Form 8-K KEMPER Corp For: Feb 05

February 5, 2015 4:03 PM

KMPR 2014 12.31.14 8-K Release and Supplement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 5, 2015

Kemper Corporation

(Exact name of registrant as specified in its charter)

Commission File Number: 001-18298




DE		95-4255452
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

One East Wacker Drive, Chicago, IL 60601

(Address of principal executive offices, including zip code)

312-661-4600

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2.below):



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2. – Financial Information



Item 2.02.	Results of Operations and Financial Condition.

On February 5, 2015, the Registrant issued a press release announcing its financial results for the fourth quarter of 2014 and the availability of the Registrant’s fourth quarter investor supplement on the Registrant’s web site. The press release and the investor supplement are furnished as Exhibits 99.1 and 99.2 to this report. The information contained in the press release and the investor supplement are furnished and not filed pursuant to instruction B.2 of Form 8-K.

Section 9. – Financial Statements and Exhibits.



Item 9.01.	Financial Statements and Exhibits.

(d) Exhibits

99.1 Registrant’s press release dated February 5, 2015.

99.2 Fourth Quarter 2014 Investor Supplement of Kemper Corporation.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




		Kemper Corporation

Date:	February 5, 2015	/S/ FRANK J. SODARO
		Frank J. Sodaro
		Senior Vice President and Chief Financial Officer

Exhibit Index



99.1			Registrant’s press release dated February 5, 2015.
99.2			Fourth Quarter 2014 Investor Supplement of Kemper Corporation.

KMPR 2014 12.31.14 EX 99.1 Release

Exhibit 99.1



		Kemper Corporation One East Wacker Drive Chicago, IL 60601 kemper.com



	Press Release

February 5, 2015

Kemper Corporation Reports Fourth Quarter and Full Year 2014 Earnings


◦	Delivered net operating earnings per share of $1.02 in the quarter, up 23 percent from fourth quarter 2013


◦	Improved the Property & Casualty Insurance segment’s underlying loss and LAE ratio 4.1 percentage points for the quarter and 2.7 percentage points for the year


◦	Returned $22 million to shareholders through share repurchases and dividends in the quarter; $167 million in 2014


◦	Reported book value per share of $39.88, flat to third quarter, but up 8 percent from year-end 2013

CHICAGO - (Business Wire) - Kemper Corporation (NYSE: KMPR) reported today net income of $65.4 million, or $1.24 per diluted share, for the fourth quarter of 2014, compared to $55.2 million, or $0.99 per share, for the fourth quarter of 2013. Consolidated net operating income¹ was $53.9 million, or $1.02 per diluted share, for the fourth quarter of 2014, compared to $46.3 million, or $0.83 per share, for the fourth quarter of 2013. Net operating income per diluted share increased primarily from higher net investment income and improved underlying loss results in the Property & Casualty Insurance segment.



	Three Months Ended						Year Ended
(Dollars in Millions, Except Per Share Amounts) (Unaudited)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013
Consolidated Net Operating Income ¹	$	53.9		$	46.3		$	97.1		$	159.2
Income from Continuing Operations	63.3			54.8			112.6			214.5
Net Income	65.4			55.2			114.5			217.7

Impact of Catastrophe Losses and Related Loss Adjustment Expense (LAE) on Net Income	$	(3.1	)	$	(1.5	)	$	(64.0	)	$	(33.0	)

Diluted Net Income Per Share From:
Consolidated Net Operating Income ¹	$	1.02		$	0.83		$	1.79		$	2.78
Continuing Operations	1.20			0.98			2.08			3.74
Net Income	1.24			0.99			2.12			3.80

Impact of Catastrophe Losses and Related LAE on Net Income Per Share	$	(0.06	)	$	(0.03	)	$	(1.19	)	$	(0.58	)

“We finished the year with a strong fourth quarter, reporting net income of $65.4 million, as we increased net investment income 21 percent and improved the Property & Casualty segment’s underlying loss and LAE ratio by 4.1 percentage points,” commented Donald G. Southwell, Kemper’s Chairman, President and Chief Executive Officer. “While our profit improvement actions pressured our top line, we are actively engaging agents and are starting to see improvement.

“The Life & Health segment’s earnings increased 35 percent, benefitting from the strong performance of our alternative investments portfolio.

¹ Consolidated net operating income is an after-tax, non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” for additional information.

“In December, we announced a definitive agreement to purchase Alliance United Group, a top writer of nonstandard auto in California. We expect the transaction to close in the first half of 2015 and that it will be accretive to earnings in 2015. We repurchased $9 million of common stock in the quarter, bringing our 2014 share repurchases to $116 million. In total, we returned $167 million to shareholders in 2014,” said Southwell.

Capital

During the fourth quarter of 2014, Kemper repurchased more than 250,000 shares of its common stock at a total cost of $9.0 million, or $34.94 per share, and paid dividends of $12.6 million. For the full year, Kemper repurchased more than 3.2 million shares of its common stock at a cost of $115.5 million and paid dividends of $51.8 million.

Kemper ended the year with a book value per share excluding net unrealized gains on fixed maturities of $34.50, essentially flat with year-end 2013, as net income was offset by dividends, the impact of lowering the discount rate assumption 80 basis points and adopting newly-published mortality tables related to the company’s pension plan. Book value per share was $39.88, up 8 percent from $36.86 at the end of 2013, largely from the impact of lower yields on the fixed maturities portfolio.

Revenues

Total revenues were $559.7 million for the fourth quarter of 2014, compared to $586.0 million in 2013. Revenues decreased $26.3 million primarily from a $38.2 million decrease in earned premiums in the Property & Casualty Insurance segment, partially offset by $16.2 million higher net investment income.

Although quarter over quarter new business has improved, the Property & Casualty Insurance segment continued to feel the impact of lower renewal business due to the aggressive profit improvement actions taken over the past couple of years, coupled with competitive market conditions, particularly in auto. As the actions moderate, consistent with profit improvement, the company anticipates it will see improvements with new and renewal business over the next several quarters.

Net investment income was $93.1 million in the fourth quarter of 2014, compared to $76.9 million in 2013. The increase was driven by improved performance in the alternative investments portfolio, which primarily consists of limited partnerships, limited liability companies (both equity method investments and other equity interests) and fair value option securities. In particular, the company recorded $21.8 million of dividend income related to the recovery of one investment within the alternative investments portfolio. Net investment income from the alternative investment portfolio was $26.8 million in the fourth quarter of 2014, compared to $10.7 million in 2013.

The company expects quarterly volatility in the alternative investments portfolio, but has been pleased with the returns over time. Net investment income from the alternative investments portfolio exceeded expectations for both 2014 and 2013.

Net investment income for the Life & Health Insurance segment increased $20.7 million for the fourth quarter of 2014, compared to 2013, largely from the cash distribution from one investment within the alternative investments portfolio. Net investment income for the Property & Casualty Insurance segment decreased by $5.9 million, driven by $4.5 million lower net investment income on alternative investments.

The investment portfolio in total generated a pre-tax equivalent annualized book yield of 6.5 percent for the fourth quarter of 2014 and 5.5 percent for the full year of 2014.

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, (iii) catastrophe losses exclude the impact of prior-year development and (iv) underlying loss ratio includes loss and loss adjustment expenses.



	Three Months Ended						Year Ended
(Dollars in Millions) (Unaudited)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013
Segment Net Operating Income:
Property & Casualty Insurance	$	25.3		$	29.1		$	24.9		$	100.6
Life & Health Insurance	33.5			24.9			91.8			89.3
Total Segment Net Operating Income	58.8			54.0			116.7			189.9
Corporate and Other Net Operating Loss	(4.9		)	(7.7		)	(19.6		)	(30.7		)
Consolidated Net Operating Income	53.9			46.3			97.1			159.2
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	13.6			13.5			25.4			64.4
Net Impairment Losses Recognized in Earnings	(4.2		)	(5.0		)	(9.9		)	(9.1		)
Income from Continuing Operations	$	63.3		$	54.8		$	112.6		$	214.5

The Property & Casualty Insurance segment reported net operating income of $25.3 million in the fourth quarter of 2014, compared to net operating income of $29.1 million in 2013. Results decreased primarily from $4.2 million lower net investment income, $4.1 million less favorable prior-year development and higher insurance expenses as a percentage of earned premiums, partially offset by improved underlying loss and LAE results. Results also included catastrophe losses of $2.9 million in the fourth quarter of 2014, compared to $1.4 million in the prior year, both lower than expectations for the quarter. The company successfully implemented various cost-cutting measures and decreased expenses by $8.0 million pre-tax in the quarter. However, these expense savings have not kept pace with the decrease in earned premiums and resulted in the expense ratio increasing to 29.0 percent in the fourth quarter of 2014, compared to 28.1 percent in 2013. The underlying loss and LAE ratio for the fourth quarter of 2014 improved 4.1 percentage points to 66.2 percent, primarily from increases in average earned premium on personal auto insurance exceeding loss cost trends and higher favorable development from the first three quarters of 2014.

The Life & Health Insurance segment reported net operating income of $33.5 million for the fourth quarter of 2014, compared to $24.9 million in 2013. Results increased largely from higher net investment income, partially offset by higher expenses and higher benefits at Reserve National. Insurance expenses increased primarily from start-up expenses to expand distribution channels at Reserve National and higher legal fees.

Corporate and Other net operating loss improved $2.8 million over the fourth quarter of 2013, driven by lower employee retirement benefits and higher unallocated net investment income, partially offset by higher interest expense.

Unaudited condensed consolidated statements of income for the three and twelve months ended December 31, 2014 and 2013 are presented below:



	Three Months Ended						Year Ended
(Dollars in Millions, Except Per Share Amounts)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013
Revenues:
Earned Premiums	$	451.5		$	495.6		$	1,862.2		$	2,025.8
Net Investment Income	93.1			76.9			309.1			314.7
Other Income	0.6			0.3			1.4			0.8
Net Realized Gains on Sales of Investments	21.0			20.8			39.1			99.1
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(6.5		)	(7.6		)	(15.2		)	(15.8		)
Portion of Losses Recognized in Other Comprehensive Income	—			—			—			1.9
Net Impairment Losses Recognized in Earnings	(6.5		)	(7.6		)	(15.2		)	(13.9		)
Total Revenues	559.7			586.0			2,196.6			2,426.5
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	285.8			315.5			1,261.7			1,357.2
Insurance Expenses	156.4			162.9			628.4			654.4
Write-off of Long-lived Asset	—			—			54.6			—
Interest and Other Expenses	24.4			26.2			91.7			100.5
Total Expenses	466.6			504.6			2,036.4			2,112.1
Income from Continuing Operations before Income Taxes	93.1			81.4			160.2			314.4
Income Tax Expense	(29.8		)	(26.6		)	(47.6		)	(99.9		)
Income from Continuing Operations	63.3			54.8			112.6			214.5
Income from Discontinued Operations	2.1			0.4			1.9			3.2
Net Income	$	65.4		$	55.2		$	114.5		$	217.7

Income from Continuing Operations Per Unrestricted Share:
Basic	$	1.20		$	0.98		$	2.08		$	3.75
Diluted	$	1.20		$	0.98		$	2.08		$	3.74

Net Income Per Unrestricted Share:
Basic	$	1.24		$	0.99		$	2.12		$	3.81
Diluted	$	1.24		$	0.99		$	2.12		$	3.80

Weighted-average Outstanding (Shares in Thousands):
Unrestricted Shares - Basic	52,465.3			55,412.4			53,762.5			56,856.9
Unrestricted Shares and Equivalent Shares - Diluted	52,555.4			55,562.6			53,867.9			56,983.6

Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.96		$	0.96

Unaudited business segment revenues for the three and twelve months ended December 31, 2014 and 2013 are presented below:



