UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________________________________________________ FORM 10-Q ______________________________________________________ ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended 3/31/2025 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to Commission file number 001-18298 ____________________________ ...

Investor Supplement First Quarter 2025 Caution Regarding Forward-Looking Statements This Investor Supplement may contain or incorporate by reference information that includes or is based on forward- looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Such statements involve known and unknown ris ...

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a me ...

Company Overview - Kemper is an insurance holding company based in Chicago, operating in the Finance sector, with shares experiencing a price change of -13.1% this year [3] - The company currently pays a dividend of $0.32 per share, resulting in a dividend yield of 2.22%, which is higher than the Insurance - Multi line industry's yield of 1.56% and the S&P 500's yield of 1.73% [3] Dividend Analysis - Kemper's annualized dividend of $1.28 has increased by 3.2% from the previous year, with two dividend increases over the last five years, averaging an annual increase of 0.63% [4] - The company's current payout ratio is 21%, indicating that it pays out 21% of its trailing 12-month earnings per share as dividends [4] Earnings Expectations - The Zacks Consensus Estimate for Kemper's earnings in 2025 is projected at $6.03 per share, reflecting a year-over-year growth rate of 2.38% [5] Investment Considerations - Dividends are favored by investors for various reasons, including improving stock investing profits and providing tax advantages, although not all companies offer dividends [6] - Kemper is identified as a compelling investment opportunity due to its strong dividend profile and a Zacks Rank of 3 (Hold) [7]

Regulatory Environment - Kemper's insurance operations are primarily regulated at the state level, affecting policy forms, rate setting, and claims handling practices [83]. - The company anticipates a continuing focus on new regulatory and legislative proposals at state and federal levels regarding privacy and security of personal information [90]. - Kemper's insurance subsidiaries are required to pay assessments to fund policyholder losses or liabilities of insolvent insurance companies under guaranty fund laws in most states [87]. - The company faces risks related to increased costs and potential liabilities from evolving regulatory policies and adverse legal outcomes [26]. - Kemper's ability to address market developments can be adversely impacted by lengthy delays in the approval process for policy rates and forms [84]. - The company is subject to numerous federal and state laws imposing significant requirements for protecting personal and confidential information [88]. - Kemper's insurance subsidiaries must maintain a cybersecurity program and incident response plan under extensive regulations [90]. - New state regulations expand oversight and reporting requirements for insurance holding companies, impacting enterprise risk assessments [96]. - The Dodd-Frank Act established the Federal Insurance Office to monitor the insurance industry and may influence business operations and financial reporting [97]. - Control of insurance companies is presumed with ownership of 10% or more of voting securities in most states, and 5% in Alabama, requiring prior regulatory approval for acquisitions [94]. Financial Strategy - Kemper's total capital held by domestic insurance subsidiaries exceeded the minimum levels required under applicable Risk-Based Capital (RBC) requirements as of December 31, 2024 [86]. - The company employs a total return investment strategy with an emphasis on yield while maintaining liquidity to meet short- and medium-term insurance obligations [81]. - Kemper relies on dividends from its insurance subsidiaries to meet obligations, with regulatory approval required for certain distributions [92]. - The company cannot guarantee that forward-looking statements will be achieved due to various risks and uncertainties [22]. Employee Engagement and Culture - Kemper emphasizes a culture of ownership among employees, driving high performance and accountability [100]. - Employee engagement is measured through surveys focusing on career growth, leadership, and workplace culture [109]. - Kemper offers a comprehensive total rewards package, including health insurance, retirement savings, and employee development programs [110]. - The company promotes a hybrid work model to enhance flexibility and maintain community engagement among employees [113]. - Regular town hall meetings are held to keep employees informed about key initiatives and celebrate achievements [114]. - Kemper is committed to fostering an inclusive environment that values diverse perspectives and supports employee growth [102].

