Kemper(KMPR) - 2025 Q2 - Quarterly Report

FORM 10-Q General Information 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][2] 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 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][8] Caution Regarding Forward-Looking Statements 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 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] - Adverse outcomes in litigation, investigations, or other legal/regulatory proceedings pose a risk[16] - Uncertainties related to regulatory approval of insurance rates, policy forms, and other business matters are significant[16] Factors relating to insurance claims and related reserves 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] - Changes in interest rates may cause material fluctuations in life policyholder benefit reserves[16] - 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][19] Factors related to the Company's ability to compete 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] - Difficulties with technology, data, and network security (including cyber attacks) could negatively impact business operations[19] - Heightened competition, new technologies (telematics), and product developments by competitors pose significant challenges[19] Factors related to the business environment 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] - Absolute and relative performance of the Company's investments is a key risk factor[19] - Regulatory, accounting, or tax changes may affect earnings, product costs/demand, or after-tax returns from investments[19] Other risks and uncertainties 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] - Increased costs and risks related to cybersecurity (data breaches, cyber attacks) could materially affect operations[21] - The Company assumes no obligation to correct or update any forward-looking statements publicly[20] PART I. FINANCIAL INFORMATION This part presents Kemper Corporation's unaudited condensed consolidated financial statements and comprehensive explanatory notes Item 1. Financial Statements 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 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] - 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] Condensed Consolidated Statements of Comprehensive Income 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] - 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] Condensed Consolidated Balance Sheets 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] - 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] Condensed Consolidated Statements of Cash Flows 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] - 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] - 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] Condensed Consolidated Statements of Shareholders' Equity 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] Notes to the Condensed Consolidated Financial Statements 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 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][45] - No recently issued accounting pronouncements adopted prior to July 1, 2025, had a material impact on the interim financial statements[47] - 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][50] Note 2 - Net Income Per Unrestricted Share 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][53] Note 3 - Business Segments 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][55] 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 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] - 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] Note 5 - Liability for Future Policyholder Benefits 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] 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] Note 6 - Investments 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] Note 7 - Derivatives 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] 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] Note 8 - Fair Value Measurements 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] 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 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] - 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] - 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][135] Note 10 - Deferred Policy Acquisition Costs 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] - No changes were made to future assumptions for deferred policy acquisition costs during the six months ended June 30, 2025 and 2024[137] Note 11 - Receivables from Policyholders - Allowance for Expected Credit Losses 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 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] Note 13 - Shareholders' Equity 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] - For the six months ended June 30, 2025, Kemper repurchased approximately 509,000 shares for $32.5 million (average $63.90/share)[150] - As of June 30, 2025, the remaining share repurchase authorization was $100.3 million[148] - 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] Note 14 - Amortization of Intangible Assets 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] Note 15 - Policyholder Obligations 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] - The fair value of collateral pledged for FHLB funding agreements was $653.4 million at June 30, 2025[158] Note 16 - Debt 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] 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] - 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] Note 17 - Leases 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] Note 18 - Income Taxes 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] - 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] - 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] Note 19 - Commitments and Contingencies 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] Note 20 - Subsequent Events 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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][190] - Underlying Losses and LAE exclude catastrophe losses and prior-year reserve development to reveal underlying Property & Casualty Insurance segment trends[191][193] - The Underlying Combined Ratio is calculated by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio[192] Summary of Results 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] - 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][204] 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][210] - 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][211] - 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] Specialty Property & Casualty Insurance 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 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] - 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] Specialty Personal Automobile Insurance 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][232][234] - 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] Commercial Automobile Insurance 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][237][239] - 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] Life Insurance 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 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] Investment Results 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 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][254] Change in Unrealized Gains and Losses on Investments 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] Change in Fair Value of Equity and Convertible Securities 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] Net Realized (Losses) Gains on Sales of Investments 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][257] Impairment Losses 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][259] Investment Quality and Concentrations 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] 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] Investments in Limited Liability Companies and Limited Partnerships 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] Insurance, Interest, and Other Expenses 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] - 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] Income Taxes 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] - 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] - 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][281] Liquidity and Capital Resources 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 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] - No outstanding borrowings existed under the credit agreement at June 30, 2025, or December 31, 2024[283] Long-term Debt 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] Federal Home Loan Bank Agreements 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] - For these advances, United Insurance held pledged securities with a fair value of $653.4 million at June 30, 2025[287] - The fair value of pledged collateral must be maintained at specified levels, potentially requiring additional collateral or repayment if values decline[287] Common Stock Repurchases 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] - For the six months ended June 30, 2025, approximately 509,000 shares were repurchased for $32.5 million (average $63.90/share)[290] - As of June 30, 2025, the remaining share repurchase authorization was $100.3 million[288] Dividends to Shareholders 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] - 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] Subsidiary Dividends 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] - The remaining capacity for subsidiary dividends without prior regulatory approval is estimated at $129.0 million as of the filing date[292] Sources and Uses of Funds 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] - Primary sources for insurance subsidiaries are premiums, investment income, and FHLB advances; uses include policyholder benefits, claims, expenses, and investments[295] - Management believes its property and casualty insurance subsidiaries maintain adequate liquidity for potential catastrophic events[296] Net Cash Provided by Operating Activities 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] Net Cash Provided by Investing Activities 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] Net Cash Used in Financing Activities 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] Critical Accounting Estimates 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] - No material changes have occurred in the critical accounting estimates or significant accounting policies since the 2024 Annual Report[303] [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disc