	Three Months Ended						Year Ended
(Dollars in Millions)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013
REVENUES
Property & Casualty Insurance:
Earned Premiums:
Personal Automobile	$	198.0		$	229.7		$	831.4		$	959.1
Homeowners	75.8			81.4			312.4			326.2
Other Personal	12.2			13.5			50.9			55.3
Total Personal	286.0			324.6			1,194.7			1,340.6
Commercial Automobile	14.0			13.6			54.8			52.3
Total Earned Premiums	300.0			338.2			1,249.5			1,392.9
Net Investment Income	17.1			23.0			72.7			90.9
Other Income	0.1			0.1			0.5			0.5
Total Property & Casualty Insurance	317.2			361.3			1,322.7			1,484.3
Life & Health Insurance:
Earned Premiums:
Life	96.0			97.8			387.6			392.7
Accident and Health	36.5			40.2			148.6			161.4
Property	19.0			19.4			76.5			78.8
Total Earned Premiums	151.5			157.4			612.7			632.9
Net Investment Income	71.3			50.6			218.7			209.9
Other Income	0.5			0.1			0.9			0.2
Total Life & Health Insurance	223.3			208.1			832.3			843.0
Total Segment Revenues	540.5			569.4			2,155.0			2,327.3
Net Realized Gains on Sales of Investments	21.0			20.8			39.1			99.1
Net Impairment Losses Recognized in Earnings	(6.5		)	(7.6		)	(15.2		)	(13.9		)
Other	4.7			3.4			17.7			14.0
Total Revenues	$	559.7		$	586.0		$	2,196.6		$	2,426.5

KEMPER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Millions)

	Dec 31, 2014		Dec 31, 2013
Assets:	(Unaudited)
Investments:
Fixed Maturities at Fair Value	$	4,777.6	$	4,575.0
Equity Securities at Fair Value	632.2		598.5
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	184.8		245.1
Fair Value Option Investments	53.3		—
Short-term Investments at Cost which Approximates Fair Value	342.2		284.7
Other Investments	449.6		448.0
Total Investments	6,439.7		6,151.3
Cash	76.1		66.5
Receivables from Policyholders	295.3		331.6
Other Receivables	187.0		193.1
Deferred Policy Acquisition Costs	303.3		302.9
Goodwill	311.8		311.8
Deferred Income Tax Assets	—		31.8
Other Assets	220.2		267.4
Total Assets	$	7,833.4	$	7,656.4
Liabilities and Shareholders’ Equity:
Insurance Reserves:
Life and Health	$	3,273.7	$	3,217.5
Property and Casualty	733.9		843.5
Total Insurance Reserves	4,007.6		4,061.0
Unearned Premiums	536.9		598.9
Liabilities for Income Taxes	36.5		8.3
Debt at Amortized Cost	752.1		606.9
Accrued Expenses and Other Liabilities	409.6		329.8
Total Liabilities	5,742.7		5,604.9
Shareholders’ Equity:
Common Stock	5.2		5.6
Paid-in Capital	660.1		694.8
Retained Earnings	1,202.7		1,215.8
Accumulated Other Comprehensive Income	222.7		135.3
Total Shareholders’ Equity	2,090.7		2,051.5
Total Liabilities and Shareholders’ Equity	$	7,833.4	$	7,656.4

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



	Three Months Ended						Year Ended
(Dollars in Millions)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013

Results of Operations
Net Premiums Written	$	269.1		$	302.9		$	1,189.1		$	1,342.2

Earned Premiums	$	300.0		$	338.2		$	1,249.5		$	1,392.9
Net Investment Income	17.1			23.0			72.7			90.9
Other Income	0.1			0.1			0.5			0.5
Total Revenues	317.2			361.3			1,322.7			1,484.3
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	198.6			237.7			845.2			980.2
Catastrophe Losses and LAE	4.4			2.1			96.5			47.1
Prior Years:
Non-catastrophe Losses and LAE	(8.1		)	(11.1		)	(38.6		)	(45.5		)
Catastrophe Losses and LAE	(0.8		)	(4.1		)	(15.8		)	(12.5		)
Total Incurred Losses and LAE	194.1			224.6			887.3			969.3
Insurance Expenses, Excluding Write-off of Long-lived Asset	87.1			95.1			353.7			375.4
Write-off of Long-lived Asset	—			—			54.6			—
Operating Profit	36.0			41.6			27.1			139.6
Income Tax Expense	(10.7		)	(12.5		)	(2.2		)	(39.0		)
Segment Net Operating Income	$	25.3		$	29.1		$	24.9		$	100.6

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	66.2		%	70.3		%	67.7		%	70.4		%
Current Year Catastrophe Losses and LAE Ratio	1.5			0.6			7.7			3.4
Prior Years Non-catastrophe Losses and LAE Ratio	(2.7		)	(3.3		)	(3.1		)	(3.3		)
Prior Years Catastrophe Losses and LAE Ratio	(0.3		)	(1.2		)	(1.3		)	(0.9		)
Total Incurred Loss and LAE Ratio	64.7			66.4			71.0			69.6
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset	29.0			28.1			28.3			27.0
Impact on Ratio from Write-off of Long-lived Asset	—			—			4.4			—
Combined Ratio	93.7		%	94.5		%	103.7		%	96.6		%

Underlying Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio	66.2		%	70.3		%	67.7		%	70.4		%
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset	29.0			28.1			28.3			27.0
Impact on Ratio from Write-off of Long-lived Asset	—			—			4.4			—
Underlying Combined Ratio	95.2		%	98.4		%	100.4		%	97.4		%

Non-GAAP Measure Reconciliation
Underlying Combined Ratio	95.2		%	98.4		%	100.4		%	97.4		%
Current Year Catastrophe Losses and LAE Ratio	1.5			0.6			7.7			3.4
Prior Years Non-catastrophe Losses and LAE Ratio	(2.7		)	(3.3		)	(3.1		)	(3.3		)
Prior Years Catastrophe Losses and LAE Ratio	(0.3		)	(1.2		)	(1.3		)	(0.9		)
Combined Ratio as Reported	93.7		%	94.5		%	103.7		%	96.6		%

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



	Three Months Ended						Year Ended
(Dollars in Millions)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013

Results of Operations

Earned Premiums:
Life	$	96.0		$	97.8		$	387.6		$	392.7
Accident and Health	36.5			40.2			148.6			161.4
Property	19.0			19.4			76.5			78.8
Total Earned Premiums	151.5			157.4			612.7			632.9
Net Investment Income	71.3			50.6			218.7			209.9
Other Income	0.5			0.1			0.9			0.2
Total Revenues	223.3			208.1			832.3			843.0
Policyholders’ Benefits and Incurred Losses and LAE	91.7			91.0			374.4			387.9
Insurance Expenses	80.4			78.5			316.0			318.2
Operating Profit	51.2			38.6			141.9			136.9
Income Tax Expense	(17.7		)	(13.7		)	(50.1		)	(47.6		)
Segment Net Operating Income	$	33.5		$	24.9		$	91.8		$	89.3

Use of Non-GAAP Financial Measures

Consolidated Net Operating Income

Consolidated Net Operating Income is an after-tax, non-GAAP financial measure computed by excluding from income from continuing operations the after-tax impact of 1) net realized gains on sales of investments, 2) net impairment losses recognized in earnings related to investments and 3) 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 income from continuing operations.

Kemper believes that Consolidated Net Operating Income 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. Net realized gains on sales of investments and net impairment losses recognized in earnings 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 company’s investments, the timing of which is unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of Kemper’s business or economic trends.

A reconciliation of Consolidated Net Operating Income to Income from Continuing Operations for the three and twelve months ended December 31, 2014 and 2013 is presented below:



	Three Months Ended						Year Ended
(Dollars in Millions) (Unaudited)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013
Consolidated Net Operating Income	$	53.9		$	46.3		$	97.1		$	159.2
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	13.6			13.5			25.4			64.4
Net Impairment Losses Recognized in Earnings	(4.2		)	(5.0		)	(9.9		)	(9.1		)
Income from Continuing Operations	$	63.3		$	54.8		$	112.6		$	214.5

Diluted Consolidated Net Operating Income Per Unrestricted Share

Diluted Consolidated Net Operating Income Per Unrestricted Share is a non-GAAP financial measure computed by dividing Consolidated Net Operating Income attributed to unrestricted shares by the weighted-average unrestricted shares and equivalent shares outstanding. The most directly comparable GAAP financial measure is Income from Continuing Operations Per Unrestricted Share-diluted.

A reconciliation of Diluted Consolidated Net Operating Income Per Unrestricted Share to Diluted Income from Continuing Operations Per Unrestricted Share for the three and twelve months ended December 31, 2014 and 2013 is presented below:



	Three Months Ended						Year Ended
(Unaudited)	Dec 31, 2014			Dec 31, 2013			Dec 31, 2014			Dec 31, 2013
Diluted Consolidated Net Operating Income Per Unrestricted Share	$	1.02		$	0.83		$	1.79		$	2.78
Net Income (Loss) Per Unrestricted Share From:
Net Realized Gains on Sales of Investments	0.26			0.24			0.47			1.12
Net Impairment Losses Recognized in Earnings	(0.08		)	(0.09		)	(0.18		)	(0.16		)
Diluted Income from Continuing Operations Per Unrestricted Share	$	1.20		$	0.98		$	2.08		$	3.74

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities is a ratio 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 trend 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 generally 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 Maturities and Book Value Per Share at December 31, 2014 and December 31, 2013 is presented below:



(Dollars in Millions) (Unaudited)	Dec 31, 2014		Dec 31, 2013
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities	$	1,808.5	$	1,919.3
Net Unrealized Gains on Fixed Maturities	282.2		132.2
Shareholders’ Equity	$	2,090.7	$	2,051.5

Underlying Combined Ratio

Underlying Combined Ratio is a non-GAAP financial measure, which is computed by adding the current year non-catastrophe losses and LAE ratio with the insurance expense (including write-offs of long-lived assets) ratio. The most directly comparable GAAP financial measure is the combined ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses, and loss and LAE reserve development from prior years with the insurance expense (including write-offs of long-lived assets) ratio. Kemper believes the underlying combined ratio is useful to investors and is used by management to reveal the trends in Kemper’s property and casualty insurance businesses that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses may cause 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 development is 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 company’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 its underwriting performance. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.

Conference Call

Kemper will discuss its fourth quarter 2014 results in a conference call on Friday, February 6, at 11 a.m. Eastern Time. Kemper’s conference call will be accessible via the internet and by telephone. The phone number for Kemper’s conference call is 866.393.1565. 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 through February 20, 2015 at 855.859.2056 using conference ID number 61652309.

More detailed financial information can be found in Kemper’s Investor Financial Supplement for the fourth quarter of 2014, which is available at the investor section of kemper.com.

About Kemper

Kemper is a diversified insurance holding company with subsidiaries that provide an array of products to the individual and small business markets:


•	Auto insurance


•	Homeowners insurance


•	Renters insurance


•	Life insurance


•	Health insurance

Kemper markets to its customers through a network of independent agents, brokers and career agents.

Additional information about Kemper, including its filings on Forms 10-K, 10-Q and 8-K and its investor supplement, is available by visiting 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. Forward-looking statements give expectations or forecasts of future events, and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts.

Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. Forward-looking statements involve a number of risks and uncertainties that are difficult to predict, and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are those listed in periodic reports filed by Kemper with the Securities and Exchange Commission (the “SEC”). No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. 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. The reader is advised, however, to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.

Source: Kemper Corporation



Contact
Investors: Diana Hickert-Hill	312.661.4930 or [email protected]

KEYWORD: ILLINOIS

INDUSTRY KEYWORD: INSURANCE EARNINGS

KMPR 2014 12.31.14 EX 99.2 Supplement

Exhibit 99.2

Investor Supplement

Fourth Quarter 2014

The financial statements and financial exhibits included herein are unaudited. These financial statements and exhibits should be read in conjunction with the Company’s periodic reports on Form 10-K, Form 10-Q and Form 8-K. The results of operations for interim periods should not be considered indicative of results to be expected for the full year.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures to analyze the Company’s operating performance for the periods presented. Because the Company’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company’s non-GAAP financial measures to those of other companies. For detailed disclosures on non-GAAP financial measures please refer to the “Definitions of Non-GAAP Financial Measures” on Page 27.

