Business Wire | Jan 31, 2022 04:05PM EST

Kemper Reports Fourth Quarter 2021 Operating Results

Jan. 31, 2022

CHICAGO--(BUSINESS WIRE)--Jan. 31, 2022--Kemper Corporation (NYSE: KMPR) reported net loss of $105.8 million, or $(1.66) per diluted share, for the fourth quarter of 2021, compared to net income of $97.5 million, or $1.46 per diluted share, for the fourth quarter of 2020. As Adjusted for Acquisitions1 of American Access Casualty Company ("AAC") and Infinity Property and Casualty Corporation, net loss was $101.3 million, or $(1.59) per diluted share, for the fourth quarter of 2021, compared to net income of $117.6 million, or $1.76 per diluted share, for the fourth quarter of 2020. In the fourth quarter of 2021, net loss included a $17.5 million after-tax gain, or $0.27 per diluted share, attributable to the change in fair value of equity and convertible securities.

Adjusted Consolidated Net Operating Loss1 was $130.8 million, or $(2.05) per diluted share, for the fourth quarter of 2021, compared to Adjusted Consolidated Net Operating Income1 of $105.8 million, or $1.59 per diluted share, for the fourth quarter of 2020.

Key themes of the quarter include:

* Specialty P&C earned premiums increased 17.0% due to a 17.9% increase in policies-in-force and the initial impact of rate changes; AAC contributed 10.3% and 12.6% for earned premiums and policies-in-force, respectively * Specialty P&C underlying combined ratio1 was 119.4%, due primarily to higher claim severity trends * Rate and non-rate actions continued at an accelerated pace, but earned benefit was minimal in the quarter * Investment portfolio continues to provide stable net investment income supporting long-term business objectives * Declared dividend of $0.31 per share

"This was another challenging quarter, and it goes without saying we're disappointed in our profitability," said President, CEO and Chairman Joseph P. Lacher, Jr. "The pandemic-driven environmental challenges the industry has experienced in the last couple of quarters intensified further in the fourth quarter, impacting results in each of our businesses. That said, we closed the year making significant progress on corrective measures that will become visible in the coming quarters. Overall, I couldn't be prouder of our team and how our organization has responded to the circumstances and challenges in the last couple of years. We remain focused on managing through these circumstances, and our team will continue to deliver on our promises and provide attractive, long-term intrinsic value for our shareholders."

1 Non-GAAP financial measure. All Non-GAAP financial measures are denoted with footnote 1 throughout this release. See "Use of Non-GAAP Financial Measures" for additional information.

Three Months Ended Year Ended

(Dollars in Millions, Except Dec 31, Dec 31, Dec 31, Dec 31,Per Share Amounts) 2021 2020 2021 2020(Unaudited)

Net Income (Loss) $ (105.8 ) $ 97.5 $ (120.5 ) $ 409.9

Adjusted Consolidated Net $ (130.8 ) $ 105.8 $ (218.8 ) $ 438.8 Operating Income (Loss) ^1



Impact of Catastrophe Lossesand Related Loss Adjustment $ (10.2 ) $ (4.4 ) $ (85.2 ) $ (84.3 )Expense (LAE) on Net Income



Diluted Net Income (Loss) Per Share From:

Net Income (Loss) $ (1.66 ) $ 1.46 $ (1.87 ) $ 6.14

Adjusted Consolidated Net $ (2.05 ) $ 1.59 $ (3.40 ) $ 6.57 Operating Income (Loss) ^1



Impact of Catastrophe Lossesand Related LAE on Net Income $ (0.16 ) $ (0.07 ) $ (1.33 ) $ (1.26 )(Loss) Per Share

Revenues

Total revenues for the fourth quarter of 2021 increased $101.8 million, or 7 percent, to $1,493.9 million, compared to the fourth quarter of 2020, driven by $149.9 million of higher Specialty P&C earned premiums, partially offset by a $50.9 million decrease attributable to the change in fair value of equity and convertible securities. Specialty P&C earned premiums increased due primarily to the acquisition of AAC and growth in existing portfolio. Net investment income increased $5.7 million to $108.4 million in the fourth quarter of 2021 compared to the fourth quarter of 2020 due primarily to higher levels of investments and rate on Company-Owned Life Insurance. Net realized investment gains were $21.7 million in the fourth quarter of 2021, compared to a net loss of $0.1 million in the fourth quarter of 2020.

