimate going higher and no negative revisions [12] - Kemper currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While the consensus price target may not be a reliable indicator of potential gains, the implied direction of price movement appears to be a good guide [14]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Kemper (KMPR) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][3][7]. Valuation Metrics - Kemper has a Price-to-Book (P/B) ratio of 1.39, which is significantly lower than the industry average of 2.65, indicating it may be undervalued [4]. - The Price-to-Sales (P/S) ratio for Kemper is 0.84, compared to the industry average of 1.07, further suggesting undervaluation [5]. - Kemper's Price-to-Cash Flow (P/CF) ratio stands at 10.24, which is attractive relative to the industry's average of 10.52 [6]. Earnings Outlook - The strength of Kemper's earnings outlook, combined with its favorable valuation metrics, positions it as one of the strongest value stocks in the market [7].