Kemper Corporation

Investor Supplement

Fourth Quarter 2014

Table of Contents




	Page
Consolidated Financial Highlights	3
Consolidated Statements of Income	4
Consolidated Balance Sheets	5
Consolidated Statements of Cash Flows	6-7
Capital Metrics	8
Debt Outstanding and Ratings	9
Segment Summary Results:
Revenues	10
Operating Profit	11
Net Operating Income	11
Earned Premiums by Product	12
Net Investment Income by Segment	12
Catastrophe Frequency and Severity	13
Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information	14-15
Property & Casualty Insurance Segment - Premiums and Losses and LAE by Product:
Personal Automobile Insurance	16
Commercial Automobile Insurance	17
Total Automobile Insurance	18
Homeowners Insurance	19
Other Personal Lines	20
Life & Health Insurance Segment - Results of Operations and Selected Financial Information	21
Investment Performance	22
Invested Assets	23
Investment Concentration	24
Municipal Bond Securities	25
Investments in Limited Liability Companies and Limited Partnerships	26
Definitions of Non-GAAP Financial Measures	27-28

Page 2

Kemper Corporation Consolidated Financial Highlights (Dollars in Millions, Except Per Share Amounts) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014		Dec 31, 2013
For Period Ended
Earned Premiums	$	451.5		$	462.8		$	470.3		$	477.6		$	495.6		$	507.5		$	512.8		$	509.9		$	1,862.2	$	2,025.8
Net Investment Income	93.1			72.3			72.6			71.1			76.9			82.4			74.6			80.8			309.1		314.7
Net Investment Gains (Losses) and Other Income	15.1			4.7			(0.4		)	5.9			13.5			45.8			1.5			25.2			25.3		86.0
Total Revenues	$	559.7		$	539.8		$	542.5		$	554.6		$	586.0		$	635.7		$	588.9		$	615.9		$	2,196.6	$	2,426.5

Consolidated Net Operating Income ¹	$	53.9		$	2.1		$	9.6		$	31.5		$	46.3		$	38.9		$	31.7		$	42.3		$	97.1	$	159.2
Income from Continuing Operations	$	63.3		$	4.8		$	9.3		$	35.2		$	54.8		$	68.6		$	32.5		$	58.6		$	112.6	$	214.5
Net Income	$	65.4		$	4.7		$	9.3		$	35.1		$	55.2		$	70.1		$	34.0		$	58.4		$	114.5	$	217.7

Per Unrestricted Common Share Amounts:
Basic:
Consolidated Net Operating Income ¹	$	1.02		$	0.04		$	0.18		$	0.56		$	0.83		$	0.69		$	0.55		$	0.72		$	1.79	$	2.79
Income from Continuing Operations	$	1.20		$	0.09		$	0.17		$	0.63		$	0.98		$	1.21		$	0.56		$	1.00		$	2.08	$	3.75
Net Income	$	1.24		$	0.09		$	0.17		$	0.63		$	0.99		$	1.24		$	0.59		$	1.00		$	2.12	$	3.81
Diluted:
Consolidated Net Operating Income ¹	$	1.02		$	0.04		$	0.18		$	0.56		$	0.83		$	0.69		$	0.55		$	0.72		$	1.79	$	2.78
Income from Continuing Operations	$	1.20		$	0.09		$	0.17		$	0.63		$	0.98		$	1.21		$	0.56		$	1.00		$	2.08	$	3.74
Net Income	$	1.24		$	0.09		$	0.17		$	0.63		$	0.99		$	1.23		$	0.59		$	1.00		$	2.12	$	3.80

Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.96	$	0.96

At Period End
Total Assets	$	7,833.4		$	7,905.3		$	7,969.8		$	7,944.2		$	7,656.4		$	7,745.9		$	7,820.8		$	8,056.2
Insurance Reserves	$	4,007.6		$	4,041.7		$	4,064.2		$	4,067.3		$	4,061.0		$	4,086.1		$	4,108.6		$	4,117.1
Debt	$	752.1		$	751.9		$	751.7		$	751.4		$	606.9		$	606.7		$	611.9		$	611.6
Shareholders’ Equity	$	2,090.7		$	2,104.5		$	2,138.6		$	2,144.7		$	2,051.5		$	2,009.1		$	2,005.0		$	2,172.4
Shareholders’ Equity Excluding Goodwill	$	1,778.9		$	1,792.7		$	1,826.8		$	1,832.9		$	1,739.7		$	1,697.3		$	1,693.2		$	1,860.6
Common Shares Issued and Outstanding (In Millions)	52.418			52.666			53.497			55.408			55.653			56.025			57.061			58.322
Book Value Per Share²	$	39.88		$	39.96		$	39.98		$	38.71		$	36.86		$	35.86		$	35.14		$	37.25
Book Value Per Share Excluding Goodwill^1,2	$	33.94		$	34.04		$	34.15		$	33.08		$	31.26		$	30.30		$	29.67		$	31.90
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities^1,2	$	34.50		$	35.31		$	35.32		$	35.13		$	34.49		$	32.93		$	31.91		$	31.55
Debt to Total Capitalization²	26.5		%	26.3		%	26.0		%	25.9		%	22.8		%	23.2		%	23.4		%	22.0		%
Rolling 12 Months Return on 5-point AverageShareholders Equity^2,3	5.4		%	5.0		%	8.2		%	9.4		%	10.5		%	7.8		%	7.0		%	5.5		%

¹ Non-GAAP Measure. See page 27 for definition.
²See Capital Metrics on page 8 for detail calculations.
³ Rolling 12 Months Return on 5-point Average Shareholders Equity is calculated by taking the last 12 months of Net Income (Loss) divided by the 5-point average Shareholders’ Equity. The 5-point Average Shareholders’ Equity is calculated by using a 5-point quarter average of Shareholders’ Equity for the 12 month period.

Page 3

Kemper Corporation Consolidated Statements of Income (Dollars in Millions, Except Per Share Amounts) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Revenues:
Earned Premiums	$	451.5		$	462.8		$	470.3		$	477.6		$	495.6		$	507.5		$	512.8		$	509.9		$	1,862.2		$	2,025.8
Net Investment Income	93.1			72.3			72.6			71.1			76.9			82.4			74.6			80.8			309.1			314.7
Other Income	0.6			0.5			0.2			0.1			0.3			0.1			0.2			0.2			1.4			0.8
Net Realized Gains on Sales of Investments	21.0			8.0			3.5			6.6			20.8			49.1			2.3			26.9			39.1			99.1
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(6.5		)	(3.8		)	(4.1		)	(0.8		)	(7.6		)	(3.5		)	(2.3		)	(2.4		)	(15.2		)	(15.8		)
Portion of Losses Recognized in Other Comprehensive Income	—			—			—			—			—			0.1			1.3			0.5			—			1.9
Net Impairment Losses Recognized in Earnings	(6.5		)	(3.8		)	(4.1		)	(0.8		)	(7.6		)	(3.4		)	(1.0		)	(1.9		)	(15.2		)	(13.9		)
Total Revenues	559.7			539.8			542.5			554.6			586.0			635.7			588.9			615.9			2,196.6			2,426.5
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	285.8			300.5			347.5			327.9			315.5			338.3			354.2			349.2			1,261.7			1,357.2
Insurance Expenses	156.4			158.6			161.3			152.1			162.9			170.1			163.1			158.3			628.4			654.4
Write-off of Long-lived Asset	—			54.6			—			—			—			—			—			—			54.6			—
Interest and Other Expenses	24.4			22.1			22.5			22.7			26.2			25.3			25.2			23.8			91.7			100.5
Total Expenses	466.6			535.8			531.3			502.7			504.6			533.7			542.5			531.3			2,036.4			2,112.1
Income from Continuing Operations before Income Taxes	93.1			4.0			11.2			51.9			81.4			102.0			46.4			84.6			160.2			314.4
Income Tax Benefit (Expense)	(29.8		)	0.8			(1.9		)	(16.7		)	(26.6		)	(33.4		)	(13.9		)	(26.0		)	(47.6		)	(99.9		)
Income from Continuing Operations	63.3			4.8			9.3			35.2			54.8			68.6			32.5			58.6			112.6			214.5
Discontinued Operations:
Income (Loss) from Discontinued Operations before Income Taxes	3.4			(0.2		)	—			(0.2		)	0.6			2.2			2.5			(0.4		)	3.0			4.9
Income Tax Benefit (Expense)	(1.3		)	0.1			—			0.1			(0.2		)	(0.7		)	(1.0		)	0.2			(1.1		)	(1.7		)
Income (Loss) from Discontinued Operations	2.1			(0.1		)	—			(0.1		)	0.4			1.5			1.5			(0.2		)	1.9			3.2
Net Income	$	65.4		$	4.7		$	9.3		$	35.1		$	55.2		$	70.1		$	34.0		$	58.4		$	114.5		$	217.7
Income from Continuing Operations Per Unrestricted Share:
Basic	$	1.20		$	0.09		$	0.17		$	0.63		$	0.98		$	1.21		$	0.56		$	1.00		$	2.08		$	3.75
Diluted	$	1.20		$	0.09		$	0.17		$	0.63		$	0.98		$	1.21		$	0.56		$	1.00		$	2.08		$	3.74
Net Income Per Unrestricted Share:
Basic	$	1.24		$	0.09		$	0.17		$	0.63		$	0.99		$	1.24		$	0.59		$	1.00		$	2.12		$	3.81
Diluted	$	1.24		$	0.09		$	0.17		$	0.63		$	0.99		$	1.23		$	0.59		$	1.00		$	2.12		$	3.80
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.24		$	0.96		$	0.96
Weighted Average Unrestricted Common Shares Outstanding (in Millions)	52.465			52.605			54.667			55.313			55.412			56.366			57.519			58.131			53.763			56.857

Page 4

Kemper Corporation Consolidated Balance Sheets (Dollars in Millions) (Unaudited)

	Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2013		Mar 31, 2013
Assets:
Investments:
Fixed Maturities at Fair Value	$	4,777.6	$	4,697.2	$	4,680.0	$	4,619.5	$	4,575.0	$	4,645.0	$	4,701.1	$	4,856.5
Equity Securities at Fair Value	632.2		661.4		646.2		648.3		598.5		567.4		545.0		554.1
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	184.8		222.8		227.1		239.0		245.1		231.4		241.7		248.1
Fair Value Option Investments	53.3		50.6		40.3		—		—		—		—		—
Short-term Investments at Cost which Approximates Fair Value	342.2		316.2		480.1		506.9		284.7		286.8		239.3		362.8
Other Investments	449.6		450.5		448.3		448.2		448.0		446.2		496.0		494.8
Total Investments	6,439.7		6,398.7		6,522.0		6,461.9		6,151.3		6,176.8		6,223.1		6,516.3
Cash	76.1		93.1		61.8		65.0		66.5		76.1		69.5		97.5
Receivables from Policyholders	295.3		314.4		313.5		319.5		331.6		354.2		357.5		363.2
Other Receivables	187.0		247.5		190.5		225.5		193.1		203.9		206.2		202.7
Deferred Policy Acquisition Costs	303.3		306.7		304.8		301.8		302.9		308.5		308.4		304.5
Goodwill	311.8		311.8		311.8		311.8		311.8		311.8		311.8		311.8
Current and Deferred Income Tax Assets	—		4.3		10.1		—		31.8		61.6		85.7		—
Other Assets	220.2		228.8		255.3		258.7		267.4		253.0		258.6		260.2
Total Assets	$	7,833.4	$	7,905.3	$	7,969.8	$	7,944.2	$	7,656.4	$	7,745.9	$	7,820.8	$	8,056.2
Liabilities and Shareholders’ Equity:
Insurance Reserves:
Life and Health	$	3,273.7	$	3,260.8	$	3,249.0	$	3,237.7	$	3,217.5	$	3,201.5	$	3,189.6	$	3,174.8
Property and Casualty	733.9		780.9		815.2		829.6		843.5		884.6		919.0		942.3
Total Insurance Reserves	4,007.6		4,041.7		4,064.2		4,067.3		4,061.0		4,086.1		4,108.6		4,117.1
Unearned Premiums	536.9		568.2		571.8		582.5		598.9		635.3		640.3		646.8
Liabilities for Income Taxes	36.5		48.7		53.4		30.6		8.3		6.6		6.5		25.8
Debt at Amortized Cost	752.1		751.9		751.7		751.4		606.9		606.7		611.9		611.6
Accrued Expenses and Other Liabilities	409.6		390.3		390.1		367.7		329.8		402.1		448.5		482.5
Total Liabilities	5,742.7		5,800.8		5,831.2		5,799.5		5,604.9		5,736.8		5,815.8		5,883.8
Shareholders’ Equity:
Common Stock	5.2		5.3		5.3		5.5		5.6		5.6		5.7		5.8
Paid-in Capital	660.1		662.2		671.3		693.5		694.8		698.0		709.1		722.5
Retained Earnings	1,202.7		1,155.6		1,183.4		1,231.5		1,215.8		1,184.4		1,151.7		1,158.0
Accumulated Other Comprehensive Income	222.7		281.4		278.6		214.2		135.3		121.1		138.5		286.1
Total Shareholders’ Equity	2,090.7		2,104.5		2,138.6		2,144.7		2,051.5		2,009.1		2,005.0		2,172.4
Total Liabilities and Shareholders’ Equity	$	7,833.4	$	7,905.3	$	7,969.8	$	7,944.2	$	7,656.4	$	7,745.9	$	7,820.8	$	8,056.2