Segment Results

Unless otherwise noted, (i) the segment results discussed below are presented on an after-tax basis, (ii) prior-year development includes both catastrophe and non-catastrophe losses and LAE, (iii) catastrophe losses and LAE exclude the impact of prior-year development, (iv) loss ratio includes loss and LAE, and (v) all comparisons are made to the prior year quarter unless otherwise stated.

Three Months Ended Year Ended

(Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31,(Unaudited) 2021 2020 2021 2020

Segment Net Operating Income (Loss):

Specialty Property & Casualty $ (125.2 ) $ 91.1 $ (196.1 ) $ 337.9 Insurance

Preferred Property & Casualty (7.4 ) 16.9 (12.5 ) 3.5 Insurance

Life & Health Insurance 5.1 9.4 28.2 60.0

Total Segment Net Operating (127.5 ) 117.4 (180.4 ) 401.4 Income (Loss)

Corporate and Other Net (3.3 ) (11.6 ) (38.4 ) 37.4 Operating Income (Loss)

Adjusted Consolidated Net (130.8 ) 105.8 (218.8 ) 438.8 Operating Income (Loss) ^1

Net Income (Loss) From:

Change in Fair Value ofEquity and Convertible 17.5 57.8 90.5 57.0 Securities

Net Realized Gains on Sales 17.2 (0.1 ) 51.2 30.1 of Investments

Impairment Losses (2.5 ) 0.4 (8.7 ) (15.4 )

Acquisition RelatedTransaction, Integration and (7.2 ) (15.8 ) (34.7 ) (50.0 )Other Costs

Debt Extinguishment, Pension - (50.6 ) - (50.6 )and Other Charges

Net Income (Loss) $ (105.8 ) $ 97.5 $ (120.5 ) $ 409.9

The Specialty Property & Casualty Insurance segment reported net operating loss of $125.2 million for the fourth quarter of 2021, compared to net operating income of $91.1 million in the fourth quarter of 2020. Results decreased due primarily to higher Underlying Combined Ratio1. The segment's Underlying Combined Ratio1 was 119.4 percent, compared to 91.3 percent in the fourth quarter of 2020.

The Preferred Property & Casualty Insurance segment reported net operating loss of $7.4 million for the fourth quarter of 2021, compared to net operating income of $16.9 million in the fourth quarter of 2020. Results deteriorated due primarily to a higher Underlying Combined Ratio1, higher catastrophe losses and LAE, partially offset by lower adverse prior year development. The segment's Underlying Combined Ratio1 was 106.9 percent, compared to 93.6 percent in the fourth quarter of 2020.

The Life & Health Insurance segment reported net operating income of $5.1 million for the fourth quarter of 2021, compared to $9.4 million in the fourth quarter of 2020.

Capital

Total Shareholders' Equity at the end of the quarter was $4,007.7 million, a decrease of $555.7 million, or 12 percent, since year-end 2020 primarily driven by a decrease in the valuation of our fixed income bond portfolio, a net operating loss, repurchases of common stock, and cash dividends. Kemper and its direct non-insurance subsidiaries ended the quarter with cash and investments of $233.9 million, and the $400.0 million revolving credit agreement was undrawn.

On November 3, 2021, Kemper announced that its Board of Directors declared a quarterly dividend of $0.31 per share, or $19.9 million. The dividend was paid on December 1, 2021 to its shareholders of record as of November 15, 2021.

Kemper ended the quarter with a book value per share of $62.93, a decrease of 10 percent from $69.74 at the end of 2020. Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 was $55.04, compared to $58.67 at the end of 2020.

Unaudited condensed consolidated statements of income for the three and twelve months ended December 31, 2021 and 2020 are presented below.

