Form 8-K KEMPER Corp For: May 07

May 7, 2015 4:04 PM

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): May 7, 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 May 7, 2015, the Registrant issued a press release announcing its financial results for the first quarter of 2015 and the availability of the Registrant’s first 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 May 7, 2015.

99.2 First Quarter 2015 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:	May 7, 2015	/S/ FRANK J. SODARO
		Frank J. Sodaro
		Senior Vice President and Chief Financial Officer

Exhibit Index



99.1			Registrant’s press release dated May 7, 2015.
99.2			First Quarter 2015 Investor Supplement of Kemper Corporation.

Exhibit 99.1



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



	Press Release

May 7, 2015

Kemper Corporation Reports First Quarter 2015 Earnings


◦	Improved the Property & Casualty Insurance segment’s underlying loss and LAE ratio 2.4 percentage points


◦	Returned $34 million to shareholders through share repurchases and dividends


◦	Reported book value per share of $40.71, up 2 percent from year-end 2014


◦	Refinanced $250 million of 6.00 percent debt maturing November 2015 with 4.35 percent debt maturing in February 2025


◦	Completed the acquisition of Alliance United Group on April 30

CHICAGO - (Business Wire) - Kemper Corporation (NYSE: KMPR) reported today net income of $13.5 million, or $0.26 per diluted share, for the first quarter of 2015, compared to $35.1 million, or $0.63 per share, for the first quarter of 2014. Consolidated net operating income¹ was $21.8 million, or $0.42 per diluted share, for the first quarter of 2015, compared to $31.5 million, or $0.56 per share, for the first quarter of 2014. Net operating income decreased primarily from lower favorable reserve development, a reserve adjustment on certain life policies, higher employee retirement benefits and higher interest expenses. These items were partially offset by improved P&C underlying results and lower catastrophes.



	Three Months Ended
(Dollars in Millions, Except Per Share Amounts) (Unaudited)	Mar 31, 2015			Mar 31, 2014
Consolidated Net Operating Income ¹	$	21.8		$	31.5
Income from Continuing Operations	13.5			35.2
Net Income	13.5			35.1

Impact of Catastrophe Losses and Related Loss Adjustment Expense (LAE) on Net Income	$	(6.7	)	$	(10.6	)

Diluted Net Income Per Share From:
Consolidated Net Operating Income ¹	$	0.42		$	0.56
Continuing Operations	0.26			0.63
Net Income	0.26			0.63

Impact of Catastrophe Losses and Related LAE on Net Income Per Share	$	(0.13	)	$	(0.19	)

“Our team made tangible progress in the first quarter of 2015,” commented Donald G. Southwell, Kemper’s Chairman, President and Chief Executive Officer. “In the Property & Casualty segment, our underlying loss and LAE ratio improved 2.4 percentage points. While we continued to see top line pressure, new business increased and is at the highest level in the last six quarters. Additionally, the premium renewal ratio is stabilizing.

“The Life & Health Group’s results decreased primarily as a result of a $7.6 million pre-tax adjustment to deferred premium reserves. Excluding this adjustment, net income exceeded our plans and approached last year’s level.

“Last week, we completed the purchase of Alliance United Group, a top writer of nonstandard auto in California. We expect Alliance United will generate more than $200 million of earned premiums for Kemper in 2015 and be accretive to our 2015 earnings.

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

“In the first quarter, we refinanced our $250 million 6 percent notes maturing in November with new $250 million 10-year notes at a coupon of 4.35 percent. Additionally, we returned $34 million to shareholders through $22 million of common stock repurchases and $12 million of dividends,” said Southwell.

Capital

During the first quarter of 2015, Kemper repurchased more than 600,000 shares of its common stock at a total cost of $21.9 million, or $35.68 per share, and paid dividends of $12.3 million.

Kemper ended the quarter with a book value per share excluding net unrealized gains on fixed maturities of $34.64, essentially flat with year-end 2014, as net income was offset by dividends. Book value per share was $40.71, up 2 percent from $39.88 at the end of 2014, largely from the impact of lower yields on the fixed maturities portfolio.

Revenues

Total revenues of $499.2 million for the first quarter of 2015, decreased $55.4 million over the prior year primarily from a $46.3 million decrease in earned premiums. Realized gains decreased $3.2 million and other-than-temporary impairment losses increased $6.2 million.

Earned premiums in the Property & Casualty segment decreased $34.7 million driven by the impact of profit improvement actions taken over the past couple of years. As the impact of profit improvement actions moderate throughout 2015, the company anticipates it will see continued improvements in the level of new business and renewal ratios.

Earned premiums in the Life & Health Insurance segment decreased $11.6 million driven by a $7.6 million adjustment to deferred premium reserves for certain limited-pay life policies.

Net investment income was $70.6 million in the first quarter of 2015, compared to $71.1 million in 2014, as lower income from the alternative investments portfolio was mostly offset by higher interest and dividends on fixed maturities.

The investment portfolio in total generated a pre-tax equivalent annualized book yield of 5.0 percent for the first quarter of 2015, flat with 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 and LAE, (iii) catastrophe losses and LAE exclude the impact of prior-year development and (iv) underlying loss ratio includes loss and LAE.



	Three Months Ended
(Dollars in Millions) (Unaudited)	Mar 31, 2015			Mar 31, 2014
Segment Net Operating Income:
Property & Casualty Insurance	$	13.4		$	14.4
Life & Health Insurance	16.1			22.1
Total Segment Net Operating Income	29.5			36.5
Corporate and Other Net Operating Loss	(7.7		)	(5.0		)
Consolidated Net Operating Income	21.8			31.5
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	2.2			4.2
Net Impairment Losses Recognized in Earnings	(4.6		)	(0.5		)
Loss from Early Extinguishment of Debt	(5.9		)	—
Income from Continuing Operations	$	13.5		$	35.2

The Property & Casualty Insurance segment reported net operating income of $13.4 million in the first quarter of 2015, compared to $14.4 million in 2014. Results in the first quarter of 2015 included favorable prior year reserve development of $4.7 million and catastrophe losses of $6.7 million, compared to $10.0 million and $10.4 million, respectively, in 2014. Additionally, net investment income decreased $2.0 million. The underlying combined ratio improved 1.3 percentage points to 97.9 percent, driven by a 2.4 percentage point improvement in the underlying loss and LAE ratio, partially offset by a 1.1 percentage point increase in the expense ratio. The first quarter underlying loss and LAE ratio of 69.0 percent, improved primarily from increases in average earned premium. Property and casualty operating expenses decreased $6.6 million pre-tax in the quarter, driven by a reduction in variable costs and various cost-cutting measures. However, the expense ratio increased to 28.9 percent in the first quarter of 2015, compared to 27.8 percent in 2014 as earned premiums declined.

The Life & Health Insurance segment reported net operating income of $16.1 million for the first quarter of 2015, compared to $22.1 million in 2014. Results decreased largely from a $7.6 million pre-tax adjustment to deferred premium reserves for certain limited-pay life policies.

Corporate and Other net operating loss increased $2.7 million compared to the first quarter of 2014, driven by $2.3 million of higher employee retirement benefits and $1.9 million higher interest expense, partially offset by $1.2 million of higher unallocated net investment income.