Page 5

Kemper Corporation Consolidated Statements of Cash Flows (Dollars in Millions) (Unaudited)

	Year Ended
	Dec 31, 2014			Dec 31, 2013			Dec 31, 2012
Operating Activities:
Net Income	$	114.5		$	217.7		$	103.4
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities:
Decrease (Increase) in Deferred Policy Acquisition Costs	(0.4		)	0.5			(9.4		)
Amortization of Life Insurance in Force Acquired and Customer Relationships Acquired	7.2			8.3			8.0
Equity in Earnings of Equity Method Limited Liability Investments	(9.0		)	(26.4		)	(9.3		)
Distribution of Accumulated Earnings of Equity Method Limited Liability Investments	21.7			15.4			15.4
Decrease in Value of Fair Value Option Investments	0.7			—			—
Amortization of Investment Securities and Depreciation of Investment Real Estate	15.4			16.2			15.2
Net Realized Gains on Sales of Investments	(39.1		)	(99.1		)	(65.4		)
Net Impairment Losses Recognized in Earnings	15.2			13.9			6.9
Net Gain on Sale of Portfolio of Automobile Loan Receivables	—			—			(12.9		)
Benefit for Loan Losses	—			—			(2.0		)
Depreciation of Property and Equipment	16.0			17.4			15.3
Write-off of Long-lived Asset	54.6			—			—
Decrease in Receivables	46.2			43.5			13.9
Decrease in Insurance Reserves	(54.7		)	(72.5		)	(1.1		)
Decrease in Unearned Premiums	(62.0		)	(52.0		)	(15.2		)
Change in Income Taxes	11.2			57.9			(14.9		)
Decrease in Accrued Expenses and Other Liabilities	(20.3		)	(54.8		)	(15.6		)
Other, Net	16.4			36.1			33.4
Net Cash Provided by Operating Activities (Carryforward to page 7)	133.6			122.1			65.7

Page 6

Kemper Corporation Consolidated Statements of Cash Flows (Dollars in Millions) (Unaudited)

	Year Ended
	Dec 31, 2014			Dec 31, 2013			Dec 31, 2012
Net Cash Provided by Operating Activities (Carryforward from page 6)	133.6			122.1			65.7
Investing Activities:
Sales, Paydowns and Maturities of Fixed Maturities	573.7			664.4			914.4
Purchases of Fixed Maturities	(553.0		)	(744.5		)	(872.6		)
Sales of Equity Securities	245.3			182.1			70.8
Purchases of Equity Securities	(235.2		)	(213.4		)	(137.7		)
Sales of and Return of Investment of Equity Method Limited Liability Investments	55.2			31.3			56.0
Acquisitions of Equity Method Limited Liability Investments	(21.4		)	(20.5		)	(31.0		)
Sales of Fair Value Option Investments	6.9			—			—
Purchases of Fair Value Option Investments	(60.9		)	—			—
Decrease (Increase) in Short-term Investments	(63.9		)	41.8			(80.0		)
Acquisition and Improvements of Investment Real Estate	(2.1		)	(5.4		)	(5.5		)
Sales of Investment Real Estate	0.9			102.7			6.0
Increase in Other Investments	(8.0		)	(9.1		)	(12.4		)
Purchase of Corporate-owned Life Insurance	(33.5		)	—			—
Acquisition of Software	(11.3		)	(15.2		)	(26.5		)
Disposition of Business, Net of Cash Disposed	8.9			3.8			—
Net Proceeds from Sale of Portfolio of Automobile Loan Receivables	—			—			16.7
Receipts from Automobile Loan Receivables	—			—			2.0
Other, Net	(5.9		)	(13.2		)	(6.4		)
Net Cash Provided (Used) by Investing Activities	(104.3		)	4.8			(106.2		)
Financing Activities:
Net Proceeds from Issuance of Subordinated Debentures	144.0			—			—
Repayments of Debt	—			(5.5		)	—
Common Stock Repurchases	(114.0		)	(100.4		)	(60.7		)
Dividends and Dividend Equivalents Paid	(51.8		)	(54.9		)	(56.9		)
Cash Exercise of Stock Options	0.5			1.7			1.3
Other, Net	1.6			2.4			1.9
Net Cash Used by Financing Activities	(19.7		)	(156.7		)	(114.4		)
Increase (Decrease) in Cash	9.6			(29.8		)	(154.9		)
Cash, Beginning of Year	66.5			96.3			251.2
Cash, End of Period	$	76.1		$	66.5		$	96.3

Page 7

Kemper Corporation Capital Metrics (Dollars and Shares in Millions, Except Per Share Amounts) (Unaudited)

	Three Months Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013
Book Value Per Share
Numerator
Shareholders’ Equity	$	2,090.7		$	2,104.5		$	2,138.6		$	2,144.7		$	2,051.5		$	2,009.1		$	2,005.0		$	2,172.4
Less: Goodwill	(311.8		)	(311.8		)	(311.8		)	(311.8		)	(311.8		)	(311.8		)	(311.8		)	(311.8		)
Shareholders’ Equity Excluding Goodwill	$	1,778.9		$	1,792.7		$	1,826.8		$	1,832.9		$	1,739.7		$	1,697.3		$	1,693.2		$	1,860.6
Shareholders’ Equity	$	2,090.7		$	2,104.5		$	2,138.6		$	2,144.7		$	2,051.5		$	2,009.1		$	2,005.0		$	2,172.4
Less: Net Unrealized Gains on Fixed Maturities	(282.2		)	(244.9		)	(249.0		)	(198.3		)	(132.2		)	(164.0		)	(184.2		)	(332.4		)
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities	$	1,808.5		$	1,859.6		$	1,889.6		$	1,946.4		$	1,919.3		$	1,845.1		$	1,820.8		$	1,840.0
Denominator
Common Shares Issued and Outstanding	52.418			52.666			53.497			55.408			55.653			56.025			57.061			58.322
Book Value Per Share	$	39.88		$	39.96		$	39.98		$	38.71		$	36.86		$	35.86		$	35.14		$	37.25
Book Value Per Share Excluding Goodwill	$	33.94		$	34.04		$	34.15		$	33.08		$	31.26		$	30.30		$	29.67		$	31.90
Book Value Per Share Excluding Unrealized on Fixed Maturities	$	34.50		$	35.31		$	35.32		$	35.13		$	34.49		$	32.93		$	31.91		$	31.55

Return on Shareholders’ Equity
Numerator
Rolling 12 Months Net Income	$	114.5		$	104.3		$	169.7		$	194.4		$	217.7		$	164.4		$	149.9		$	118.2
Denominator (5-point Average)
5-point Average Shareholders’ Equity	$	2,106.0		$	2,089.7		$	2,069.8		$	2,076.5		$	2,079.9		$	2,110.5		$	2,138.5		$	2,163.8
Rolling 12 Months Return on Average Shareholders Equity (5-point Average)	5.4		%	5.0		%	8.2		%	9.4		%	10.5		%	7.8		%	7.0		%	5.5		%

Debt and Total Capitalization
Debt	$	752.1		$	751.9		$	751.7		$	751.4		$	606.9		$	606.7		$	611.9		$	611.6
Shareholders’ Equity	2,090.7			2,104.5			2,138.6			2,144.7			2,051.5			2,009.1			2,005.0			2,172.4
Total Capitalization	$	2,842.8		$	2,856.4		$	2,890.3		$	2,896.1		$	2,658.4		$	2,615.8		$	2,616.9		$	2,784.0
Ratio of Debt to Shareholders’ Equity	36.0		%	35.7		%	35.1		%	35.0		%	29.6		%	30.2		%	30.5		%	28.2		%
Ratio of Debt to Total Capitalization	26.5		%	26.3		%	26.0		%	25.9		%	22.8		%	23.2		%	23.4		%	22.0		%

Parent Company Liquidity
Kemper Holding Company Cash and Investments	$	330.3		$	302.4		$	302.7		$	255.9		$	156.7		$	152.6		$	124.3		$	187.4
Borrowings Available Under Credit Agreement	225.0			225.0			225.0			225.0			225.0			325.0			325.0			325.0
Parent Company Liquidity	$	555.3		$	527.4		$	527.7		$	480.9		$	381.7		$	477.6		$	449.3		$	512.4

Capital Returned to Shareholders
Common Stock Repurchased	$	9.0		$	29.9		$	68.3		$	8.3		$	15.2		$	36.3		$	42.4		$	6.5
Cash Dividends Paid	12.6			12.6			13.3			13.3			13.4			13.6			13.9			14.0
Total Capital Returned to Shareholders	$	21.6		$	42.5		$	81.6		$	21.6		$	28.6		$	49.9		$	56.3		$	20.5

Page 8

Kemper Corporation Debt Outstanding and Ratings (Dollars in Millions) (Unaudited)

	Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2013		Mar 31, 2013
Notes Payable under Revolving Credit Agreements	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Senior Notes at Amortized Cost:
6.00% Senior Notes due November 30, 2015	249.5		249.4		249.3		249.2		249.0		248.9		248.8		248.7
6.00% Senior Notes due May 15, 2017	358.5		358.3		358.2		358.0		357.9		357.8		357.6		357.4
7.375% Subordinated Debentures due February 27, 2054 at Amortized Cost	144.1		144.2		144.2		144.2		—		—		—		—
Mortgage Note Payable at Amortized Cost	—		—		—		—		—		—		5.5		5.5
Debt Outstanding	$	752.1	$	751.9	$	751.7	$	751.4	$	606.9	$	606.7	$	611.9	$	611.6

	A.M. Best		Moody’s		S&P		Fitch
As of Date of Financial Supplement
Kemper Debt Ratings:
Senior Notes Payable	bbb-		Baa3		BBB-		BBB-
Subordinated Debentures	bb+		Ba1		BB		BB
Insurance Company Financial Strength Ratings:
Trinity Universal Insurance Company	A-		A3		A-		A-
United Insurance Company of America	A-		A3		A-		A-
Reserve National Insurance Company	A-		NR		NR		NR