Three Months Ended Year Ended

(Dollars in Dec 31, Dec 31, Dec 31, Dec 31,Millions, Except 2021 2020 2021 2020Per Share Amounts)

Revenues:

Earned Premiums $ 1,359.1 $ 1,214.0 $ 5,253.7 $ 4,672.2

Net Investment 108.4 102.7 427.3 348.2 Income

Change in Value ofAlternative Energy (14.3 ) - (61.2 ) - PartnershipInvestments^2

Other Income - 1.9 4.8 94.6

Income (Loss) fromChange in FairValue of Equity and 22.2 73.1 114.6 72.1 ConvertibleSecurities

Net Realized Gainson Sales of 21.7 (0.1 ) 64.8 38.1 Investments

Impairment Losses (3.2 ) 0.5 (11.0 ) (19.5 )

Total Revenues 1,493.9 1,392.1 5,793.0 5,205.7

Expenses:

Policyholders'Benefits andIncurred Losses and 1,276.0 863.4 4,600.8 3,323.6 Loss AdjustmentExpenses

Insurance Expenses 309.1 279.3 1,218.1 1,100.5

Interest and Other 56.2 128.8 219.4 271.5 Expenses

Total Expenses 1,641.3 1,271.5 6,038.3 4,695.6

Income (Loss) (147.4 ) 120.6 (245.3 ) 510.1 before Income Taxes

Income Tax Benefit 41.6 (23.1 ) 124.8 (100.2 )(Expense)

Net Income (Loss) $ (105.8 ) $ 97.5 $ (120.5 ) $ 409.9



Net Income (Loss)Per Unrestricted Share:

Basic $ (1.66 ) $ 1.49 $ (1.87 ) $ 6.24

Diluted $ (1.66 ) $ 1.46 $ (1.87 ) $ 6.14



Weighted-averageOutstanding (Shares in Thousands):

Unrestricted Shares 63,654.6 65,413.7 64,264.4 65,636.1 - Basic

Unrestricted Sharesand Equivalent 63,654.6 66,528.7 64,264.4 66,729.8 Shares - Diluted



Dividends Paid toShareholders Per $ 0.31 $ 0.30 $ 1.24 $ 1.20 Share

2The Alternative Energy Partnership Investments results are included as a pre-tax loss in the Change in Value of Alternative Energy Partnership Investments of $14.3 million and $61.2 million and benefit in income tax expense of $11.2 million and $79.0 million for a net loss of $3.1 million and net income of $17.8 million for the three and twelve months ended December 31, 2021, respectively.

Unaudited business segment revenues for the three and twelve months ended December 31, 2021 and 2020 are presented below.

Three Months Ended Year Ended

(Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2021 2020

REVENUES:

Specialty Property & Casualty Insurance:

Earned Premiums:

Specialty Automobile $ 918.1 $ 796.1 $ 3,533.7 $ 3,031.3

Commercial Automobile 114.2 86.3 414.8 304.0

Total Earned Premiums 1,032.3 882.4 3,948.5 3,335.3

Net Investment Income 37.8 37.9 152.5 114.1

Change in Value ofAlternative Energy (6.7 ) - (29.0 ) - Partnership Investments

Other Income 1.0 0.4 4.1 1.8

Total SpecialtyProperty & Casualty 1,064.4 920.7 4,076.1 3,451.2 Insurance Revenues

Preferred Property & Casualty Insurance:

Earned Premiums:

Preferred Automobile 101.4 107.1 410.5 431.7

Homeowners 52.7 53.3 207.3 220.7

Other Personal 8.5 8.8 33.9 35.8

Total Earned Premiums 162.6 169.2 651.7 688.2

Net Investment Income 17.1 13.4 68.6 37.7

Change in Value ofAlternative Energy (3.8 ) - (16.3 ) - Partnership Investments

Other Income - - - 0.1

Total PreferredProperty & Casualty 175.9 182.6 704.0 726.0 Insurance Revenues

Life & Health Insurance:

Earned Premiums:

Life 101.5 96.5 401.7 385.7

Accident & Health 47.6 50.2 189.9 199.3

Property 15.1 15.7 61.9 63.7

Total Earned Premiums 164.2 162.4 653.5 648.7

Net Investment Income 50.8 52.8 202.7 198.8

Change in Value ofAlternative Energy (3.7 ) - (15.8 ) - Partnership Investments

Other Income (1.6 ) - (1.3 ) 0.6

Total Life & Health 209.7 215.2 839.1 848.1 Insurance Revenues

Total Segment Revenues 1,450.0 1,318.5 5,619.2 5,025.3

Income (Loss) fromChange in Fair Value of 22.2 73.1 114.6 72.1 Equity and ConvertibleSecurities

Net Realized Gains on 21.7 (0.1 ) 64.8 38.1 Sales of Investments

Impairment Losses (3.2 ) 0.5 (11.0 ) (19.5 )

Other 3.2 0.1 5.4 89.7

Total Revenues $ 1,493.9 $ 1,392.1 $ 5,793.0 $ 5,205.7

KEMPER CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in Millions)(Unaudited)

Dec 31, Dec 31, 2021 2020

Assets:

Investments:

Fixed Maturities at Fair Value $ 7,986.9 $ 7,605.9

Equity Securities at Fair Value 830.6 858.5

Equity Securities at Modified Cost 32.3 40.1

Equity Method Limited Liability Investments at Cost 241.9 204.0Plus Cumulative Undistributed Earnings

Alternative Energy Partnership Investments 39.6 21.3

Convertible Securities at Fair Value 46.4 39.9

Short-term Investments at Cost which Approximates Fair 284.1 875.4Value

Other Investments 925.6 779.0

Total Investments 10,387.4 10,424.1

Cash 148.2 206.1

Receivables from Policyholders 1,418.7 1,194.5

Other Receivables 207.3 222.4

Deferred Policy Acquisition Costs 677.6 589.3

Goodwill 1,312.0 1,114.0

Current Income Tax Assets 173.1 15.6

Other Assets 592.2 575.9

Total Assets $ 14,916.5 $ 14,341.9

Liabilities and Shareholders' Equity:

Insurance Reserves:

Life & Health $ 3,540.9 $ 3,527.5

Property & Casualty 2,772.7 1,982.5

Total Insurance Reserves 6,313.6 5,510.0

Unearned Premiums 1,898.7 1,615.1

Policyholder Contract Liabilities 504.0 467.0

Deferred Income Tax Liabilities 227.0 285.7

Accrued Expenses and Other Liabilities 843.6 727.9

Debt at Amortized Cost 1,121.9 1,172.8

Total Liabilities 10,908.8 9,778.5

Shareholders' Equity:

Common Stock 6.4 6.5

Paid-in Capital 1,790.7 1,805.2

Retained Earnings 1,762.5 2,071.2

Accumulated Other Comprehensive Income 448.1 680.5

Total Shareholders' Equity 4,007.7 4,563.4

Total Liabilities and Shareholders' Equity $ 14,916.5 $ 14,341.9

Unaudited selected financial information for the Specialty Property & Casualty Insurance segment follows.

Three Months Ended Year Ended

(Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2021 2020



Results of Operations

Net Premiums Written $ 979.0 $ 829.2 $ 4,057.3 $ 3,435.5



Earned Premiums $ 1,032.3 $ 882.4 $ 3,948.5 $ 3,335.3

Net Investment Income 37.8 37.9 152.5 114.1

Change in Value ofAlternative Energy (6.7 ) - (29.0 ) - Partnership Investments

Other Income 1.0 0.4 4.1 1.8

Total Revenues 1,064.4 920.7 4,076.1 3,451.2

Incurred Losses and LAE related to:

Current Year:

Non-catastrophe Losses 1,028.5 626.2 3,480.3 2,350.8 and LAE

Catastrophe Losses and 2.5 5.5 15.7 12.3 LAE

Prior Years:

Non-catastrophe Losses (7.6 ) (1.7 ) 97.4 15.1 and LAE

Catastrophe Losses and - 0.1 0.3 0.2 LAE

Total Incurred Losses and 1,023.4 630.1 3,593.7 2,378.4 LAE

Insurance Expenses 204.4 179.1 774.5 651.9

Operating Income (Loss) (163.4 ) 111.5 (292.1 ) 420.9

Income Tax Benefit 38.2 (20.4 ) 96.0 (83.0 )(Expense)