Unaudited condensed consolidated statements of income for the three months ended March 31, 2015 and 2014 are presented below:



	Three Months Ended
(Dollars in Millions, Except Per Share Amounts)	Mar 31, 2015			Mar 31, 2014
Revenues:
Earned Premiums	$	431.3		$	477.6
Net Investment Income	70.6			71.1
Other Income	0.9			0.1
Net Realized Gains on Sales of Investments	3.4			6.6
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(7.0		)	(0.8		)
Portion of Losses Recognized in Other Comprehensive Income	—			—
Net Impairment Losses Recognized in Earnings	(7.0		)	(0.8		)
Total Revenues	499.2			554.6
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	297.7			327.9
Insurance Expenses	144.9			152.1
Loss from Early Extinguishment of Debt	9.1			—
Interest and Other Expenses	29.7			22.7
Total Expenses	481.4			502.7
Income from Continuing Operations before Income Taxes	17.8			51.9
Income Tax Expense	(4.3		)	(16.7		)
Income from Continuing Operations	13.5			35.2
Income from Discontinued Operations	—			(0.1		)
Net Income	$	13.5		$	35.1

Income from Continuing Operations Per Unrestricted Share:
Basic	$	0.26		$	0.63
Diluted	$	0.26		$	0.63

Net Income Per Unrestricted Share:
Basic	$	0.26		$	0.63
Diluted	$	0.26		$	0.63

Weighted-average Outstanding (Shares in Thousands):
Unrestricted Shares - Basic	51,872.8			55,312.9
Unrestricted Shares and Equivalent Shares - Diluted	51,969.3			55,443.1

Dividends Paid to Shareholders Per Share	$	0.24		$	0.24

Unaudited business segment revenues for the three months ended March 31, 2015 and 2014 are presented below:



	Three Months Ended
(Dollars in Millions)	Mar 31, 2015			Mar 31, 2014
REVENUES
Property & Casualty Insurance:
Earned Premiums:
Personal Automobile	$	189.8		$	216.3
Homeowners	72.6			79.7
Other Personal	11.7			13.2
Total Personal	274.1			309.2
Commercial Automobile	13.5			13.1
Total Earned Premiums	287.6			322.3
Net Investment Income	14.8			17.6
Other Income	0.3			0.1
Total Property & Casualty Insurance	302.7			340.0
Life & Health Insurance:
Earned Premiums:
Life	88.0			97.6
Accident and Health	36.8			38.8
Property	18.9			18.9
Total Earned Premiums	143.7			155.3
Net Investment Income	50.4			50.2
Other Income	0.8			—
Total Life & Health Insurance	194.9			205.5
Total Segment Revenues	497.6			545.5
Net Realized Gains on Sales of Investments	3.4			6.6
Net Impairment Losses Recognized in Earnings	(7.0		)	(0.8		)
Other	5.2			3.3
Total Revenues	$	499.2		$	554.6

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

	Mar 31, 2015		Dec 31, 2014
Assets:	(Unaudited)
Investments:
Fixed Maturities at Fair Value	$	4,803.1	$	4,777.6
Equity Securities at Fair Value	628.6		632.2
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	168.1		184.8
Fair Value Option Investments	54.2		53.3
Short-term Investments at Cost which Approximates Fair Value	357.3		342.2
Other Investments	450.1		449.6
Total Investments	6,461.4		6,439.7
Cash	87.7		76.1
Receivables from Policyholders	293.1		295.3
Other Receivables	197.0		187.0
Deferred Policy Acquisition Costs	305.6		303.3
Goodwill	311.8		311.8
Current Income Tax Assets	10.9		—
Other Assets	217.5		220.2
Total Assets	$	7,885.0	$	7,833.4
Liabilities and Shareholders’ Equity:
Insurance Reserves:
Life and Health	$	3,299.5	$	3,273.7
Property and Casualty	720.1		733.9
Total Insurance Reserves	4,019.6		4,007.6
Unearned Premiums	530.0		536.9
Liabilities for Income Taxes	58.2		36.5
Debt at Amortized Cost	750.0		752.1
Accrued Expenses and Other Liabilities	417.3		409.6
Total Liabilities	5,775.1		5,742.7
Shareholders’ Equity:
Common Stock	5.2		5.2
Paid-in Capital	655.1		660.1
Retained Earnings	1,189.3		1,202.7
Accumulated Other Comprehensive Income	260.3		222.7
Total Shareholders’ Equity	2,109.9		2,090.7
Total Liabilities and Shareholders’ Equity	$	7,885.0	$	7,833.4

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



	Three Months Ended
(Dollars in Millions)	Mar 31, 2015			Mar 31, 2014

Results of Operations
Net Premiums Written	$	279.7		$	304.3

Earned Premiums	$	287.6		$	322.3
Net Investment Income	14.8			17.6
Other Income	0.3			0.1
Total Revenues	302.7			340.0
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	198.5			230.4
Catastrophe Losses and LAE	10.3			16.0
Prior Years:
Non-catastrophe Losses and LAE	(5.0		)	(12.7		)
Catastrophe Losses and LAE	(2.2		)	(2.7		)
Total Incurred Losses and LAE	201.6			231.0
Insurance Expenses	83.1			89.7
Operating Profit	18.0			19.3
Income Tax Expense	(4.6		)	(4.9		)
Segment Net Operating Income	$	13.4		$	14.4

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	69.0		%	71.4		%
Current Year Catastrophe Losses and LAE Ratio	3.6			5.0
Prior Years Non-catastrophe Losses and LAE Ratio	(1.7		)	(3.9		)
Prior Years Catastrophe Losses and LAE Ratio	(0.8		)	(0.8		)
Total Incurred Loss and LAE Ratio	70.1			71.7
Insurance Expense Ratio	28.9			27.8
Combined Ratio	99.0		%	99.5		%

Underlying Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio	69.0		%	71.4		%
Insurance Expense Ratio	28.9			27.8
Underlying Combined Ratio	97.9		%	99.2		%

Non-GAAP Measure Reconciliation
Underlying Combined Ratio	97.9		%	99.2		%
Current Year Catastrophe Losses and LAE Ratio	3.6			5.0
Prior Years Non-catastrophe Losses and LAE Ratio	(1.7		)	(3.9		)
Prior Years Catastrophe Losses and LAE Ratio	(0.8		)	(0.8		)
Combined Ratio as Reported	99.0		%	99.5		%

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



	Three Months Ended
(Dollars in Millions)	Mar 31, 2015			Mar 31, 2014

Results of Operations

Earned Premiums:
Life	$	88.0		$	97.6
Accident and Health	36.8			38.8
Property	18.9			18.9
Total Earned Premiums	143.7			155.3
Net Investment Income	50.4			50.2
Other Income	0.8			—
Total Revenues	194.9			205.5
Policyholders’ Benefits and Incurred Losses and LAE	96.1			97.0
Insurance Expenses	74.0			73.9
Operating Profit	24.8			34.6
Income Tax Expense	(8.7		)	(12.5		)
Segment Net Operating Income	$	16.1		$	22.1

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, 3) loss from early extinguishment of debt and 4) 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. Loss from Early Extinguishment of Debt is driven by the Company’s financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process. 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 months ended March 31, 2015 and 2014 is presented below:



	Three Months Ended
(Dollars in Millions) (Unaudited)	Mar 31, 2015			Mar 31, 2014
Consolidated Net Operating Income	$	21.8		$	31.5
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	2.2			4.2
Net Impairment Losses Recognized in Earnings	(4.6		)	(0.5		)
Loss from Early Extinguishment of Debt	(5.9		)	—
Income from Continuing Operations	$	13.5		$	35.2

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 Diluted Income from Continuing Operations Per Unrestricted Share.

A reconciliation of Diluted Consolidated Net Operating Income Per Unrestricted Share to Diluted Income from Continuing Operations Per Unrestricted Share for the three months ended March 31, 2015 and 2014 is presented below:



	Three Months Ended
(Unaudited)	Mar 31, 2015			Mar 31, 2014
Diluted Consolidated Net Operating Income Per Unrestricted Share	$	0.42		$	0.56
Net Income (Loss) Per Unrestricted Share From:
Net Realized Gains on Sales of Investments	0.04			0.08
Net Impairment Losses Recognized in Earnings	(0.09		)	(0.01		)
Loss from Early Extinguishment of Debt	(0.11		)	—
Diluted Income from Continuing Operations Per Unrestricted Share	$	0.26		$	0.63

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 March 31, 2015 and December 31, 2014 is presented below:



(Dollars in Millions) (Unaudited)	Mar 31, 2015		Dec 31, 2014
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities	$	1,795.3	$	1,808.5
Net Unrealized Gains on Fixed Maturities	314.6		282.2
Shareholders’ Equity	$	2,109.9	$	2,090.7

Underlying Combined Ratio

Underlying Combined Ratio is a non-GAAP financial measure, that is computed by adding the current year non-catastrophe losses and LAE ratio with the insurance expense ratio. The most directly comparable GAAP financial measure is the combined ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses, and loss and LAE reserve development from prior years with the insurance expense 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 first quarter 2015 results in a conference call on Friday, May 8, 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 May 22, 2015 at 855.859.2056 using conference ID number 19511835.