NR - Not Rated

Page 9

Kemper Corporation Segment Revenues (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Revenues:
Property & Casualty Insurance:
Earned Premiums:
Personal Automobile	$	198.0		$	205.1		$	212.0		$	216.3		$	229.7		$	239.1		$	244.6		$	245.7		$	831.4		$	959.1
Homeowners	75.8			77.9			79.0			79.7			81.4			82.3			82.1			80.4			312.4			326.2
Other Personal	12.2			12.6			12.9			13.2			13.5			13.8			14.1			13.9			50.9			55.3
Total Personal	286.0			295.6			303.9			309.2			324.6			335.2			340.8			340.0			1,194.7			1,340.6
Commercial Automobile	14.0			14.1			13.6			13.1			13.6			13.5			13.1			12.1			54.8			52.3
Total Earned Premiums	300.0			309.7			317.5			322.3			338.2			348.7			353.9			352.1			1,249.5			1,392.9
Net Investment Income	17.1			18.5			19.5			17.6			23.0			21.3			21.5			25.1			72.7			90.9
Other Income	0.1			0.1			0.2			0.1			0.1			0.1			0.1			0.2			0.5			0.5
Total Property & Casualty Insurance	317.2			328.3			337.2			340.0			361.3			370.1			375.5			377.4			1,322.7			1,484.3
Life & Health Insurance:
Earned Premiums:
Life	96.0			96.8			97.2			97.6			97.8			98.4			98.6			97.9			387.6			392.7
Accident and Health	36.5			37.1			36.2			38.8			40.2			40.7			40.3			40.2			148.6			161.4
Property	19.0			19.2			19.4			18.9			19.4			19.7			20.0			19.7			76.5			78.8
Total Earned Premiums	151.5			153.1			152.8			155.3			157.4			158.8			158.9			157.8			612.7			632.9
Net Investment Income	71.3			49.2			48.0			50.2			50.6			56.5			49.8			53.0			218.7			209.9
Other Income	0.5			0.4			—			—			0.1			—			0.1			—			0.9			0.2
Total Life & Health Insurance	223.3			202.7			200.8			205.5			208.1			215.3			208.8			210.8			832.3			843.0
Total Segment Revenues	540.5			531.0			538.0			545.5			569.4			585.4			584.3			588.2			2,155.0			2,327.3
Net Realized Gains on Sales of Investments	21.0			8.0			3.5			6.6			20.8			49.1			2.3			26.9			39.1			99.1
Net Impairment Losses Recognized in Earnings	(6.5		)	(3.8		)	(4.1		)	(0.8		)	(7.6		)	(3.4		)	(1.0		)	(1.9		)	(15.2		)	(13.9		)
Other	4.7			4.6			5.1			3.3			3.4			4.6			3.3			2.7			17.7			14.0
Total Revenues	$	559.7		$	539.8		$	542.5		$	554.6		$	586.0		$	635.7		$	588.9		$	615.9		$	2,196.6		$	2,426.5

Page 10

Kemper Corporation Segment Operating Results (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Segment Operating Profit (Loss):
Property & Casualty Insurance	$	36.0		$	(23.9	)	$	(4.3	)	$	19.3		$	41.6		$	32.2		$	25.6		$	40.2		$	27.1		$	139.6
Life & Health Insurance	51.2			31.4			24.7			34.6			38.6			35.2			31.2			31.9			141.9			136.9
Total Segment Operating Profit	87.2			7.5			20.4			53.9			80.2			67.4			56.8			72.1			169.0			276.5
Corporate and Other Operating Loss	(8.6		)	(7.7		)	(8.6		)	(7.8		)	(12.0		)	(11.1		)	(11.7		)	(12.5		)	(32.7		)	(47.3		)
Total Operating Profit (Loss)	78.6			(0.2		)	11.8			46.1			68.2			56.3			45.1			59.6			136.3			229.2
Net Realized Gains on Sales of Investments	21.0			8.0			3.5			6.6			20.8			49.1			2.3			26.9			39.1			99.1
Net Impairment Losses Recognized in Earnings	(6.5		)	(3.8		)	(4.1		)	(0.8		)	(7.6		)	(3.4		)	(1.0		)	(1.9		)	(15.2		)	(13.9		)
Income from Continuing Operations before Income Taxes	$	93.1		$	4.0		$	11.2		$	51.9		$	81.4		$	102.0		$	46.4		$	84.6		$	160.2		$	314.4
Segment Net Operating Income (Loss):
Property & Casualty Insurance	$	25.3		$	(13.6	)	$	(1.2	)	$	14.4		$	29.1		$	23.4		$	19.1		$	29.0		$	24.9		$	100.6
Life & Health Insurance	33.5			20.3			15.9			22.1			24.9			22.9			20.3			21.2			91.8			89.3
Total Segment Net Operating Income	58.8			6.7			14.7			36.5			54.0			46.3			39.4			50.2			116.7			189.9
Corporate and Other Net Operating Loss	(4.9		)	(4.6		)	(5.1		)	(5.0		)	(7.7		)	(7.4		)	(7.7		)	(7.9		)	(19.6		)	(30.7		)
Consolidated Operating Income	53.9			2.1			9.6			31.5			46.3			38.9			31.7			42.3			97.1			159.2
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	13.6			5.2			2.4			4.2			13.5			31.9			1.5			17.5			25.4			64.4
Net Impairment Losses Recognized in Earnings	(4.2		)	(2.5		)	(2.7		)	(0.5		)	(5.0		)	(2.2		)	(0.7		)	(1.2		)	(9.9		)	(9.1		)
Income from Continuing Operations	$	63.3		$	4.8		$	9.3		$	35.2		$	54.8		$	68.6		$	32.5		$	58.6		$	112.6		$	214.5

Page 11

Kemper Corporation Segment Operating Results (Dollars in Millions) (Unaudited)

	Three Months Ended																		Year Ended
	Dec 31, 2014			Sep 30, 2014		Jun 30, 2014			Mar 31, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2013		Mar 31, 2013		Dec 31, 2014			Dec 31, 2013
Earned Premiums by Product:
Personal Automobile	$	198.0		$	205.1	$	212.0		$	216.3	$	229.7	$	239.1	$	244.6	$	245.7	$	831.4		$	959.1
Homeowners	75.8			77.9		79.0			79.7		81.4		82.3		82.1		80.4		312.4			326.2
Other Personal Property and Casualty Insurance	31.2			31.8		32.3			32.1		32.9		33.5		34.1		33.6		127.4			134.1
Commercial Automobile	14.0			14.1		13.6			13.1		13.6		13.5		13.1		12.1		54.8			52.3
Life	96.0			96.8		97.2			97.6		97.8		98.4		98.6		97.9		387.6			392.7
Accident and Health	36.5			37.1		36.2			38.8		40.2		40.7		40.3		40.2		148.6			161.4
Total Earned Premiums	$	451.5		$	462.8	$	470.3		$	477.6	$	495.6	$	507.5	$	512.8	$	509.9	$	1,862.2		$	2,025.8
Net Investment Income by Segment:
Property & Casualty Insurance:
Equity Method Limited Liability Investments	$	(0.5	)	$	4.3	$	2.1		$	2.5	$	5.0	$	3.4	$	2.3	$	5.8	$	8.4		$	16.5
All Other Net Investment Income	17.6			14.2		17.4			15.1		18.0		17.9		19.2		19.3		64.3			74.4
Net Investment Income	17.1			18.5		19.5			17.6		23.0		21.3		21.5		25.1		72.7			90.9
Life & Health Insurance:
Equity Method Limited Liability Investments	(0.1		)	0.1		(1.1		)	0.7		1.2		3.8		1.1		2.3		(0.4		)	8.4
All Other Net Investment Income	71.4			49.1		49.1			49.5		49.4		52.7		48.7		50.7		219.1			201.5
Net Investment Income	71.3			49.2		48.0			50.2		50.6		56.5		49.8		53.0		218.7			209.9
Total Segment Net Investment Income	88.4			67.7		67.5			67.8		73.6		77.8		71.3		78.1		291.4			300.8
Unallocated Net Investment Income:
Equity Method Limited Liability Investments	(0.1		)	0.5		0.3			0.3		0.3		0.5		0.2		0.5		1.0			1.5
All Other Net Investment Income	4.8			4.1		4.8			3.0		3.0		4.1		3.1		2.2		16.7			12.4
Unallocated Net Investment Income	4.7			4.6		5.1			3.3		3.3		4.6		3.3		2.7		17.7			13.9
Net Investment Income	$	93.1		$	72.3	$	72.6		$	71.1	$	76.9	$	82.4	$	74.6	$	80.8	$	309.1		$	314.7

Page 12

Kemper Corporation Catastrophe Frequency and Severity (Dollars in Millions) (Unaudited)

	Year Ended Dec 31, 2014
	Property & Casualty Insurance Segment			Life & Health Insurance Segment			Consolidated
	Number of Events	Losses and LAE		Number of Events	Losses and LAE		Number of Events	Losses and LAE
Range of Losses and LAE Per Event:
Below $5	27	$	30.1	17	$	2.0	27	$	31.1
$5 - $10	3	19.8		—	—		3	20.4
$10 - $15	1	12.8		—	—		1	13.1
$15 - $20	—	—		—	—		—	—
$20 - $25	—	—		—	—		—	—
Greater Than $25	1	33.8		—	—		1	33.9
Total	32	$	96.5	17	$	2.0	32	$	98.5

	Year Ended Dec 31, 2013
	Property & Casualty Insurance Segment			Life & Health Insurance Segment			Consolidated
	Number of Events	Losses and LAE		Number of Events	Losses and LAE		Number of Events	Losses and LAE
Range of Losses and LAE Per Event:
Below $5	28	$	47.1	15	$	3.6	27	$	44.3
$5 - $10	—	—		—	—		1	6.4
$10 - $15	—	—		—	—		—	—
$15 - $20	—	—		—	—		—	—
$20 - $25	—	—		—	—		—	—
Greater Than $25	—	—		—	—		—	—
Total	28	$	47.1	15	$	3.6	28	$	50.7

Page 13

Kemper Corporation Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Results of Operations
Net Premiums Written	$	269.1		$	307.0		$	308.7		$	304.3		$	302.9		$	345.0		$	348.9		$	345.4		$	1,189.1		$	1,342.2