Segment Net Operating $ (125.2 ) $ 91.1 $ (196.1 ) $ 337.9 Income (Loss)



Ratios Based On Earned Premiums

Current YearNon-catastrophe Losses 99.6 % 71.0 % 88.1 % 70.4 %and LAE Ratio

Current Year Catastrophe 0.2 0.6 0.4 0.4 Losses and LAE Ratio

Prior YearsNon-catastrophe Losses (0.7 ) (0.2 ) 2.5 0.5 and LAE Ratio

Prior Years Catastrophe - - - - Losses and LAE Ratio

Total Incurred Loss and 99.1 71.4 91.0 71.3 LAE Ratio

Insurance Expense Ratio 19.8 20.3 19.6 19.5

Combined Ratio 118.9 % 91.7 % 110.6 % 90.8 %



Underlying Combined Ratio^1

Current YearNon-catastrophe Losses 99.6 % 71.0 % 88.1 % 70.4 %and LAE Ratio

Insurance Expense Ratio 19.8 20.3 19.6 19.5

Underlying Combined Ratio 119.4 % 91.3 % 107.7 % 89.9 %^1



Non-GAAP Measure Reconciliation

Combined Ratio 118.9 % 91.7 % 110.6 % 90.8 %

Less:

Current Year Catastrophe 0.2 0.6 0.4 0.4 Losses and LAE Ratio

Prior YearsNon-catastrophe Losses (0.7 ) (0.2 ) 2.5 0.5 and LAE Ratio

Prior Years Catastrophe - - - - Losses and LAE Ratio

Underlying Combined Ratio 119.4 % 91.3 % 107.7 % 89.9 %^1



Unaudited selected financial information for the Preferred Property & Casualty Insurance segment follows.

Three Months Ended Year Ended

(Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2021 2020



Results of Operations

Net Premiums Written $ 153.2 $ 155.2 $ 642.0 $ 653.0



Earned Premiums $ 162.6 $ 169.2 $ 651.7 $ 688.2

Net Investment Income 17.1 13.4 68.6 37.7

Change in Value of Alternative (3.8 ) - (16.3 ) - Energy Partnership Investments

Other Income - - - 0.1

Total Revenues 175.9 182.6 704.0 726.0

Incurred Losses and LAE related to:

Current Year:

Non-catastrophe Losses and LAE 122.4 107.1 450.4 400.9

Catastrophe Losses and LAE 7.5 (5.3 ) 79.1 82.0

Prior Years:

Non-catastrophe Losses and LAE 8.4 9.5 13.5 20.7

Catastrophe Losses and LAE (2.0 ) 0.1 (5.6 ) (0.5 )

Total Incurred Losses and LAE 136.3 111.4 537.4 503.1

Insurance Expenses 51.6 51.4 206.4 221.1

Operating Income (Loss) (12.0 ) 19.8 (39.8 ) 1.8

Income Tax Benefit (Expense) 4.6 (2.9 ) 27.3 1.7

Segment Net Operating Income $ (7.4 ) $ 16.9 $ (12.5 ) $ 3.5 (Loss)



Ratios Based On Earned Premiums

Current Year Non-catastrophe 75.2 % 63.2 % 69.2 % 58.3 %Losses and LAE Ratio

Current Year Catastrophe Losses 4.6 (3.1 ) 12.1 11.9 and LAE Ratio

Prior Years Non-catastrophe 5.2 5.6 2.1 3.0 Losses and LAE Ratio

Prior Years Catastrophe Losses (1.2 ) 0.1 (0.9 ) (0.1 )and LAE Ratio

Total Incurred Loss and LAE 83.8 65.8 82.5 73.1 Ratio

Insurance Expense Ratio 31.7 30.4 31.7 32.1

Combined Ratio 115.5 % 96.2 % 114.2 % 105.2 %



Underlying Combined Ratio^1

Current Year Non-catastrophe 75.2 % 63.2 % 69.2 % 58.3 %Losses and LAE Ratio

Insurance Expense Ratio 31.7 30.4 31.7 32.1

Underlying Combined Ratio^1 106.9 % 93.6 % 100.9 % 90.4 %



Non-GAAP Measure Reconciliation

Combined Ratio 115.5 % 96.2 % 114.2 % 105.2 %

Less:

Current Year Catastrophe Losses 4.6 (3.1 ) 12.1 11.9 and LAE Ratio

Prior Years Non-catastrophe 5.2 5.6 2.1 3.0 Losses and LAE Ratio

Prior Years Catastrophe Losses (1.2 ) 0.1 (0.9 ) (0.1 )and LAE Ratio

Underlying Combined Ratio^1 106.9 % 93.6 % 100.9 % 90.4 %



Unaudited selected financial information for the Life & Health Insurance segment follows.

Three Months Ended Year Ended

(Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2021 2020

Results of Operations

Earned Premiums $ 164.2 $ 162.4 $ 653.5 $ 648.7

Net Investment Income 50.8 52.8 202.7 198.8

Change in Value of Alternative (3.7 ) - (15.8 ) - Energy Partnership Investments

Other Income (Loss) (1.6 ) - (1.3 ) 0.6

Total Revenues 209.7 215.2 839.1 848.1

Policyholders' Benefits and 116.2 121.8 469.7 442.0 Incurred Losses and LAE

Insurance Expenses 89.5 83.8 358.9 334.9

Operating Income (Loss) 4.0 9.6 10.5 71.2

Income Tax Benefit (Expense) 1.1 (0.2 ) 17.7 (11.2 )

Segment Net Operating Income $ 5.1 $ 9.4 $ 28.2 $ 60.0 (Loss)

Use of Non-GAAP Financial Measures

Adjusted Consolidated Net Operating Income (Loss)1 is an after-tax, non-GAAP financial measure and is computed by excluding from Net Income (Loss) the after-tax impact of:

(i) Income (Loss) from Change in Fair Value of Equity and Convertible Securities; (ii) Net Realized Gains or Losses on Sales of Investments; (iii) Impairment Losses; (iv) Acquisition Related Transaction, Integration and Other Costs; (v) Debt Extinguishment, Pension and Other Charges; and (vi) Significant non-recurring or infrequent items that may not be indicative of ongoing operations

Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, and (b) there has been no similar charge or gain within the prior two years. The most directly comparable GAAP financial measure is Net Income (Loss). There were no applicable significant non-recurring items that Kemper excluded from the calculation of Adjusted Consolidated Net Operating Income (Loss)1 for the three and twelve months ended December 31, 2021 or 2020.

Kemper believes that Adjusted Consolidated Net Operating Income (Loss)1 provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Income (Loss) from Change in Fair Value of Equity and Convertible Securities, Net Realized Gains or Losses on Sales of Investments and Impairment Losses related to investments included in Kemper's results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Kemper's investments, the timing of which is unrelated to the insurance underwriting process. Acquisition Related Transaction and Integration Costs may vary significantly between periods and are generally driven by the timing of acquisitions and business decisions which are unrelated to the insurance underwriting process. Debt Extinguishment, Pension and Other Charges relate to (i) loss from early extinguishment of debt, which is driven by Kemper's financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process; (ii) settlement of pension plan obligations which are business decisions made by Kemper, the timing of which is unrelated to the underwriting process; and (iii) other charges that are non-standard, not part of the ordinary course of business, and unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Kemper's business or economic trends. The preceding non-GAAP financial measures should not be considered a substitute for the comparable GAAP financial measures, as they do not fully recognize the overall profitability of the Kemper's businesses.

A reconciliation of Net Income (Loss) to Adjusted Consolidated Net Operating Income (Loss) 1 for the three and twelve months ended December 31, 2021 and 2020 is presented below.