More detailed financial information can be found in Kemper’s Investor Financial Supplement for the first quarter of 2015, which is available at the investor section of kemper.com.

About Kemper

The Kemper family of companies is one of the nation’s leading insurers. With $8 billion in assets, Kemper is improving the world of insurance by offering personalized solutions for individuals, families and businesses. Kemper's businesses collectively:


•	Offer insurance for home, auto, life, health and valuables


•	Service six million policies


•	Are represented by more than 20,000 independent agents and brokers


•	Employ 6,000 associates dedicated to providing exceptional service


•	Are licensed to sell insurance in 50 states and the District of Columbia

Learn more about Kemper.

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

Exhibit 99.2

Investor Supplement

First Quarter 2015

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

First Quarter 2015

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 (Loss)	11
Net Operating Income (Loss)	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
Details of Investment Performance	22
Details of 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
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
For Period Ended
Earned Premiums	$	431.3		$	451.5		$	462.8		$	470.3		$	477.6
Net Investment Income	70.6			93.1			72.3			72.6			71.1
Net Investment Gains (Losses) and Other Income	(2.7		)	15.1			4.7			(0.4		)	5.9
Total Revenues	$	499.2		$	559.7		$	539.8		$	542.5		$	554.6

Consolidated Net Operating Income ¹	$	21.8		$	53.9		$	2.1		$	9.6		$	31.5
Income from Continuing Operations	$	13.5		$	63.3		$	4.8		$	9.3		$	35.2
Net Income	$	13.5		$	65.4		$	4.7		$	9.3		$	35.1

Per Unrestricted Common Share Amounts:
Basic:
Consolidated Net Operating Income ¹	$	0.42		$	1.02		$	0.04		$	0.18		$	0.56
Income from Continuing Operations	$	0.26		$	1.20		$	0.09		$	0.17		$	0.63
Net Income	$	0.26		$	1.24		$	0.09		$	0.17		$	0.63
Diluted:
Consolidated Net Operating Income ¹	$	0.42		$	1.02		$	0.04		$	0.18		$	0.56
Income from Continuing Operations	$	0.26		$	1.20		$	0.09		$	0.17		$	0.63
Net Income	$	0.26		$	1.24		$	0.09		$	0.17		$	0.63

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

At Period End
Total Assets	$	7,885.0		$	7,833.4		$	7,905.3		$	7,969.8		$	7,944.2
Insurance Reserves	$	4,019.6		$	4,007.6		$	4,041.7		$	4,064.2		$	4,067.3
Debt	$	750.0		$	752.1		$	751.9		$	751.7		$	751.4
Shareholders’ Equity	$	2,109.9		$	2,090.7		$	2,104.5		$	2,138.6		$	2,144.7
Shareholders’ Equity Excluding Goodwill	$	1,798.1		$	1,778.9		$	1,792.7		$	1,826.8		$	1,832.9
Common Shares Issued and Outstanding (In Millions)	51.826			52.418			52.666			53.497			55.408
Book Value Per Share²	$	40.71		$	39.88		$	39.96		$	39.98		$	38.71
Book Value Per Share Excluding Goodwill^1,2	$	34.69		$	33.94		$	34.04		$	34.15		$	33.08
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities^1,2	$	34.64		$	34.50		$	35.31		$	35.32		$	35.13
Debt to Total Capitalization²	26.2		%	26.5		%	26.3		%	26.0		%	25.9		%
Rolling 12 Months Return on 5-point AverageShareholders Equity^2,3	4.4		%	5.4		%	5.0		%	8.2		%	9.4		%

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
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Revenues:
Earned Premiums	$	431.3		$	451.5		$	462.8		$	470.3		$	477.6
Net Investment Income	70.6			93.1			72.3			72.6			71.1
Other Income	0.9			0.6			0.5			0.2			0.1
Net Realized Gains on Sales of Investments	3.4			21.0			8.0			3.5			6.6
Other-than-temporary Impairment Losses:
Total Other-than-temporary Impairment Losses	(7.0		)	(6.5		)	(3.8		)	(4.1		)	(0.8		)
Portion of Losses Recognized in Other Comprehensive Income	—			—			—			—			—
Net Impairment Losses Recognized in Earnings	(7.0		)	(6.5		)	(3.8		)	(4.1		)	(0.8		)
Total Revenues	499.2			559.7			539.8			542.5			554.6
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses	297.7			285.8			300.5			347.5			327.9
Insurance Expenses	144.9			156.4			158.6			161.3			152.1
Write-off of Long-lived Asset	—			—			54.6			—			—
Loss from Early Extinguishment of Debt	9.1			—			—			—			—
Interest and Other Expenses	29.7			24.4			22.1			22.5			22.7
Total Expenses	481.4			466.6			535.8			531.3			502.7
Income from Continuing Operations before Income Taxes	17.8			93.1			4.0			11.2			51.9
Income Tax Benefit (Expense)	(4.3		)	(29.8		)	0.8			(1.9		)	(16.7		)
Income from Continuing Operations	13.5			63.3			4.8			9.3			35.2
Discontinued Operations:
Income (Loss) from Discontinued Operations before Income Taxes	—			3.4			(0.2		)	—			(0.2		)
Income Tax Benefit (Expense)	—			(1.3		)	0.1			—			0.1
Income (Loss) from Discontinued Operations	—			2.1			(0.1		)	—			(0.1		)
Net Income	$	13.5		$	65.4		$	4.7		$	9.3		$	35.1
Income from Continuing Operations Per Unrestricted Share:
Basic	$	0.26		$	1.20		$	0.09		$	0.17		$	0.63
Diluted	$	0.26		$	1.20		$	0.09		$	0.17		$	0.63
Net Income Per Unrestricted Share:
Basic	$	0.26		$	1.24		$	0.09		$	0.17		$	0.63
Diluted	$	0.26		$	1.24		$	0.09		$	0.17		$	0.63
Dividends Paid to Shareholders Per Share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.24
Weighted Average Unrestricted Common Shares Outstanding (in Millions)	51.873			52.465			52.605			54.667			55.313