Earned Premiums	300.0			309.7			317.5			322.3			338.2			348.7			353.9			352.1			1,249.5			1,392.9
Net Investment Income	17.1			18.5			19.5			17.6			23.0			21.3			21.5			25.1			72.7			90.9
Other Income	0.1			0.1			0.2			0.1			0.1			0.1			0.1			0.2			0.5			0.5
Total Revenues	317.2			328.3			337.2			340.0			361.3			370.1			375.5			377.4			1,322.7			1,484.3
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	198.6			206.8			209.4			230.4			237.7			245.1			246.3			251.1			845.2			980.2
Catastrophe Losses and LAE	4.4			14.2			61.9			16.0			2.1			10.4			25.9			8.7			96.5			47.1
Prior Years:
Non-catastrophe Losses and LAE	(8.1		)	(3.3		)	(14.5		)	(12.7		)	(11.1		)	(10.2		)	(12.2		)	(12.0		)	(38.6		)	(45.5		)
Catastrophe Losses and LAE	(0.8		)	(7.2		)	(5.1		)	(2.7		)	(4.1		)	(1.7		)	(5.2		)	(1.5		)	(15.8		)	(12.5		)
Total Incurred Losses and LAE	194.1			210.5			251.7			231.0			224.6			243.6			254.8			246.3			887.3			969.3
Insurance Expenses, Excluding Write-off of Long-lived Assets	87.1			87.1			89.8			89.7			95.1			94.3			95.1			90.9			353.7			375.4
Write-off of Long-lived Asset	—			54.6			—			—			—			—			—			—			54.6			—
Operating Profit (Loss)	36.0			(23.9		)	(4.3		)	19.3			41.6			32.2			25.6			40.2			27.1			139.6
Income Tax Benefit (Expense)	(10.7		)	10.3			3.1			(4.9		)	(12.5		)	(8.8		)	(6.5		)	(11.2		)	(2.2		)	(39.0		)
Segment Net Operating Income (Loss)	$	25.3		$	(13.6	)	$	(1.2	)	$	14.4		$	29.1		$	23.4		$	19.1		$	29.0		$	24.9		$	100.6
Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	66.2		%	66.8		%	66.0		%	71.4		%	70.3		%	70.3		%	69.6		%	71.3		%	67.7		%	70.4		%
Current Year Catastrophe Losses and LAE Ratio	1.5			4.6			19.5			5.0			0.6			3.0			7.3			2.5			7.7			3.4
Prior Years Non-catastrophe Losses and LAE Ratio	(2.7		)	(1.1		)	(4.6		)	(3.9		)	(3.3		)	(2.9		)	(3.4		)	(3.4		)	(3.1		)	(3.3		)
Prior Years Catastrophe Losses and LAE Ratio	(0.3		)	(2.3		)	(1.6		)	(0.8		)	(1.2		)	(0.5		)	(1.5		)	(0.4		)	(1.3		)	(0.9		)
Total Incurred Loss and LAE Ratio	64.7			68.0			79.3			71.7			66.4			69.9			72.0			70.0			71.0			69.6
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset	29.0			28.1			28.3			27.8			28.1			27.0			26.9			25.8			28.3			27.0
Impact on Ratio from Write-off of Long-lived Asset	—			17.6			—			—			—			—			—			—			4.4			—
Combined Ratio	93.7		%	113.7		%	107.6		%	99.5		%	94.5		%	96.9		%	98.9		%	95.8		%	103.7		%	96.6		%
Underlying Combined Ratio ¹
Current Year Non-catastrophe Losses and LAE Ratio	66.2		%	66.8		%	66.0		%	71.4		%	70.3		%	70.3		%	69.6		%	71.3		%	67.7		%	70.4		%
Insurance Expense Ratio, Excluding write-off of Long-lived Asset	29.0			28.1			28.3			27.8			28.1			27.0			26.9			25.8			28.3			27.0
Impact on Ratio from Write-off of Long-lived Asset	—			17.6			—			—			—			—			—			—			4.4			—
Underlying Combined Ratio	95.2		%	112.5		%	94.3		%	99.2		%	98.4		%	97.3		%	96.5		%	97.1		%	100.4		%	97.4		%
Non-GAAP Measure Reconciliation
Underlying Combined Ratio	95.2		%	112.5		%	94.3		%	99.2		%	98.4		%	97.3		%	96.5		%	97.1		%	100.4		%	97.4		%
Current Year Catastrophe Losses and LAE Ratio	1.5			4.6			19.5			5.0			0.6			3.0			7.3			2.5			7.7			3.4
Prior Years Non-catastrophe Losses and LAE Ratio	(2.7		)	(1.1		)	(4.6		)	(3.9		)	(3.3		)	(2.9		)	(3.4		)	(3.4		)	(3.1		)	(3.3		)
Prior Years Catastrophe Losses and LAE Ratio	(0.3		)	(2.3		)	(1.6		)	(0.8		)	(1.2		)	(0.5		)	(1.5		)	(0.4		)	(1.3		)	(0.9		)
Combined Ratio as Reported	93.7		%	113.7		%	107.6		%	99.5		%	94.5		%	96.9		%	98.9		%	95.8		%	103.7		%	96.6		%


¹Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio.

Page 14

Kemper Corporation Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information (continued) (Dollars in Millions) (Unaudited)

	Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2013		Mar 31, 2013
Insurance Reserves:
Automobile	$	501.4	$	524.2	$	545.4	$	568.9	$	595.1	$	614.9	$	638.4	$	649.3
Homeowners	102.4		118.8		128.3		114.4		99.9		118.2		122.6		122.4
Other Personal	47.3		47.5		47.2		47.9		47.6		47.1		46.9		50.3
Insurance Reserves	$	651.1	$	690.5	$	720.9	$	731.2	$	742.6	$	780.2	$	807.9	$	822.0
Insurance Reserves:
Loss Reserves:
Case	$	423.6	$	447.6	$	460.8	$	468.1	$	471.2	$	491.8	$	509.0	$	514.7
Incurred but Not Reported	135.8		148.9		162.5		164.2		169.0		180.5		184.6		190.2
Total Loss Reserves	559.4		596.5		623.3		632.3		640.2		672.3		693.6		704.9
LAE Reserves	91.7		94.0		97.6		98.9		102.4		107.9		114.3		117.1
Insurance Reserves	$	651.1	$	690.5	$	720.9	$	731.2	$	742.6	$	780.2	$	807.9	$	822.0

Page 15

Kemper Corporation Property & Casualty Insurance Segment Personal Automobile Insurance - Premiums and Losses and LAE (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Premiums
Net Premiums Written	$	179.1		$	202.1		$	200.1		$	207.7		$	204.2		$	232.9		$	233.0		$	244.1		$	789.0		$	914.2

Earned Premiums	$	198.0		$	205.1		$	212.0		$	216.3		$	229.7		$	239.1		$	244.6		$	245.7		$	831.4		$	959.1

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	150.0		$	149.8		$	153.1		$	163.1		$	189.5		$	181.3		$	184.0		$	186.9		$	616.0		$	741.7
Catastrophe Losses and LAE	0.4			1.6			9.8			0.9			0.1			0.8			4.2			2.5			12.7			7.6
Prior Years:
Non-catastrophe Losses and LAE	(4.7		)	(3.1		)	(11.9		)	(11.3		)	(7.6		)	(6.9		)	(8.5		)	(6.9		)	(31.0		)	(29.9		)
Catastrophe Losses and LAE	—			(0.3		)	(0.1		)	(0.2		)	0.1			(0.1		)	(0.3		)	0.1			(0.6		)	(0.2		)
Total Incurred Losses and LAE	$	145.7		$	148.0		$	150.9		$	152.5		$	182.1		$	175.1		$	179.4		$	182.6		$	597.1		$	719.2

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	75.8		%	73.0		%	72.2		%	75.4		%	82.6		%	75.8		%	75.2		%	76.1		%	74.1		%	77.3		%
Current Year Catastrophe Losses and LAE Ratio	0.2			0.8			4.6			0.4			—			0.3			1.7			1.0			1.5			0.8
Prior Years Non-catastrophe Losses and LAE Ratio	(2.4		)	(1.5		)	(5.6		)	(5.2		)	(3.3		)	(2.9		)	(3.5		)	(2.8		)	(3.7		)	(3.1		)
Prior Years Catastrophe Losses and LAE Ratio	—			(0.1		)	—			(0.1		)	—			—			(0.1		)	—			(0.1		)	—
Total Incurred Loss and LAE Ratio	73.6		%	72.2		%	71.2		%	70.5		%	79.3		%	73.2		%	73.3		%	74.3		%	71.8		%	75.0		%

Page 16

Kemper Corporation Property & Casualty Insurance Segment Commercial Automobile Insurance - Premiums and Losses and LAE (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Premiums
Net Premiums Written	$	12.3		$	13.7		$	15.3		$	14.3		$	12.3		$	12.7		$	14.4		$	14.3		$	55.6		$	53.7

Earned Premiums	$	14.0		$	14.1		$	13.6		$	13.1		$	13.6		$	13.5		$	13.1		$	12.1		$	54.8		$	52.3

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	10.4		$	11.5		$	11.6		$	11.1		$	10.6		$	10.9		$	12.8		$	9.4		$	44.6		$	43.7
Catastrophe Losses and LAE	—			0.1			0.1			—			(0.1		)	0.1			0.1			—			0.2			0.1
Prior Years:
Non-catastrophe Losses and LAE	(1.9		)	(0.6		)	0.4			(0.5		)	(1.0		)	(2.0		)	(0.7		)	0.7			(2.6		)	(3.0		)
Catastrophe Losses and LAE	—			—			—			—			—			—			—			—			—			—
Total Incurred Losses and LAE	$	8.5		$	11.0		$	12.1		$	10.6		$	9.5		$	9.0		$	12.2		$	10.1		$	42.2		$	40.8

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	74.3		%	81.6		%	85.4		%	84.7		%	78.0		%	80.8		%	97.6		%	77.7		%	81.3		%	83.5		%
Current Year Catastrophe Losses and LAE Ratio	—			0.7			0.7			—			(0.7		)	0.7			0.8			—			0.4			0.2
Prior Years Non-catastrophe Losses and LAE Ratio	(13.6		)	(4.3		)	2.9			(3.8		)	(7.4		)	(14.8		)	(5.3		)	5.8			(4.7		)	(5.7		)
Prior Years Catastrophe Losses and LAE Ratio	—			—			—			—			—			—			—			—			—			—
Total Incurred Loss and LAE Ratio	60.7		%	78.0		%	89.0		%	80.9		%	69.9		%	66.7		%	93.1		%	83.5		%	77.0		%	78.0		%

Page 17

Kemper Corporation Property & Casualty Insurance Segment Total Automobile Insurance - Premiums and Losses and LAE (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Premiums
Net Premiums Written	$	191.4		$	215.8		$	215.4		$	222.0		$	216.5		$	245.6		$	247.4		$	258.4		$	844.6		$	967.9

Earned Premiums	$	212.0		$	219.2		$	225.6		$	229.4		$	243.3		$	252.6		$	257.7		$	257.8		$	886.2		$	1,011.4

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	160.4		$	161.3		$	164.7		$	174.2		$	200.1		$	192.2		$	196.8		$	196.3		$	660.6		$	785.4
Catastrophe Losses and LAE	0.4			1.7			9.9			0.9			—			0.9			4.3			2.5			12.9			7.7
Prior Years:
Non-catastrophe Losses and LAE	(6.6		)	(3.7		)	(11.5		)	(11.8		)	(8.6		)	(8.9		)	(9.2		)	(6.2		)	(33.6		)	(32.9		)
Catastrophe Losses and LAE	—			(0.3		)	(0.1		)	(0.2		)	0.1			(0.1		)	(0.3		)	0.1			(0.6		)	(0.2		)
Total Incurred Losses and LAE	$	154.2		$	159.0		$	163.0		$	163.1		$	191.6		$	184.1		$	191.6		$	192.7		$	639.3		$	760.0

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	75.6		%	73.5		%	73.0		%	75.9		%	82.3		%	76.0		%	76.4		%	76.1		%	74.5		%	77.6		%
Current Year Catastrophe Losses and LAE Ratio	0.2			0.8			4.4			0.4			—			0.4			1.7			1.0			1.5			0.8
Prior Years Non-catastrophe Losses and LAE Ratio	(3.1		)	(1.7		)	(5.1		)	(5.1		)	(3.5		)	(3.5		)	(3.6		)	(2.4		)	(3.8		)	(3.3		)
Prior Years Catastrophe Losses and LAE Ratio	—			(0.1		)	—			(0.1		)	—			—			(0.1		)	—			(0.1		)	—
Total Incurred Loss and LAE Ratio	72.7		%	72.5		%	72.3		%	71.1		%	78.8		%	72.9		%	74.4		%	74.7		%	72.1		%	75.1		%

Page 18

Kemper Corporation Property & Casualty Insurance Segment Homeowners Insurance - Premiums and Losses and LAE (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Premiums
Net Premiums Written	$	66.5		$	78.6		$	80.5		$	70.9		$	74.2		$	85.4		$	87.0		$	74.3		$	296.5		$	320.9

Earned Premiums	$	75.8		$	77.9		$	79.0		$	79.7		$	81.4		$	82.3		$	82.1		$	80.4		$	312.4		$	326.2

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	31.4		$	38.1		$	37.9		$	49.1		$	30.9		$	47.6		$	43.1		$	48.8		$	156.5		$	170.4
Catastrophe Losses and LAE	3.8			12.3			50.4			14.3			2.2			8.8			21.2			6.0			80.8			38.2
Prior Years:
Non-catastrophe Losses and LAE	(0.7		)	1.5			(1.6		)	(0.7		)	(3.0		)	(0.3		)	(1.0		)	(4.6		)	(1.5		)	(8.9		)
Catastrophe Losses and LAE	(0.8		)	(6.0		)	(4.4		)	(2.1		)	(3.8		)	(1.6		)	(4.2		)	(1.6		)	(13.3		)	(11.2		)
Total Incurred Losses and LAE	$	33.7		$	45.9		$	82.3		$	60.6		$	26.3		$	54.5		$	59.1		$	48.6		$	222.5		$	188.5

