Kemper (KMPR) Q2 2024 earnings summary

Executive summary

• Net income of $75.4 million ($1.16 per diluted share) in Q2 2024, reversing a net loss of $97.1 million in Q2 2023, with adjusted consolidated net operating income of $91.7 million ($1.42 per diluted share).

• Profitability improved with 11.5% ROE and 17.6% adjusted ROE; book value per share rose to $41.46 and adjusted book value per share to $27.14.

• Specialty P&C underlying combined ratio improved to 89.6%, a 12.4 point year-over-year improvement, with 4.6% sequential PIF growth.

• Life segment fundamentals remain stable, though quarterly NOI was impacted by a real estate valuation adjustment; adjusted net operating income would have been higher excluding this.

• Strong capital position with $1.1 billion in parent company liquidity and well-capitalized insurance subsidiaries.

Financial highlights

• Net income of $75.4 million and adjusted consolidated net operating income of $91.7 million for Q2 2024, up from losses in Q2 2023.

• Diluted EPS of $1.16 and adjusted EPS of $1.42; book value per share increased to $41.46, adjusted book value per share to $27.14.

• Total revenues for Q2 2024 decreased to $1,129.9 million, mainly due to lower new business volumes and exit from Preferred Insurance.

• Net investment income was $93 million, impacted by a real estate valuation adjustment.

• Specialty P&C earned premiums declined 7.4% year-over-year; Life face value of in-force declined 0.6%.

Outlook and guidance

• Expect to exceed 10% ROE for 2024, with no anticipated earnings decline in the second half.

• Sequential PIF growth anticipated to moderate to low single digits in the second half due to seasonality, with higher growth expected in 2025.

• Combined ratio expected to migrate back toward traditional 93-96% range over 4-6 quarters as growth resumes.

• Anticipate quarterly net investment income to revert to normal levels.

• Additional $50 million+ capital release anticipated by year-end 2024.