Page 4

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

	Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014
Assets:
Investments:
Fixed Maturities at Fair Value	$	4,803.1	$	4,777.6	$	4,697.2	$	4,680.0	$	4,619.5
Equity Securities at Fair Value	628.6		632.2		661.4		646.2		648.3
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings	168.1		184.8		222.8		227.1		239.0
Fair Value Option Investments	54.2		53.3		50.6		40.3		—
Short-term Investments at Cost which Approximates Fair Value	357.3		342.2		316.2		480.1		506.9
Other Investments	450.1		449.6		450.5		448.3		448.2
Total Investments	6,461.4		6,439.7		6,398.7		6,522.0		6,461.9
Cash	87.7		76.1		93.1		61.8		65.0
Receivables from Policyholders	293.1		295.3		314.4		313.5		319.5
Other Receivables	197.0		187.0		247.5		190.5		225.5
Deferred Policy Acquisition Costs	305.6		303.3		306.7		304.8		301.8
Goodwill	311.8		311.8		311.8		311.8		311.8
Current and Deferred Income Tax Assets	10.9		—		4.3		10.1		—
Other Assets	217.5		220.2		228.8		255.3		258.7
Total Assets	$	7,885.0	$	7,833.4	$	7,905.3	$	7,969.8	$	7,944.2
Liabilities and Shareholders’ Equity:
Insurance Reserves:
Life and Health	$	3,299.5	$	3,273.7	$	3,260.8	$	3,249.0	$	3,237.7
Property and Casualty	720.1		733.9		780.9		815.2		829.6
Total Insurance Reserves	4,019.6		4,007.6		4,041.7		4,064.2		4,067.3
Unearned Premiums	530.0		536.9		568.2		571.8		582.5
Liabilities for Income Taxes	58.2		36.5		48.7		53.4		30.6
Debt at Amortized Cost	750.0		752.1		751.9		751.7		751.4
Accrued Expenses and Other Liabilities	417.3		409.6		390.3		390.1		367.7
Total Liabilities	5,775.1		5,742.7		5,800.8		5,831.2		5,799.5
Shareholders’ Equity:
Common Stock	5.2		5.2		5.3		5.3		5.5
Paid-in Capital	655.1		660.1		662.2		671.3		693.5
Retained Earnings	1,189.3		1,202.7		1,155.6		1,183.4		1,231.5
Accumulated Other Comprehensive Income	260.3		222.7		281.4		278.6		214.2
Total Shareholders’ Equity	2,109.9		2,090.7		2,104.5		2,138.6		2,144.7
Total Liabilities and Shareholders’ Equity	$	7,885.0	$	7,833.4	$	7,905.3	$	7,969.8	$	7,944.2

Page 5

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

	Three Months Ended
	Mar 31, 2015			Mar 31, 2014
Operating Activities:
Net Income	$	13.5		$	35.1
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities:
Decrease (Increase) in Deferred Policy Acquisition Costs	(2.3		)	1.1
Amortization of Life Insurance in Force Acquired and Customer Relationships Acquired	1.6			1.8
Equity in Loss (Earnings) of Equity Method Limited Liability Investments	0.7			(3.5		)
Distribution of Accumulated Earnings of Equity Method Limited Liability Investments	0.4			7.0
Increase in Value of Fair Value Option Investments Reported in Net Investment Income	(0.9		)	—
Amortization of Investment Securities and Depreciation of Investment Real Estate	2.7			3.8
Net Realized Gains on Sales of Investments	(3.4		)	(6.6		)
Net Impairment Losses Recognized in Earnings	7.0			0.8
Loss from Early Extinguishment of Debt	9.1			—
Depreciation of Property and Equipment	3.2			4.3
Increase in Receivables	(8.4		)	(13.6		)
Increase in Insurance Reserves	11.5			6.0
Decrease in Unearned Premiums	(6.9		)	(16.4		)
Change in Income Taxes	(10.5		)	10.1
Decrease in Accrued Expenses and Other Liabilities	1.9			2.3
Other, Net	9.8			4.9
Net Cash Provided by Operating Activities (Carryforward to page 7)	29.0			37.1

Page 6

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

	Three Months Ended
	Mar 31, 2015			Mar 31, 2014
Net Cash Provided by Operating Activities (Carryforward from page 6)	29.0			37.1
Investing Activities:
Sales, Paydowns and Maturities of Fixed Maturities	121.7			188.8
Purchases of Fixed Maturities	(92.3		)	(98.6		)
Sales of Equity Securities	18.7			35.1
Purchases of Equity Securities	(11.7		)	(67.0		)
Return of Investment of Equity Method Limited Liability Investments	16.3			10.1
Acquisitions of Equity Method Limited Liability Investments	(4.7		)	(7.5		)
Increase in Short-term Investments	(15.2		)	(224.8		)
Improvements of Investment Real Estate	(0.6		)	(0.8		)
Sales of Investment Real Estate	—			0.9
Increase in Other Investments	(1.1		)	(1.8		)
Acquisition of Software	(2.9		)	(3.0		)
Disposition of Subsidiary, Net of Cash Disposed	—			8.9
Other, Net	(0.5		)	(2.5		)
Net Cash Provided (Used) by Investing Activities	27.7			(162.2		)
Financing Activities:
Net Proceeds from Issuances of Debt	267.8			144.2
Repayments of Debt	(279.3		)	—
Common Stock Repurchases	(23.4		)	(7.7		)
Dividends and Dividend Equivalents Paid	(12.3		)	(13.3		)
Cash Exercise of Stock Options	1.6			—
Other, Net	0.5			0.4
Net Cash Provided (Used) by Financing Activities	(45.1		)	123.6
Increase (Decrease) in Cash	11.6			(1.5		)
Cash, Beginning of Year	76.1			66.5
Cash, End of Period	$	87.7		$	65.0

Page 7

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Book Value Per Share
Numerator
Shareholders’ Equity	$	2,109.9		$	2,090.7		$	2,104.5		$	2,138.6		$	2,144.7
Less: Goodwill	(311.8		)	(311.8		)	(311.8		)	(311.8		)	(311.8		)
Shareholders’ Equity Excluding Goodwill	$	1,798.1		$	1,778.9		$	1,792.7		$	1,826.8		$	1,832.9
Shareholders’ Equity	$	2,109.9		$	2,090.7		$	2,104.5		$	2,138.6		$	2,144.7
Less: Net Unrealized Gains on Fixed Maturities	(314.6		)	(282.2		)	(244.9		)	(249.0		)	(198.3		)
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities	$	1,795.3		$	1,808.5		$	1,859.6		$	1,889.6		$	1,946.4
Denominator
Common Shares Issued and Outstanding	51.826			52.418			52.666			53.497			55.408
Book Value Per Share	$	40.71		$	39.88		$	39.96		$	39.98		$	38.71
Book Value Per Share Excluding Goodwill	$	34.69		$	33.94		$	34.04		$	34.15		$	33.08
Book Value Per Share Excluding Unrealized on Fixed Maturities	$	34.64		$	34.50		$	35.31		$	35.32		$	35.13

Return on Shareholders’ Equity
Numerator
Rolling 12 Months Net Income	$	92.9		$	114.5		$	104.3		$	169.7		$	194.4
Denominator (5-point Average)
5-point Average Shareholders’ Equity	$	2,117.7		$	2,106.0		$	2,089.7		$	2,069.8		$	2,076.5
Rolling 12 Months Return on Average Shareholders Equity (5-point Average)	4.4		%	5.4		%	5.0		%	8.2		%	9.4		%

Debt and Total Capitalization
Debt	$	750.0		$	752.1		$	751.9		$	751.7		$	751.4
Shareholders’ Equity	2,109.9			2,090.7			2,104.5			2,138.6			2,144.7
Total Capitalization	$	2,859.9		$	2,842.8		$	2,856.4		$	2,890.3		$	2,896.1
Ratio of Debt to Shareholders’ Equity	35.5		%	36.0		%	35.7		%	35.1		%	35.0		%
Ratio of Debt to Total Capitalization	26.2		%	26.5		%	26.3		%	26.0		%	25.9		%

Parent Company Liquidity
Kemper Holding Company Cash and Investments	$	290.2		$	330.3		$	302.4		$	302.7		$	255.9
Borrowings Available Under Credit Agreement	225.0			225.0			225.0			225.0			225.0
Parent Company Liquidity	$	515.2		$	555.3		$	527.4		$	527.7		$	480.9

Capital Returned to Shareholders
Common Stock Repurchased	$	21.9		$	9.0		$	29.9		$	68.3		$	8.3
Cash Dividends Paid	12.3			12.6			12.6			13.3			13.3
Total Capital Returned to Shareholders	$	34.2		$	21.6		$	42.5		$	81.6		$	21.6