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	41.5		%	48.9		%	48.0		%	61.6		%	38.0		%	57.8		%	52.5		%	60.6		%	50.1		%	52.2		%
Current Year Catastrophe Losses and LAE Ratio	5.0			15.8			63.8			17.9			2.7			10.7			25.8			7.5			25.9			11.7
Prior Years Non-catastrophe Losses and LAE Ratio	(0.9		)	1.9			(2.0		)	(0.9		)	(3.7		)	(0.4		)	(1.2		)	(5.7		)	(0.5		)	(2.7		)
Prior Years Catastrophe Losses and LAE Ratio	(1.1		)	(7.7		)	(5.6		)	(2.6		)	(4.7		)	(1.9		)	(5.1		)	(2.0		)	(4.3		)	(3.4		)
Total Incurred Loss and LAE Ratio	44.5		%	58.9		%	104.2		%	76.0		%	32.3		%	66.2		%	72.0		%	60.4		%	71.2		%	57.8		%

Page 19

Kemper Corporation Property & Casualty Insurance Segment Other Personal Lines - Premiums and Losses and LAE (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Premiums
Net Premiums Written	$	11.2		$	12.6		$	12.8		$	11.4		$	12.2		$	14.0		$	14.5		$	12.7		$	48.0		$	53.4

Earned Premiums	$	12.2		$	12.6		$	12.9		$	13.2		$	13.5		$	13.8		$	14.1		$	13.9		$	50.9		$	55.3

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	6.8		$	7.4		$	6.8		$	7.1		$	6.7		$	5.3		$	6.4		$	6.0		$	28.1		$	24.4
Catastrophe Losses and LAE	0.2			0.2			1.6			0.8			(0.1		)	0.7			0.4			0.2			2.8			1.2
Prior Years:
Non-catastrophe Losses and LAE	(0.8		)	(1.1		)	(1.4		)	(0.2		)	0.5			(1.0		)	(2.0		)	(1.2		)	(3.5		)	(3.7		)
Catastrophe Losses and LAE	—			(0.9		)	(0.6		)	(0.4		)	(0.4		)	—			(0.7		)	—			(1.9		)	(1.1		)
Total Incurred Losses and LAE	$	6.2		$	5.6		$	6.4		$	7.3		$	6.7		$	5.0		$	4.1		$	5.0		$	25.5		$	20.8

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	55.8		%	58.6		%	52.8		%	53.7		%	49.6		%	38.3		%	45.5		%	43.2		%	55.2		%	44.1		%
Current Year Catastrophe Losses and LAE Ratio	1.6			1.6			12.4			6.1			(0.7		)	5.1			2.8			1.4			5.5			2.2
Prior Years Non-catastrophe Losses and LAE Ratio	(6.6		)	(8.7		)	(10.9		)	(1.5		)	3.7			(7.2		)	(14.2		)	(8.6		)	(6.9		)	(6.7		)
Prior Years Catastrophe Losses and LAE Ratio	—			(7.1		)	(4.7		)	(3.0		)	(3.0		)	—			(5.0		)	—			(3.7		)	(2.0		)
Total Incurred Loss and LAE Ratio	50.8		%	44.4		%	49.6		%	55.3		%	49.6		%	36.2		%	29.1		%	36.0		%	50.1		%	37.6		%

Page 20

Kemper Corporation Life & Health Insurance Segment - Results of Operations and Selected Financial Information (Dollars in Millions) (Unaudited)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Results of Operations
Earned Premiums:
Life	$	96.0		$	96.8		$	97.2		$	97.6		$	97.8		$	98.4		$	98.6		$	97.9		$	387.6		$	392.7
Accident and Health	36.5			37.1			36.2			38.8			40.2			40.7			40.3			40.2			148.6			161.4
Property	19.0			19.2			19.4			18.9			19.4			19.7			20.0			19.7			76.5			78.8
Total Earned Premiums	151.5			153.1			152.8			155.3			157.4			158.8			158.9			157.8			612.7			632.9
Net Investment Income	71.3			49.2			48.0			50.2			50.6			56.5			49.8			53.0			218.7			209.9
Other Income	0.5			0.4			—			—			0.1			—			0.1			—			0.9			0.2
Total Revenues	223.3			202.7			200.8			205.5			208.1			215.3			208.8			210.8			832.3			843.0
Policyholders’ Benefits and Incurred Losses and LAE	91.7			89.9			95.8			97.0			91.0			94.6			99.4			102.9			374.4			387.9
Insurance Expenses	80.4			81.4			80.3			73.9			78.5			85.5			78.2			76.0			316.0			318.2
Operating Profit	51.2			31.4			24.7			34.6			38.6			35.2			31.2			31.9			141.9			136.9
Income Tax Expense	(17.7		)	(11.1		)	(8.8		)	(12.5		)	(13.7		)	(12.3		)	(10.9		)	(10.7		)	(50.1		)	(47.6		)
Segment Net Operating Income	$	33.5		$	20.3		$	15.9		$	22.1		$	24.9		$	22.9		$	20.3		$	21.2		$	91.8		$	89.3



	Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2013		Mar 31, 2013
Insurance Reserves:
Future Policyholder Benefits	$	3,214.7	$	3,202.5	$	3,189.5	$	3,173.8	$	3,157.7	$	3,146.7	$	3,133.3	$	3,119.4
Incurred Losses and LAE Reserves:
Life	38.8		38.7		39.4		42.6		37.6		33.1		34.3		35.0
Accident and Health	20.2		19.6		20.1		21.3		22.2		21.7		22.0		20.4
Property	4.5		4.3		5.3		5.6		5.3		4.7		5.7		8.0
Total Incurred Losses and LAE Reserves	63.5		62.6		64.8		69.5		65.1		59.5		62.0		63.4
Insurance Reserves	$	3,278.2	$	3,265.1	$	3,254.3	$	3,243.3	$	3,222.8	$	3,206.2	$	3,195.3	$	3,182.8

Page 21

Kemper Corporation Details of Investment Performance (Dollars in Millions)

	Three Months Ended																								Year Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Net Investment Income
Interest and Dividends on Fixed Maturities	$	57.4		$	56.1		$	56.9		$	57.0		$	58.3		$	59.5		$	58.6		$	59.1		$	227.4		$	235.5
Dividends on Equity Securities	34.1			7.7			10.8			7.3			8.9			11.3			9.0			8.8			59.9			38.0
Equity Method Limited Liability Investments	(0.7		)	4.9			1.3			3.5			6.5			7.7			3.6			8.6			9.0			26.4
Fair Value Option Investments	(1.3		)	0.3			0.3			—			—			—			—			—			(0.7		)	—
Short-term Investments	0.1			0.1			0.2			0.2			0.1			—			—			—			0.6			0.1
Real Estate	2.9			3.1			2.9			3.2			3.1			3.7			6.6			7.4			12.1			20.8
Loans to Policyholders	5.2			5.2			5.0			5.1			5.1			5.0			4.8			4.9			20.5			19.8
Other	0.1			—			—			—			—			—			—			—			0.1			—
Total Investment Income	97.8			77.4			77.4			76.3			82.0			87.2			82.6			88.8			328.9			340.6
Investment Expenses:
Real Estate	2.7			3.1			2.7			2.8			3.0			3.0			6.0			6.3			11.3			18.3
Other Investment Expenses	2.0			2.0			2.1			2.4			2.1			1.8			2.0			1.7			8.5			7.6
Total Investment Expenses	4.7			5.1			4.8			5.2			5.1			4.8			8.0			8.0			19.8			25.9
Net Investment Income	$	93.1		$	72.3		$	72.6		$	71.1		$	76.9		$	82.4		$	74.6		$	80.8		$	309.1		$	314.7
Net Realized Gains on Sales of Investments
Fixed Maturities:
Gains on Sales	$	2.0		$	0.2		$	0.4		$	4.4		$	1.3		$	2.5		$	1.4		$	25.7		$	7.0		$	30.9
Losses on Sales	(0.2		)	—			—			—			(0.4		)	—			—			—			(0.2		)	(0.4		)
Equity Securities:
Gains on Sales	21.4			7.9			3.0			0.8			19.9			0.7			0.8			0.4			33.1			21.8
Losses on Sales	(2.0		)	—			—			—			(0.2		)	(0.2		)	—			(0.1		)	(2.0		)	(0.5		)
Equity Method Limited Liability Investments:
Gains on Sales	—			—			—			—			—			2.3			0.2			—			—			2.5
Real Estate:
Gains on Sales	—			—			—			—			—			43.6			—			0.6			—			44.2
Losses on Sales	—			—			—			(0.2		)	—			—			—			—			(0.2		)	—
Other Investments:
Gain on Sale of Subsidiary	—			—			—			1.6			—			—			—			—			1.6			—
Gains on Sales	—			—			—			—			—			—			—			0.1			—			0.1
Losses on Sales	—			—			(0.1		)	—			—			—			(0.1		)	—			(0.1		)	(0.1		)
Trading Securities Net Gains	(0.2		)	(0.1		)	0.2			—			0.2			0.2			—			0.2			(0.1		)	0.6
Net Realized Gains on Sales of Investments	$	21.0		$	8.0		$	3.5		$	6.6		$	20.8		$	49.1		$	2.3		$	26.9		$	39.1		$	99.1
Net Impairment Losses Recognized in Earnings
Fixed Maturities	$	(0.1	)	$	(2.2	)	$	(3.1	)	$	(0.3	)	$	(5.9	)	$	(2.2	)	$	(0.5	)	$	(1.7	)	$	(5.7	)	$	(10.3	)
Equity Securities	(4.0		)	(1.6		)	(1.0		)	(0.5		)	(1.7		)	(1.2		)	(0.5		)	(0.2		)	(7.1		)	(3.6		)
Real Estate	(2.4		)	—			—			—			—			—			—			—			(2.4		)	—
Net Impairment Losses Recognized in Earnings	$	(6.5	)	$	(3.8	)	$	(4.1	)	$	(0.8	)	$	(7.6	)	$	(3.4	)	$	(1.0	)	$	(1.9	)	$	(15.2	)	$	(13.9	)

Page 22

Kemper Corporation Details of Invested Assets (Dollars in Millions) (Unaudited)

	Dec 31, 2014				Dec 31, 2013				Dec 31, 2012
	Carrying Value		Percent of Total¹		Carrying Value		Percent of Total¹		Carrying Value		Percent of Total¹
Fixed Maturities Reported at Fair Value:
U.S. Government and Government Agencies and Authorities	$	345.5	5.4	%	$	362.2	5.9	%	$	428.9	6.6	%
States and Political Subdivisions	1,477.1		22.9		1,361.0		22.1		1,401.4		21.7
Corporate Securities:
Bonds and Notes	2,878.5		44.7		2,793.7		45.4		2,993.4		46.3
Redeemable Preferred Stocks	6.7		0.1		7.4		0.1		32.6		0.5
Collaterized Loan Obligations	64.4		1.0		44.7		0.7		—		—
Other Mortgage- and Asset-backed	5.4		0.1		6.0		0.1		3.9		0.1
Subtotal Fixed Maturities Reported at Fair Value	4,777.6		74.2		4,575.0		74.3		4,860.2		75.2
Equity Securities Reported at Fair Value:
Preferred Stocks	109.5		1.7		110.2		1.8		100.5		1.6
Common Stocks	133.8		2.1		189.5		3.1		154.2		2.4
Other Equity Interests:
Exchange Traded Funds	202.7		3.1		124.9		2.0		125.9		1.9
Limited Liability Companies and Limited Partnerships	186.2		2.9		173.9		2.8		141.3		2.2
Subtotal Equity Securities Reported at Fair Value	632.2		9.8		598.5		9.7		521.9		8.1
Equity Method Limited Liability Investments	184.8		2.9		245.1		4.0		253.0		3.9
Fair Value Option Investments	53.3		0.8		—		—		—		—
Short-term Investments at Cost which Approximates Fair Value	342.2		5.3		284.7		4.6		327.5		5.1
Other Investments:
Loans to Policyholders at Unpaid Principal	283.4		4.4		275.4		4.5		266.3		4.1
Real Estate at Depreciated Cost	160.9		2.5		167.1		2.7		226.2		3.5
Trading Securities at Fair Value	4.9		0.1		5.0		0.1		4.5		0.1
Other	0.4		—		0.5		—		0.5		—
Subtotal Other Investments	449.6		7.0		448.0		7.3		497.5		7.7
Total Investments	$	6,439.7	100.0	%	$	6,151.3	100.0	%	$	6,460.1	100.0	%
S&P Equivalent Rating for Fixed Maturities
AAA, AA, A	$	3,249.3	68.0	%	$	3,128.1	68.4	%	$	3,319.1	68.3	%
BBB	1,156.4		24.2		1,119.9		24.5		1,199.0		24.7
BB, B	166.7		3.5		144.6		3.1		158.9		3.2
CCC or Lower	205.2		4.3		182.4		4.0		183.2		3.8
Total Investments in Fixed Maturities	$	4,777.6	100.0	%	$	4,575.0	100.0	%	$	4,860.2	100.0	%
Duration (in Years)
Total Investments in Fixed Maturities	6.9				6.8				7.1

¹ Sum of percentages for individual lines may not equal subtotals and grand total due to rounding.