Three Months Ended Year Ended

(Dollars in Millions) Dec 31, Dec 31, Dec 31, Dec 31,(Unaudited) 2021 2020 2021 2020

Net Income (Loss) $ (105.8 ) $ 97.5 $ (120.5 ) $ 409.9

Less Net Income (Loss) From:

Change in Fair Value ofEquity and Convertible 17.5 57.8 90.5 57.0 Securities

Net Realized Gains on Sales 17.2 (0.1 ) 51.2 30.1 of Investments

Impairment Losses (2.5 ) 0.4 (8.7 ) (15.4 )

Acquisition RelatedTransaction, Integration and (7.2 ) (15.8 ) (34.7 ) (50.0 )Other Costs

Debt Extinguishment, Pension - (50.6 ) - (50.6 )and Other Charges

Adjusted Consolidated Net $ (130.8 ) $ 105.8 $ (218.8 ) $ 438.8 Operating Income (Loss) ^1

Diluted Adjusted Consolidated Net Operating Income (Loss) Per Unrestricted Share1 is a non-GAAP financial measure computed by dividing Adjusted Consolidated Net Operating Income (Loss)1 attributed to unrestricted shares by the weighted-average unrestricted shares and equivalent shares outstanding. The most directly comparable GAAP financial measure is Diluted Net Income (Loss) Per Unrestricted Share.

A reconciliation of Diluted Net Income (Loss) Per Unrestricted Share to Diluted Adjusted Consolidated Net Operating Income (Loss) Per Unrestricted Share1 for the three and twelve months ended December 31, 2021 and 2020 is presented below.

Three Months Ended Year Ended

(Unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2021 2020

Diluted Net Income (Loss) Per $ (1.66 ) $ 1.46 $ (1.87 ) $ 6.14 Unrestricted Share

Less Net Income (Loss) Per Unrestricted Share From:

Change in Fair Value of Equity 0.27 0.86 1.41 0.86 and Convertible Securities

Net Realized Gains on Sales of 0.27 - 0.80 0.45 Investments

Impairment Losses (0.04 ) 0.01 (0.14 ) (0.23 )

Acquisition RelatedTransaction, Integration and (0.11 ) (0.24 ) (0.54 ) (0.75 )Other Costs

Debt Extinguishment, Pension - (0.76 ) - (0.76 )and Other Charges

Diluted Adjusted ConsolidatedNet Operating Income (Loss) Per $ (2.05 ) $ 1.59 $ (3.40 ) $ 6.57 Unrestricted Share^1

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders' equity after excluding the after-tax impact of net unrealized gains on fixed income securities by total Common Shares Issued and Outstanding. Book Value Per Share is the most directly comparable GAAP financial measure. Kemper uses the trends in book value per share, excluding the after-tax impact of net unrealized gains on fixed income securities, in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods. Kemper believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are not influenced by management. Kemper believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.

A reconciliation of the numerator used in the computation of Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 and Book Value Per Share at December 31, 2021 and December 31, 2020 is presented below.

(Dollars in Millions) (Unaudited) Dec 31, Dec 31, 2021 2020

Shareholders' Equity $ 4,007.7 $ 4,563.4

Net Unrealized Gains on Fixed Maturities 502.6 724.0

Shareholders' Equity Excluding Net Unrealized Gains on $ 3,505.1 $ 3,839.4Fixed Maturities^1

Underlying Combined Ratio1 is a non-GAAP financial measure. It is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio. The most directly comparable GAAP financial measure is the Combined Ratio, which is computed by adding Total Incurred Losses and LAE Ratio, including the impact of catastrophe losses and loss and LAE reserve development from prior years, with the Insurance Expense Ratio.

Kemper believes Underlying Losses and LAE and the Underlying Combined Ratio are useful to investors and uses these financial measures to reveal the trends in Kemper's Property & Casualty Insurance segment that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses may cause the Kemper's loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on incurred losses and LAE and the Combined Ratio. Prior-year reserve developments are caused by unexpected loss development on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing on the performance of the Kemper's insurance products in the current period. Kemper believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing the Kemper's underwriting performance.

As Adjusted for Acquisitions1 amounts are non-GAAP financial measures. Subsequent to the applicable acquisitions, the As Adjusted for Acquisitions1 amounts are computed by subtracting the impact of purchase accounting adjustments from the comparable consolidated GAAP financial measure reported by Kemper. Kemper believes computing and presenting results on an adjusted basis are useful to investors and are used by management to provide meaningful and comparable year-over-year comparisons.

A reconciliation of the As Adjusted for Acquisitions1 non-GAAP financial measures used in this press release to the comparable GAAP financial measure for the three months ended December 31, 2021 is presented below.