Page 8

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

	Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014
Kemper Corporation:
Notes Payable under Revolving Credit Agreement	$	—	$	—	$	—	$	—	$	—
Senior Notes at Amortized Cost:
6.00% Senior Notes due November 30, 2015	—		249.5		249.4		249.3		249.2
6.00% Senior Notes due May 15, 2017	358.6		358.5		358.3		358.2		358.0
4.35% Senior Notes due February 15, 2025	247.3		—		—		—		—
7.375% Subordinated Debentures due February 27, 2054 at Amortized Cost	144.1		144.1		144.2		144.2		144.2
Debt Outstanding	$	750.0	$	752.1	$	751.9	$	751.7	$	751.4

Subsidiary Debt:
Federal Home Loan Bank of Dallas	—		—		—		—		—
Federal Home Loan Bank of Chicago	—		—		—		—		—

	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
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Revenues:
Property & Casualty Insurance:
Earned Premiums:
Personal Automobile	$	189.8		$	198.0		$	205.1		$	212.0		$	216.3
Homeowners	72.6			75.8			77.9			79.0			79.7
Other Personal	11.7			12.2			12.6			12.9			13.2
Total Personal	274.1			286.0			295.6			303.9			309.2
Commercial Automobile	13.5			14.0			14.1			13.6			13.1
Total Earned Premiums	287.6			300.0			309.7			317.5			322.3
Net Investment Income	14.8			17.1			18.5			19.5			17.6
Other Income	0.3			0.1			0.1			0.2			0.1
Total Property & Casualty Insurance	302.7			317.2			328.3			337.2			340.0
Life & Health Insurance:
Earned Premiums:
Life	88.0			96.0			96.8			97.2			97.6
Accident and Health	36.8			36.5			37.1			36.2			38.8
Property	18.9			19.0			19.2			19.4			18.9
Total Earned Premiums	143.7			151.5			153.1			152.8			155.3
Net Investment Income	50.4			71.3			49.2			48.0			50.2
Other Income	0.8			0.5			0.4			—			—
Total Life & Health Insurance	194.9			223.3			202.7			200.8			205.5
Total Segment Revenues	497.6			540.5			531.0			538.0			545.5
Net Realized Gains on Sales of Investments	3.4			21.0			8.0			3.5			6.6
Net Impairment Losses Recognized in Earnings	(7.0		)	(6.5		)	(3.8		)	(4.1		)	(0.8		)
Other	5.2			4.7			4.6			5.1			3.3
Total Revenues	$	499.2		$	559.7		$	539.8		$	542.5		$	554.6

Page 10

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Segment Operating Profit (Loss):
Property & Casualty Insurance	$	18.0		$	36.0		$	(23.9	)	$	(4.3	)	$	19.3
Life & Health Insurance	24.8			51.2			31.4			24.7			34.6
Total Segment Operating Profit	42.8			87.2			7.5			20.4			53.9
Corporate and Other Operating Loss	(12.3		)	(8.6		)	(7.7		)	(8.6		)	(7.8		)
Total Operating Profit (Loss)	30.5			78.6			(0.2		)	11.8			46.1
Net Realized Gains on Sales of Investments	3.4			21.0			8.0			3.5			6.6
Net Impairment Losses Recognized in Earnings	(7.0		)	(6.5		)	(3.8		)	(4.1		)	(0.8		)
Loss from Early Extinguishment of Debt	(9.1		)	—			—			—			—
Income from Continuing Operations before Income Taxes	$	17.8		$	93.1		$	4.0		$	11.2		$	51.9
Segment Net Operating Income (Loss):
Property & Casualty Insurance	$	13.4		$	25.3		$	(13.6	)	$	(1.2	)	$	14.4
Life & Health Insurance	16.1			33.5			20.3			15.9			22.1
Total Segment Net Operating Income	29.5			58.8			6.7			14.7			36.5
Corporate and Other Net Operating Loss	(7.7		)	(4.9		)	(4.6		)	(5.1		)	(5.0		)
Consolidated Operating Income	21.8			53.9			2.1			9.6			31.5
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	2.2			13.6			5.2			2.4			4.2
Net Impairment Losses Recognized in Earnings	(4.6		)	(4.2		)	(2.5		)	(2.7		)	(0.5		)
Loss from Early Extinguishment of Debt	(5.9		)	—			—			—			—
Income from Continuing Operations	$	13.5		$	63.3		$	4.8		$	9.3		$	35.2

Page 11

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014		Jun 30, 2014			Mar 31, 2014
Earned Premiums by Product:
Personal Automobile	$	189.8		$	198.0		$	205.1	$	212.0		$	216.3
Homeowners	72.6			75.8			77.9		79.0			79.7
Other Personal Property and Casualty Insurance	30.6			31.2			31.8		32.3			32.1
Commercial Automobile	13.5			14.0			14.1		13.6			13.1
Life	88.0			96.0			96.8		97.2			97.6
Accident and Health	36.8			36.5			37.1		36.2			38.8
Total Earned Premiums	$	431.3		$	451.5		$	462.8	$	470.3		$	477.6
Net Investment Income by Segment:
Property & Casualty Insurance:
Equity Method Limited Liability Investments	$	0.2		$	(0.5	)	$	4.3	$	2.1		$	2.5
All Other Net Investment Income	14.6			17.6			14.2		17.4			15.1
Net Investment Income	14.8			17.1			18.5		19.5			17.6
Life & Health Insurance:
Equity Method Limited Liability Investments	(1.0		)	(0.1		)	0.1		(1.1		)	0.7
All Other Net Investment Income	51.4			71.4			49.1		49.1			49.5
Net Investment Income	50.4			71.3			49.2		48.0			50.2
Total Segment Net Investment Income	65.2			88.4			67.7		67.5			67.8
Unallocated Net Investment Income:
Equity Method Limited Liability Investments	0.1			(0.1		)	0.5		0.3			0.3
All Other Net Investment Income	5.3			4.8			4.1		4.8			3.0
Unallocated Net Investment Income	5.4			4.7			4.6		5.1			3.3
Net Investment Income	$	70.6		$	93.1		$	72.3	$	72.6		$	71.1

Page 12

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

	Three Months Ended Mar 31, 2015
	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	9	$	10.3	3	$	—	9	$	10.3
$5 - $10	—	—		—	—		—	—
$10 - $15	—	—		—	—		—	—
$15 - $20	—	—		—	—		—	—
$20 - $25	—	—		—	—		—	—
Greater Than $25	—	—		—	—		—	—
Total	9	$	10.3	3	$	—	9	$	10.3

	Three Months Ended Mar 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	6	$	9.1	4	$	0.3	6	$	9.4
$5 - $10	1	6.9		—	—		1	6.9
$10 - $15	—	—		—	—		—	—
$15 - $20	—	—		—	—		—	—
$20 - $25	—	—		—	—		—	—
Greater Than $25	—	—		—	—		—	—
Total	7	$	16.0	4	$	0.3	7	$	16.3

Page 13

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Results of Operations
Net Premiums Written	$	279.7		$	269.1		$	307.0		$	308.7		$	304.3