Page 23

Kemper Corporation Investment Concentration (Dollars in Millions) (Unaudited)

	Dec 31, 2014				Dec 31, 2013				Dec 31, 2012
Fair Value of Non-governmental Fixed Maturities by Industry	Amount		Percent of Total Investments		Amount		Percent of Total Investments		Amount		Percent of Total Investments
Manufacturing	$	1,247.4	19.4	%	$	1,196.9	19.5	%	$	1,371.1	21.2	%
Finance, Insurance and Real Estate	785.6		12.2		767.9		12.5		780.8		12.1
Transportation, Communication and Utilities	312.9		4.9		306.7		5.0		289.2		4.5
Services	305.0		4.7		277.5		4.5		298.6		4.6
Mining	139.7		2.2		143.1		2.3		143.4		2.2
Retail Trade	74.5		1.2		75.6		1.2		66.5		1.0
Wholesale Trade	69.7		1.1		60.7		1.0		57.8		0.9
Agriculture, Forestry and Fishing	15.3		0.2		18.8		0.3		19.2		0.3
Other	4.9		0.1		4.6		0.1		3.3		0.1
Total Fair Value of Non-governmental Fixed Maturities	$	2,955.0	46.0	%	$	2,851.8	46.4	%	$	3,029.9	46.9	%



		Dec 31, 2014
Ten Largest Investment Exposures ¹		Fair Value		Percent of Total Investments
Fixed Maturities:
States and Political Subdivisions:
Texas		$	96.7	1.5	%
Ohio		79.4		1.2
Michigan		68.7		1.1
Florida		65.1		1.0
Georgia		64.2		1.0
Colorado		60.2		0.9
Wisconsin		59.9		0.9
Equity Securities - Other Equity Interests:
Vanguard Total Stock Market ETF	70,300,000	70.3		1.1
iShares® Core S&P 500 ETF		53.4		0.8
Equity Method Limited Liability Investments:
Tennenbaum Opportunities Fund V, LLC		63.5		1.0
Total		$	681.4	10.5	%


¹	Excluding Investments in U.S. Government and Government Agencies and Authorities and Obligations of States and Political Subdivisions pre-refunded with U.S. government and government agencies obligations held in Trust at December 31, 2014.

Page 24

Kemper Corporation Municipal Bonds (excluding Pre-refunded Bonds) (Unaudited)

	Dec 31, 2014
	State General Obligation		Political Subdivision General Obligation		Revenue		Total Fair Value		Percent of Total Muni Bond¹		Percent of Total Investments¹
Texas	$	30.9	$	18.6	$	47.2	$	96.7	6.9	%	1.5	%
Ohio	40.7		4.9		33.8		79.4		5.7		1.2
Michigan	37.8		—		30.9		68.7		4.9		1.1
Florida	52.6		—		12.5		65.1		4.7		1.0
Georgia	49.5		5.6		9.1		64.2		4.6		1.0
Colorado	—		15.8		44.4		60.2		4.3		0.9
Wisconsin	51.5		7.0		1.4		59.9		4.3		0.9
Arkansas	53.1		—		—		53.1		3.8		0.8
New York	6.4		—		41.0		47.4		3.4		0.7
Washington	15.8		0.3		29.5		45.6		3.3		0.7
North Carolina	17.8		1.9		22.9		42.6		3.1		0.7
Louisiana	16.8		0.2		24.2		41.2		3.0		0.6
Utah	28.7		1.6		10.8		41.1		3.0		0.6
Oregon	31.0		—		1.1		32.1		2.3		0.5
Virginia	—		19.4		11.5		30.9		2.2		0.5
Connecticut	25.2		—		5.4		30.6		2.2		0.5
Minnesota	27.0		—		3.5		30.5		2.2		0.5
Nevada	22.7		7.3		—		30.0		2.2		0.5
Indiana	—		—		28.8		28.8		2.1		0.4
Mississippi	24.7		—		3.1		27.8		2.0		0.4
Delaware	17.7		—		9.7		27.4		2.0		0.4
Massachusetts	—		—		26.6		26.6		1.9		0.4
New Jersey	—		5.6		20.2		25.8		1.9		0.4
South Carolina	20.4		3.2		—		23.6		1.7		0.4
Maryland	—		18.3		3.7		22.0		1.6		0.3
Tennessee	4.6		7.6		9.5		21.7		1.6		0.3
Missouri	—		—		19.3		19.3		1.4		0.3
Iowa	—		—		17.5		17.5		1.3		0.3
California	0.4		—		17.1		17.5		1.3		0.3
Kentucky	—		1.1		16.0		17.1		1.2		0.3
Idaho	3.2		7.6		5.5		16.3		1.2		0.3
Arizona	—		—		16.3		16.3		1.2		0.3
Rhode Island	10.9		—		5.1		16.0		1.1		0.2
Pennsylvania	11.6		2.5		1.3		15.4		1.1		0.2
Illinois	—		5.6		9.4		15.0		1.1		0.2
Hawaii	14.8		—		—		14.8		1.1		0.2
Nebraska	—		7.0		5.4		12.4		0.9		0.2
District of Columbia	—		—		12.2		12.2		0.9		0.2
Alabama	6.2		—		5.7		11.9		0.9		0.2
All Other States	22.6		—		44.4		67.0		4.8		1.0
Total ⁽¹⁾	$	644.6	$	141.1	$	606.0	$	1,391.7	100.0	%	21.6	%

¹ Sum of percentages for individual lines may not equal total due to rounding.

Page 25

Kemper Corporation Investments in Limited Liability Companies and Limited Partnerships (Dollars in Millions) (Unaudited)

	Unfunded Commitment		Reported Value
Asset Class	Dec 31, 2014		Dec 31, 2014		Dec 31, 2013
Reported as Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings:
Distressed Debt	$	—	$	93.0	$	126.1
Secondary Transactions	17.7		48.9		54.0
Mezzanine Debt	15.0		27.0		46.0
Growth Equity	—		5.3		7.8
Senior Debt	4.9		5.0		7.5
Leveraged Buyout	0.1		3.9		3.7
Other	—		1.7		—
Total Equity Method Limited Liability Investments	37.7		184.8		245.1
Reported as Other Equity Interests at Fair Value:
Mezzanine Debt	61.9		69.7		63.8
Senior Debt	17.7		21.4		15.0
Distressed Debt	1.6		18.2		14.4
Secondary Transactions	12.5		15.6		13.7
Hedge Fund	—		9.1		12.5
Leveraged Buyout	2.5		8.0		9.9
Real Estate	—		—		6.3
Other	1.7		44.2		38.3
Total Reported as Other Equity Interests at Fair Value	97.9		186.2		173.9
Reported as Fair Value Option Investments:
Hedge Fund	—		53.3		—
Total Investments in Limited Liability Companies and Limited Partnerships	$	135.6	$	424.3	$	419.0

Page 26

Kemper Corporation

Definitions of Non-GAAP Financial Measures

The Company believes that investors’ understanding of Kemper’s performance is enhanced by the disclosure of the following non-GAAP financial measures. The methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities, is a ratio 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. The Company uses the trend 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. The Company 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 generally not influenced by management. The Company believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.

Book Value Per Share Excluding Goodwill, is a ratio that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the recorded Goodwill asset by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. Book Value Per Share Excluding Goodwill, also referred to as Tangible Book Value Per Share, is a common measure used by analysts and investors to compare similar companies.

Consolidated Net Operating Income is an after-tax, non-GAAP financial measure and is computed by excluding from Income from Continuing Operations the after-tax impact of 1) Net Realized Gains on Sales of Investments, 2) Net Impairment Losses Recognized in Earnings related to investments and 3) 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 Income from Continuing Operations.

The Company believes that Consolidated Net Operating Income 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. Net Realized Gains on Sales of Investments and Net Impairment Losses Recognized in Earnings related to investments included in the Company’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 Company’s investments, the timing of which is unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.

A reconciliation of Consolidated Net Operating Income to Income from Continuing Operations is presented below:



	Three Months Ended																								Year Ended
Dollars in Millions (Unaudited)	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Consolidated Net Operating Income	$	53.9		$	2.1		$	9.6		$	31.5		$	46.3		$	38.9		$	31.7		$	42.3		$	97.1		$	159.2
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	13.6			5.2			2.4			4.2			13.5			31.9			1.5			17.5			25.4			64.4
Net Impairment Losses Recognized in Earnings	(4.2		)	(2.5		)	(2.7		)	(0.5		)	(5.0		)	(2.2		)	(0.7		)	(1.2		)	(9.9		)	(9.1		)
Income from Continuing Operations	$	63.3		$	4.8		$	9.3		$	35.2		$	54.8		$	68.6		$	32.5		$	58.6		$	112.6		$	214.5

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Consolidated Net Operating Income Per Unrestricted Share is a non-GAAP financial measure. It is computed by dividing Consolidated Net Operating Income by the weighted average unrestricted shares outstanding. The most directly comparable GAAP financial measure is Income from Continuing Operations Per Unrestricted Share‐basic.

A reconciliation of Consolidated Net Operating Income Per Unrestricted Share-basic to Income from Continuing Operations Per Unrestricted Share-basic is presented below:



	Three Months Ended																								Year Ended
(Unaudited)	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2013			Mar 31, 2013			Dec 31, 2014			Dec 31, 2013
Consolidated Net Operating Income Per Unrestricted Share	$	1.02		$	0.04		$	0.18		$	0.56		$	0.83		$	0.69		$	0.55		$	0.72		$	1.79		$	2.79
Net Income (Loss) Per Unrestricted Share From:
Net Realized Gains on Sales of Investments	0.26			0.10			0.04			0.08			0.24			0.56			0.02			0.30			0.47			1.12
Net Impairment Losses Recognized in Earnings	(0.08		)	(0.05		)	(0.05		)	(0.01		)	(0.09		)	(0.04		)	(0.01		)	(0.02		)	(0.18		)	(0.16		)
Income from Continuing Operations Per Unrestricted Share	$	1.20		$	0.09		$	0.17		$	0.63		$	0.98		$	1.21		$	0.56		$	1.00		$	2.08		$	3.75

Underlying Combined Ratio is a non-GAAP financial measure. It is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense (including write-offs of long-lived assets) Ratio. The most directly comparable GAAP financial measure is the Combined Ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses and loss and LAE reserve development from prior years with the Insurance Expense (including write-offs of long-lived assets) Ratio. The Company believes the underlying combined ratio is useful to investors and is used by management to reveal the trends in the Company’s property and casualty insurance businesses that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses cause loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on 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 our insurance products in the current period. The Company believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing the Company’s underwriting performance. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.

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Form 8-K KEMPER Corp For: Feb 05

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