Financial Data and Key Metrics Changes - For the year, the company reported net income of $318 million, with a fourth-quarter net income of $97 million [16] - The return on equity for the year was 11.9%, with an adjusted return on equity of 18.3% [21] - The company achieved a strong underlying combined ratio of 91.5% for both the year and the fourth quarter [17] Business Line Data and Key Metrics Changes - The specialty auto business had an underlying combined ratio of 91.7% and generated $101 million of adjusted net operating income [22] - The Life segment delivered $24 million of adjusted net operating income, an increase of $9 million from the previous quarter [23] - The company experienced a 2% growth in policies in force (PIF) during the fourth quarter, contrasting with the typical seasonal decline [18] Market Data and Key Metrics Changes - The California market is experiencing pricing disruption due to regulatory changes and inflation, leading to increased consumer shopping activity [36] - Florida and Texas markets are moving towards normalcy, with Florida showing profitable growth and Texas being characterized as a traditionally soft market [37][104] - The company expects continued strong profitability in the specialty auto market, driven by competitive advantages [22] Company Strategy and Development Direction - The company aims to capitalize on competitive advantages in a hard market to achieve better underwriting profitability and growth rates [10] - There is a focus on diversifying the business mix away from California, which currently represents about 51% of overall business [124][128] - The company plans to continue returning capital to shareholders while prioritizing organic growth opportunities [57][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the financial benefits from competitive advantages in the hard market continuing [13] - The company anticipates robust growth trends in the specialty auto buying season entering 2025 [18] - Management noted that the recent California wildfires are not expected to have a meaningful impact on financials [15] Other Important Information - The company repurchased $14 million of common stock and increased its quarterly dividend by $0.01 to $0.32 [29] - The company plans to retire $450 million of debt, which will strengthen its balance sheet [30] Q&A Session Summary Question: Impact of California fires on auto business - Management indicated no substantive change in business due to the fires, with consistent sales and retention [48][49] Question: Return of seasonality in production and loss ratios - Management acknowledged that some return to seasonality is expected but could not provide precise forecasts [52][53] Question: Share repurchase strategy for 2025 - Management stated that organic growth is the primary focus, with opportunistic share repurchases when the stock is undervalued [58][60] Question: California auto premium increase from minimum limits - Management confirmed a 30% increase in minimum limit policies, which represent over 90% of California policies, but do not expect a material impact on margins [65][70] Question: Adverse development on commercial auto line - Management clarified that their commercial auto book is performing well, with only one underwriting loss in the last 20 quarters [75][78] Question: Future diversification away from California - Management highlighted ongoing efforts to diversify the business mix, with growth rates outside California exceeding those within [125][128]

Core Insights - Kemper reported $1.18 billion in revenue for Q4 2024, a year-over-year increase of 1.4%, with an EPS of $1.78 compared to $0.78 a year ago, indicating strong earnings growth [1] - The revenue exceeded the Zacks Consensus Estimate by 1.30%, while the EPS surprise was 28.99% above the consensus estimate [1] Financial Performance Metrics - Total Incurred Loss and LAE Ratio for Commercial Automobile Insurance was 78%, higher than the average estimate of 73.8% [4] - Total Incurred Loss and LAE Ratio for Personal Automobile Insurance was 68.4%, better than the average estimate of 70.6% [4] - Net investment income was reported at $103 million, below the average estimate of $111.69 million, reflecting a year-over-year decline of 1.5% [4] - Earned premiums totaled $1.08 billion, slightly above the estimated $1.06 billion, marking a 1.7% increase year-over-year [4] - Specialty Property & Casualty Insurance earned premiums reached $954.80 million, exceeding the estimate of $919.42 million, with a year-over-year increase of 10.3% [4] - Specialty Property & Casualty Insurance net investment income was $49.90 million, below the average estimate of $53.04 million, but showed a year-over-year increase of 17.1% [4] - Other income from Specialty Property & Casualty Insurance was $0.90 million, below the estimate of $1.10 million, reflecting a significant year-over-year decline of 30.8% [4] - Life and Health Insurance net investment income was $45.50 million, slightly below the estimate of $46.15 million, with a year-over-year decrease of 3.4% [4] - Earned premiums for Personal Automobile Insurance were $753.30 million, exceeding the estimate of $727.77 million, with a year-over-year increase of 7.7% [4] - Earned premiums for Commercial Automobile Insurance were $201.50 million, surpassing the estimate of $191.70 million, reflecting a year-over-year increase of 21.2% [4] - Total Life and Health Insurance revenue was $141.10 million, above the estimate of $138.83 million, indicating a year-over-year increase of 7.4% [4] - Earned premiums for Life and Health Insurance were $95.20 million, exceeding the estimate of $92.63 million, with a year-over-year increase of 13.3% [4] Stock Performance - Kemper's shares returned +2.2% over the past month, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Group 1 - Kemper reported quarterly earnings of $1.78 per share, exceeding the Zacks Consensus Estimate of $1.38 per share, and showing a significant increase from $0.78 per share a year ago, resulting in an earnings surprise of 28.99% [1] - The company achieved revenues of $1.18 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.30%, and showing a slight increase from $1.17 billion year-over-year [2] - Over the last four quarters, Kemper has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Group 2 - The stock has underperformed the market, losing about 0.7% since the beginning of the year, while the S&P 500 has gained 2.7% [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 $1.46 on revenues of $1.21 billion, and for the current fiscal year, it is $5.99 on revenues of $5 billion [7] Group 3 - The Zacks Industry Rank indicates that the Insurance - Multi line sector is currently in the bottom 45% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - The trend of estimate revisions for Kemper is mixed, leading to a Zacks Rank 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6]

Fourth Quarter 2024 Earnings February 5, 2025 Earnings Call Presentation – 4Q 2024 Preliminary Matters Cautionary Statements Regarding Forward-Looking Information This presentation may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual resul ...