Earned Premiums	287.6			300.0			309.7			317.5			322.3
Net Investment Income	14.8			17.1			18.5			19.5			17.6
Other Income	0.3			0.1			0.1			0.2			0.1
Total Revenues	302.7			317.2			328.3			337.2			340.0
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	198.5			198.6			206.8			209.4			230.4
Catastrophe Losses and LAE	10.3			4.4			14.2			61.9			16.0
Prior Years:
Non-catastrophe Losses and LAE	(5.0		)	(8.1		)	(3.3		)	(14.5		)	(12.7		)
Catastrophe Losses and LAE	(2.2		)	(0.8		)	(7.2		)	(5.1		)	(2.7		)
Total Incurred Losses and LAE	201.6			194.1			210.5			251.7			231.0
Insurance Expenses, Excluding Write-off of Long-lived Assets	83.1			87.1			87.1			89.8			89.7
Write-off of Long-lived Asset	—			—			54.6			—			—
Operating Profit (Loss)	18.0			36.0			(23.9		)	(4.3		)	19.3
Income Tax Benefit (Expense)	(4.6		)	(10.7		)	10.3			3.1			(4.9		)
Segment Net Operating Income (Loss)	$	13.4		$	25.3		$	(13.6	)	$	(1.2	)	$	14.4
Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	69.0		%	66.2		%	66.8		%	66.0		%	71.4		%
Current Year Catastrophe Losses and LAE Ratio	3.6			1.5			4.6			19.5			5.0
Prior Years Non-catastrophe Losses and LAE Ratio	(1.7		)	(2.7		)	(1.1		)	(4.6		)	(3.9		)
Prior Years Catastrophe Losses and LAE Ratio	(0.8		)	(0.3		)	(2.3		)	(1.6		)	(0.8		)
Total Incurred Loss and LAE Ratio	70.1			64.7			68.0			79.3			71.7
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset	28.9			29.0			28.1			28.3			27.8
Impact on Ratio from Write-off of Long-lived Asset	—			—			17.6			—			—
Combined Ratio	99.0		%	93.7		%	113.7		%	107.6		%	99.5		%
Underlying Combined Ratio ¹
Current Year Non-catastrophe Losses and LAE Ratio	69.0		%	66.2		%	66.8		%	66.0		%	71.4		%
Insurance Expense Ratio, Excluding write-off of Long-lived Asset	28.9			29.0			28.1			28.3			27.8
Impact on Ratio from Write-off of Long-lived Asset	—			—			17.6			—			—
Underlying Combined Ratio	97.9		%	95.2		%	112.5		%	94.3		%	99.2		%
Non-GAAP Measure Reconciliation
Underlying Combined Ratio	97.9		%	95.2		%	112.5		%	94.3		%	99.2		%
Current Year Catastrophe Losses and LAE Ratio	3.6			1.5			4.6			19.5			5.0
Prior Years Non-catastrophe Losses and LAE Ratio	(1.7		)	(2.7		)	(1.1		)	(4.6		)	(3.9		)
Prior Years Catastrophe Losses and LAE Ratio	(0.8		)	(0.3		)	(2.3		)	(1.6		)	(0.8		)
Combined Ratio as Reported	99.0		%	93.7		%	113.7		%	107.6		%	99.5		%


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)

	Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014
Insurance Reserves:
Automobile	$	483.4	$	501.4	$	524.2	$	545.4	$	568.9
Homeowners	108.1		102.4		118.8		128.3		114.4
Other Personal	48.5		47.3		47.5		47.2		47.9
Insurance Reserves	$	640.0	$	651.1	$	690.5	$	720.9	$	731.2
Insurance Reserves:
Loss Reserves:
Case	$	426.8	$	423.6	$	447.6	$	460.8	$	468.1
Incurred but Not Reported	124.1		135.8		148.9		162.5		164.2
Total Loss Reserves	550.9		559.4		596.5		623.3		632.3
LAE Reserves	89.1		91.7		94.0		97.6		98.9
Insurance Reserves	$	640.0	$	651.1	$	690.5	$	720.9	$	731.2

Page 15

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Premiums
Net Premiums Written	$	192.1		$	179.1		$	202.1		$	200.1		$	207.7

Earned Premiums	$	189.8		$	198.0		$	205.1		$	212.0		$	216.3

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	141.1		$	150.0		$	149.8		$	153.1		$	163.1
Catastrophe Losses and LAE	0.4			0.4			1.6			9.8			0.9
Prior Years:
Non-catastrophe Losses and LAE	(5.0		)	(4.7		)	(3.1		)	(11.9		)	(11.3		)
Catastrophe Losses and LAE	(0.1		)	—			(0.3		)	(0.1		)	(0.2		)
Total Incurred Losses and LAE	$	136.4		$	145.7		$	148.0		$	150.9		$	152.5

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	74.4		%	75.8		%	73.0		%	72.2		%	75.4		%
Current Year Catastrophe Losses and LAE Ratio	0.2			0.2			0.8			4.6			0.4
Prior Years Non-catastrophe Losses and LAE Ratio	(2.6		)	(2.4		)	(1.5		)	(5.6		)	(5.2		)
Prior Years Catastrophe Losses and LAE Ratio	(0.1		)	—			(0.1		)	—			(0.1		)
Total Incurred Loss and LAE Ratio	71.9		%	73.6		%	72.2		%	71.2		%	70.5		%

Page 16

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Premiums
Net Premiums Written	$	14.0		$	12.3		$	13.7		$	15.3		$	14.3

Earned Premiums	$	13.5		$	14.0		$	14.1		$	13.6		$	13.1

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	10.8		$	10.4		$	11.5		$	11.6		$	11.1
Catastrophe Losses and LAE	—			—			0.1			0.1			—
Prior Years:
Non-catastrophe Losses and LAE	(0.2		)	(1.9		)	(0.6		)	0.4			(0.5		)
Catastrophe Losses and LAE	—			—			—			—			—
Total Incurred Losses and LAE	$	10.6		$	8.5		$	11.0		$	12.1		$	10.6

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	80.0		%	74.3		%	81.6		%	85.4		%	84.7		%
Current Year Catastrophe Losses and LAE Ratio	—			—			0.7			0.7			—
Prior Years Non-catastrophe Losses and LAE Ratio	(1.5		)	(13.6		)	(4.3		)	2.9			(3.8		)
Prior Years Catastrophe Losses and LAE Ratio	—			—			—			—			—
Total Incurred Loss and LAE Ratio	78.5		%	60.7		%	78.0		%	89.0		%	80.9		%

Page 17

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Premiums
Net Premiums Written	$	206.1		$	191.4		$	215.8		$	215.4		$	222.0

Earned Premiums	$	203.3		$	212.0		$	219.2		$	225.6		$	229.4

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	151.9		$	160.4		$	161.3		$	164.7		$	174.2
Catastrophe Losses and LAE	0.4			0.4			1.7			9.9			0.9
Prior Years:
Non-catastrophe Losses and LAE	(5.2		)	(6.6		)	(3.7		)	(11.5		)	(11.8		)
Catastrophe Losses and LAE	(0.1		)	—			(0.3		)	(0.1		)	(0.2		)
Total Incurred Losses and LAE	$	147.0		$	154.2		$	159.0		$	163.0		$	163.1

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	74.7		%	75.6		%	73.5		%	73.0		%	75.9		%
Current Year Catastrophe Losses and LAE Ratio	0.2			0.2			0.8			4.4			0.4
Prior Years Non-catastrophe Losses and LAE Ratio	(2.6		)	(3.1		)	(1.7		)	(5.1		)	(5.1		)
Prior Years Catastrophe Losses and LAE Ratio	—			—			(0.1		)	—			(0.1		)
Total Incurred Loss and LAE Ratio	72.3		%	72.7		%	72.5		%	72.3		%	71.1		%

Page 18

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Premiums
Net Premiums Written	$	63.1		$	66.5		$	78.6		$	80.5		$	70.9

Earned Premiums	$	72.6		$	75.8		$	77.9		$	79.0		$	79.7

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	39.8		$	31.4		$	38.1		$	37.9		$	49.1
Catastrophe Losses and LAE	9.6			3.8			12.3			50.4			14.3
Prior Years:
Non-catastrophe Losses and LAE	(0.4		)	(0.7		)	1.5			(1.6		)	(0.7		)
Catastrophe Losses and LAE	(2.2		)	(0.8		)	(6.0		)	(4.4		)	(2.1		)
Total Incurred Losses and LAE	$	46.8		$	33.7		$	45.9		$	82.3		$	60.6