Kemper Less Impact As Adjusted(Dollars in Millions, Except Per Consolidated of Purchase forShare Amounts) (Unaudited) GAAP Accounting Acquisitions^ Financial Adjustments 1 Measure

Net Income (Loss) $ (105.8 ) $ (4.5 ) $ (101.3 )

Net Income (Loss) Per Share - $ (1.66 ) $ (0.07 ) $ (1.59 )Diluted

Specialty Property & Casualty Insurance Segment:

Earned Premiums $ 1,032.3 $ - $ 1,032.3

Segment Net Operating Income (Loss) $ (125.2 ) $ (4.8 ) $ (120.4 )

Specialty Personal Automobile Insurance:

Earned Premiums $ 918.1 $ - $ 918.1

Segment Net Operating Income (Loss) $ (129.7 ) $ (4.5 ) $ (125.2 )

A reconciliation of the As Adjusted for Acquisitions1 non-GAAP financial measures used in this press release to the comparable GAAP financial measure for the three months ended December 31, 2020 is presented below.



Kemper AAC Less Impact As Adjusted(Dollars in Millions, Consolidated Historical of forExcept Per Share GAAP GAAP Purchase Acquisitions^Amounts) (Unaudited) Financial Financial Accounting 1 Measure Measure Adjustments

Net Income (Loss) $ 97.5 $ 16.9 $ (3.2 ) $ 117.6

Net Income (Loss) Per $ 1.46 $ 0.25 $ (0.05 ) $ 1.76Share - Diluted

Specialty Property &Casualty Insurance Segment:

Earned Premiums $ 882.4 $ 91.2 $ - $ 973.6

Segment Net Operating $ 91.1 $ 9.5 $ (3.6 ) $ 104.2Income (Loss)

Specialty Personal Automobile Insurance:

Earned Premiums $ 796.1 $ 91.2 $ - $ 887.3

Segment Net Operating $ 77.4 $ 9.5 $ (2.8 ) $ 89.7Income (Loss)

Conference Call

Kemper will host its conference call to discuss fourth quarter 2021 results on Monday, January 31st, at 5:00 p.m. Eastern (4:00 p.m. Central). The conference call will be accessible via the internet and by telephone at 844.200.6205, access code 863164. To listen via webcast, register online at the investor section of kemper.com at least 15 minutes prior to the webcast to download and install any necessary software.

A replay of the call will be available online at the investor section of kemper.com.

More detailed financial information can be found in Kemper's Investor Financial Supplement and Earnings Call Presentation for the fourth quarter of 2021, which is available at the investor section of kemper.com.

About Kemper

The Kemper family of companies is one of the nation's leading specialized insurers. With approximately $15 billion in assets, Kemper is improving the world of insurance by providing affordable and easy-to-use personalized solutions to individuals, families and businesses through its Auto, Personal Insurance, Life and Health brands. Kemper serves over 6.5 million policies, is represented by approximately 35,400 agents and brokers, and has approximately 10,300 associates dedicated to meeting the ever-changing needs of its customers.

Learn more about Kemper at kemper.com.

Caution Regarding Forward-Looking Statements

This press release 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 risks, uncertainties, and other factors, including but not limited to:

* changes in the frequency and severity of insurance claims; * claim development and the process of estimating claim reserves; * the impacts of inflation; * product demand and pricing; * effects of governmental and regulatory actions; * litigation outcomes; * investment risks; * cybersecurity risks; * impact of catastrophes; and * other risks and uncertainties detailed in Kemper's Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission ("SEC").

The COVID-19 outbreak and subsequent global pandemic ("Pandemic") is an extraordinary catastrophe that creates unique uncertainties and risks. Kemper cannot provide any assurances as to the impacts of the Pandemic and related economic conditions on Kemper's operating and financial results.

Kemper assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this press release, including any such statements related to the Pandemic.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220131005236/en/

CONTACT: Investors: Karen Guerra 312.661.4930 or investors@kemper.com

CONTACT: Media: Barbara Ciesemier 312.661.4521 or bciesemier@kemper.com