Financial Performance - Earned premiums for Q4 2024 were $1,081.8 million, a slight increase from $1,063.8 million in Q4 2023[8] - Total revenues for Q4 2024 reached $1,186.8 million, compared to $1,187.2 million in Q4 2023, indicating a marginal decline[8] - Net income attributable to Kemper Corporation for Q4 2024 was $97.4 million, up from $73.7 million in Q4 2023, representing a 32.5% increase[8] - Adjusted consolidated net operating income for Q4 2024 was $115.1 million, compared to $105.0 million in Q4 2023, reflecting a 9.5% growth[8] - Return on shareholders' equity for Q4 2024 was 14.0%, an increase from 10.8% in Q4 2023[8] - The company declared dividends of $0.31 per share for Q4 2024, consistent with the previous quarter and year[8] - The total net investment income for Q4 2024 was $103.0 million, slightly down from $104.6 million in Q4 2023[8] - Adjusted net operating income per share for Q4 2024 was $1.81, compared to $1.63 in Q4 2023, marking an increase of 11.0%[8] - The company reported a total of $4,215.9 million in earned premiums for the year ended December 31, 2024, down from $4,529.4 million in 2023[8] - Total revenues for the year ended December 31, 2024, reached $4,638.6 million, compared to $4,944.2 million for the previous year[13] - Net income attributable to Kemper Corporation for the year ended December 31, 2024, was $312.5 million, compared to a net loss of $272.3 million in 2023[18] Assets and Liabilities - Total assets as of December 31, 2024, are $12,630.4 million, a decrease of 1.9% from $12,742.7 million in December 31, 2023[11] - The total liabilities of Kemper Corporation were $9,846.1 million as of December 31, 2024, a decrease from $10,102.6 million at September 30, 2024, indicating a reduction of about 2.5%[16] - Insurance reserves decreased to $5,811.6 million from $6,102.9 million year-over-year, reflecting a decline of 4.8%[11] - Shareholders' equity increased to $2,788.4 million, up 11.3% from $2,505.2 million in December 31, 2023[11] - Debt remained stable at $1,391.6 million, showing minimal change compared to $1,389.2 million in December 31, 2023[11] - Debt to total capitalization ratio is at 33.3%, slightly down from 35.7% in the previous year[11] Investment Performance - The company reported a net realized investment gain of $19.7 million for the three months ended September 30, 2024, compared to a loss of $30.3 million in the previous quarter[13] - The company experienced a net realized investment loss of $13.2 million for the year ended December 31, 2024, compared to a gain of $18.6 million in 2023[18] - Total investment income for the year ended December 31, 2024, was $447.1 million, compared to $419.7 million for the year ended December 31, 2023, a growth of 6.5%[50] - The company reported a net realized investment gain of $4.0 million in Q4 2024, compared to a loss of $30.3 million in Q4 2023[50] Segment Performance - Total Specialty Property & Casualty Insurance Revenues for Q4 2024 reached $1,006.2 million, an increase from $909.8 million in Q4 2023, representing a growth of 10.6% year-over-year[26] - Personal Automobile earned premiums for Q4 2024 were $753.3 million, up from $699.3 million in Q4 2023, reflecting a growth of 7.7%[26] - Commercial Automobile earned premiums increased to $201.5 million in Q4 2024, compared to $166.3 million in Q4 2023, marking a significant rise of 21.2%[26] - Life Insurance total revenues for Q4 2024 amounted to $141.1 million, up from $131.4 million in Q4 2023, showing an increase of 7.0%[26] - Specialty Property & Casualty Insurance segment reported adjusted operating income of $126.7 million for Q4 2024, up from $56.6 million in Q4 2023, representing a significant increase of 124% year-over-year[28] - Life Insurance segment achieved adjusted operating income of $28.4 million in Q4 2024, compared to $19.9 million in Q4 2023, reflecting a growth of 42%[28] Operational Efficiency - The combined ratio for the quarter improved to 90.8%, down from 99.5% in the same quarter of the previous year, indicating better operational efficiency[41] - The underlying combined ratio was 91.7%, reflecting a slight improvement from 91.3% in the previous quarter[36] - The insurance expense ratio for the current year was 21.7%, slightly up from 21.2% in the previous quarter[36] Catastrophe and Loss Events - The company reported a total of 6 catastrophe events in Q4 2024 with incurred losses of $1.9 million, compared to 6 events and $2.5 million in losses in Q4 2023[30] - The number of non-core operations events decreased from 7 in Q4 2023 to 6 in Q4 2024, with total losses of $5.4 million in Q4 2024[30] - The total losses and LAE for the Non-Core Operations segment in 2024 were $65.3 million, an increase from $96.7 million in 2023[33] Shareholder Metrics - Average shareholders' equity increased to $2,780.9 million in Q4 2024 from $2,722.3 million in Q3 2024, representing a 2.1% growth[70] - Adjusted shareholders' equity for Q4 2024 was $1,819.7 million, compared to $1,767.0 million in Q3 2024, marking a 3.0% increase[70] - The adjusted book value per share rose to $29.04 in Q4 2024 from $27.88 in Q3 2024, reflecting a 4.2% increase[75] Future Outlook - The company expects continued growth in earned premiums and net investment income for the upcoming quarters[36]