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	54.9		%	41.5		%	48.9		%	48.0		%	61.6		%
Current Year Catastrophe Losses and LAE Ratio	13.2			5.0			15.8			63.8			17.9
Prior Years Non-catastrophe Losses and LAE Ratio	(0.6		)	(0.9		)	1.9			(2.0		)	(0.9		)
Prior Years Catastrophe Losses and LAE Ratio	(3.0		)	(1.1		)	(7.7		)	(5.6		)	(2.6		)
Total Incurred Loss and LAE Ratio	64.5		%	44.5		%	58.9		%	104.2		%	76.0		%

Page 19

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Premiums
Net Premiums Written	$	10.5		$	11.2		$	12.6		$	12.8		$	11.4

Earned Premiums	$	11.7		$	12.2		$	12.6		$	12.9		$	13.2

Losses and LAE
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE	$	6.8		$	6.8		$	7.4		$	6.8		$	7.1
Catastrophe Losses and LAE	0.3			0.2			0.2			1.6			0.8
Prior Years:
Non-catastrophe Losses and LAE	0.6			(0.8		)	(1.1		)	(1.4		)	(0.2		)
Catastrophe Losses and LAE	0.1			—			(0.9		)	(0.6		)	(0.4		)
Total Incurred Losses and LAE	$	7.8		$	6.2		$	5.6		$	6.4		$	7.3

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio	58.1		%	55.8		%	58.6		%	52.8		%	53.7		%
Current Year Catastrophe Losses and LAE Ratio	2.6			1.6			1.6			12.4			6.1
Prior Years Non-catastrophe Losses and LAE Ratio	5.1			(6.6		)	(8.7		)	(10.9		)	(1.5		)
Prior Years Catastrophe Losses and LAE Ratio	0.9			—			(7.1		)	(4.7		)	(3.0		)
Total Incurred Loss and LAE Ratio	66.7		%	50.8		%	44.4		%	49.6		%	55.3		%

Page 20

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

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Results of Operations
Earned Premiums:
Life	$	88.0		$	96.0		$	96.8		$	97.2		$	97.6
Accident and Health	36.8			36.5			37.1			36.2			38.8
Property	18.9			19.0			19.2			19.4			18.9
Total Earned Premiums	143.7			151.5			153.1			152.8			155.3
Net Investment Income	50.4			71.3			49.2			48.0			50.2
Other Income	0.8			0.5			0.4			—			—
Total Revenues	194.9			223.3			202.7			200.8			205.5
Policyholders’ Benefits and Incurred Losses and LAE	96.1			91.7			89.9			95.8			97.0
Insurance Expenses	74.0			80.4			81.4			80.3			73.9
Operating Profit	24.8			51.2			31.4			24.7			34.6
Income Tax Expense	(8.7		)	(17.7		)	(11.1		)	(8.8		)	(12.5		)
Segment Net Operating Income	$	16.1		$	33.5		$	20.3		$	15.9		$	22.1



	Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Mar 31, 2014
Insurance Reserves:
Future Policyholder Benefits	$	3,238.9	$	3,214.7	$	3,202.5	$	3,189.5	$	3,173.8
Incurred Losses and LAE Reserves:
Life	40.2		38.8		38.7		39.4		42.6
Accident and Health	20.4		20.2		19.6		20.1		21.3
Property	3.7		4.5		4.3		5.3		5.6
Total Incurred Losses and LAE Reserves	64.3		63.5		62.6		64.8		69.5
Insurance Reserves	$	3,303.2	$	3,278.2	$	3,265.1	$	3,254.3	$	3,243.3

Page 21

Kemper Corporation Details of Investment Performance (Dollars in Millions)

	Three Months Ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Net Investment Income
Interest and Dividends on Fixed Maturities	$	59.5		$	57.4		$	56.1		$	56.9		$	57.0
Dividends on Equity Securities	7.7			34.1			7.7			10.8			7.3
Equity Method Limited Liability Investments	(0.7		)	(0.7		)	4.9			1.3			3.5
Fair Value Option Investments	0.9			(1.3		)	0.3			0.3			—
Short-term Investments	—			0.1			0.1			0.2			0.2
Real Estate	2.9			2.9			3.1			2.9			3.2
Loans to Policyholders	5.3			5.2			5.2			5.0			5.1
Other	—			0.1			—			—			—
Total Investment Income	75.6			97.8			77.4			77.4			76.3
Investment Expenses:
Real Estate	2.7			2.7			3.1			2.7			2.8
Other Investment Expenses	2.3			2.0			2.0			2.1			2.4
Total Investment Expenses	5.0			4.7			5.1			4.8			5.2
Net Investment Income	$	70.6		$	93.1		$	72.3		$	72.6		$	71.1
Net Realized Gains on Sales of Investments
Fixed Maturities:
Gains on Sales	$	2.0		$	2.0		$	0.2		$	0.4		$	4.4
Losses on Sales	(0.1		)	(0.2		)	—			—			—
Equity Securities:
Gains on Sales	1.5			21.4			7.9			3.0			0.8
Losses on Sales	—			(2.0		)	—			—			—
Real Estate:
Losses on Sales	—			—			—			—			(0.2		)
Other Investments:
Gain on Sale of Subsidiary	—			—			—			—			1.6
Losses on Sales	—			—			—			(0.1		)	—
Trading Securities Net Gains	—			(0.2		)	(0.1		)	0.2			—
Net Realized Gains on Sales of Investments	$	3.4		$	21.0		$	8.0		$	3.5		$	6.6
Net Impairment Losses Recognized in Earnings
Fixed Maturities	$	(2.4	)	$	(0.1	)	$	(2.2	)	$	(3.1	)	$	(0.3	)
Equity Securities	(4.6		)	(4.0		)	(1.6		)	(1.0		)	(0.5		)
Real Estate	—			(2.4		)	—			—			—
Net Impairment Losses Recognized in Earnings	$	(7.0	)	$	(6.5	)	$	(3.8	)	$	(4.1	)	$	(0.8	)

Page 22

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

	Mar 31, 2015				Dec 31, 2014				Dec 31, 2013
	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	$	340.3	5.3	%	$	345.5	5.4	%	$	362.2	5.9	%
States and Political Subdivisions	1,490.2		23.1		1,477.1		22.9		1,361.0		22.1
Corporate Securities:
Bonds and Notes	2,890.9		44.7		2,878.5		44.7		2,793.7		45.4
Redeemable Preferred Stocks	6.4		0.1		6.7		0.1		7.4		0.1
Collaterized Loan Obligations	69.9		1.1		64.4		1.0		44.7		0.7
Other Mortgage- and Asset-backed	5.4		0.1		5.4		0.1		6.0		0.1
Subtotal Fixed Maturities Reported at Fair Value	4,803.1		74.3		4,777.6		74.2		4,575.0		74.3
Equity Securities Reported at Fair Value:
Preferred Stocks	109.7		1.7		109.5		1.7		110.2		1.8
Common Stocks	124.1		1.9		133.8		2.1		189.5		3.1
Other Equity Interests:
Exchange Traded Funds	205.1		3.2		202.7		3.1		124.9		2.0
Limited Liability Companies and Limited Partnerships	189.7		2.9		186.2		2.9		173.9		2.8
Subtotal Equity Securities Reported at Fair Value	628.6		9.7		632.2		9.8		598.5		9.7
Equity Method Limited Liability Investments	168.1		2.6		184.8		2.9		245.1		4.0
Fair Value Option Investments	54.2		0.8		53.3		0.8		—		—
Short-term Investments at Cost which Approximates Fair Value	357.3		5.5		342.2		5.3		284.7		4.6
Other Investments:
Loans to Policyholders at Unpaid Principal	284.5		4.4		283.4		4.4		275.4		4.5
Real Estate at Depreciated Cost	160.3		2.5		160.9		2.5		167.1		2.7
Trading Securities at Fair Value	4.9		0.1		4.9		0.1		5.0		0.1
Other	0.4		—		0.4		—		0.5		—
Subtotal Other Investments	450.1		7.0		449.6		7.0		448.0		7.3
Total Investments	$	6,461.4	100.0	%	$	6,439.7	100.0	%	$	6,151.3	100.0	%
S&P Equivalent Rating for Fixed Maturities
AAA, AA, A	$	3,240.7	67.5	%	$	3,249.3	68.0	%	$	3,128.1	68.4	%
BBB	1,157.2		24.1		1,156.4		24.2		1,119.9		24.5
BB, B	197.1		4.1		166.7		3.5		144.6		3.1
CCC or Lower	208.1		4.3		205.2		4.3		182.4		4.0
Total Investments in Fixed Maturities	$	4,803.1	100.0	%	$	4,777.6	100.0	%	$	4,575.0	100.0	%
Duration (in Years)
Total Investments in Fixed Maturities	6.8				6.9				6.8

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)

	Mar 31, 2015				Dec 31, 2014				Dec 31, 2013
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	$	1,247.2	19.3	%	$	1,247.4	19.4	%	$	1,196.9	19.5	%
Finance, Insurance and Real Estate	764.1		11.8		785.6		12.2		767.9		12.5
Transportation, Communication and Utilities	325.4		5.0		312.9		4.9		306.7		5.0
Services	320.4		5.0		305.0		4.7		277.5		4.5
Mining	142.7		2.2		139.7		2.2		143.1		2.3
Wholesale Trade	76.9		1.2		69.7		1.1		60.7		1.0
Retail Trade	75.4		1.2		74.5		1.2		75.6		1.2
Agriculture, Forestry and Fishing	15.6		0.2		15.3		0.2		18.8		0.3
Other	4.9		0.1		4.9		0.1		4.6		0.1
Total Fair Value of Non-governmental Fixed Maturities	$	2,972.6	46.0	%	$	2,955.0	46.0	%	$	2,851.8	46.4	%



	Mar 31, 2015
Ten Largest Investment Exposures ¹	Fair Value		Percent of Total Investments
Fixed Maturities:
States and Political Subdivisions:
Texas	$	81.7	1.3	%
Ohio	76.9		1.2
Michigan	69.4		1.1
Georgia	66.1		1.0
Colorado	65.4		1.0
Florida	65.3		1.0
Wisconsin	60.2		0.9
Arkansas	53.2		0.8
Equity Securities - Other Equity Interests:
Vanguard Total Stock Market ETF	71.1		1.1
iShares® Core S&P 500 ETF	53.6		0.8
Total	$	662.9	10.2	%


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 March 31, 2015.

Page 24

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

	Mar 31, 2015
	State General Obligation		Political Subdivision General Obligation		Revenue		Total Fair Value		Percent of Total Muni Bond¹		Percent of Total Investments¹
Texas	$	15.9	$	18.6	$	47.2	$	81.7	5.9	%	1.3	%
Ohio	40.8		5.0		31.1		76.9		5.5		1.2
Michigan	38.5		—		30.9		69.4		5.0		1.1
Georgia	49.8		7.3		9.0		66.1		4.8		1.0
Colorado	—		16.3		49.1		65.4		4.7		1.0
Florida	52.8		—		12.5		65.3		4.7		1.0
Wisconsin	51.6		7.1		1.5		60.2		4.3		0.9
Arkansas	53.2		—		—		53.2		3.8		0.8
New York	6.5		—		41.6		48.1		3.5		0.7
Louisiana	16.8		3.7		27.3		47.8		3.4		0.7
Washington	16.0		0.3		29.8		46.1		3.3		0.7
North Carolina	17.9		1.9		23.1		42.9		3.1		0.7
Utah	28.8		1.6		11.2		41.6		3.0		0.6
Oregon	30.9		—		1.1		32.0		2.3		0.5
Virginia	—		19.8		11.7		31.5		2.3		0.5
Connecticut	25.4		—		5.4		30.8		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	—		—		29.1		29.1		2.1		0.5
Delaware	17.8		—		9.9		27.7		2.0		0.4
Massachusetts	—		—		26.9		26.9		1.9		0.4
New Jersey	—		5.5		20.2		25.7		1.9		0.4
Pennsylvania	11.9		2.6		9.5		24.0		1.7		0.4
South Carolina	20.4		3.2		—		23.6		1.7		0.4
California	0.3		—		22.2		22.5		1.6		0.3
Maryland	—		18.4		3.7		22.1		1.6		0.3
Tennessee	4.6		7.8		9.5		21.9		1.6		0.3
Missouri	—		—		19.7		19.7		1.4		0.3
Iowa	—		—		17.7		17.7		1.3		0.3
Kentucky	—		1.1		16.3		17.4		1.3		0.3
Idaho	—		10.9		5.5		16.4		1.2		0.3
Arizona	—		—		16.3		16.3		1.2		0.3
Rhode Island	10.9		—		5.2		16.1		1.2		0.2
Hawaii	14.9		—		—		14.9		1.1		0.2
Illinois	—		5.4		9.3		14.7		1.1		0.2
Nebraska	—		7.2		5.4		12.6		0.9		0.2
District of Columbia	—		—		12.4		12.4		0.9		0.2
Alabama	6.2		—		5.6		11.8		0.8		0.2
Oklahoma	—		—		11.2		11.2		0.8		0.2
All Other States	26.4		—		38.4		64.8		4.7		1.0
Total ⁽¹⁾	$	608.0	$	151.0	$	630.0	$	1,389.0	100.0	%	21.5	%

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	Mar 31, 2015		Mar 31, 2015		Dec 31, 2014
Reported as Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings:
Distressed Debt	$	—	$	80.2	$	93.0
Secondary Transactions	18.0		45.8		48.9
Mezzanine Debt	15.0		25.4		27.0
Senior Debt	7.2		5.1		5.0
Leveraged Buyout	0.1		5.1		3.9
Growth Equity	—		4.8		5.3
Other	—		1.7		1.7
Total Equity Method Limited Liability Investments	40.3		168.1		184.8
Reported as Other Equity Interests at Fair Value:
Mezzanine Debt	63.5		70.8		69.7
Senior Debt	27.5		25.4		21.4
Distressed Debt	6.6		17.5		18.2
Secondary Transactions	12.0		14.9		15.6
Hedge Fund	—		9.2		9.1
Leveraged Buyout	2.0		8.3		8.0
Other	1.6		43.6		44.2
Total Reported as Other Equity Interests at Fair Value	113.2		189.7		186.2
Reported as Fair Value Option Investments:
Hedge Fund	—		54.2		53.3
Total Investments in Limited Liability Companies and Limited Partnerships	$	153.5	$	412.0	$	424.3

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;

3) Loss from Early Extinguishment of Debt; and

4) 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. Loss from Early Extinguishment of Debt is driven by the Company’s financing and refinancing decisions and capital needs, as well as, external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.

Page 27

Kemper Corporation

Definitions of Non-GAAP Financial Measures (continued)

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



	Three Months Ended
Dollars in Millions (Unaudited)	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Consolidated Net Operating Income	$	21.8		$	53.9		$	2.1		$	9.6		$	31.5
Net Income (Loss) From:
Net Realized Gains on Sales of Investments	2.2			13.6			5.2			2.4			4.2
Net Impairment Losses Recognized in Earnings	(4.6		)	(4.2		)	(2.5		)	(2.7		)	(0.5		)
Loss from Early Extinguishment of Debt	(5.9		)	—			—			—			—
Income from Continuing Operations	$	13.5		$	63.3		$	4.8		$	9.3		$	35.2

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
(Unaudited)	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Consolidated Net Operating Income Per Unrestricted Share	$	0.42		$	1.02		$	0.04		$	0.18		$	0.56
Net Income (Loss) Per Unrestricted Share From:
Net Realized Gains on Sales of Investments	0.04			0.26			0.10			0.04			0.08
Net Impairment Losses Recognized in Earnings	(0.09		)	(0.08		)	(0.05		)	(0.05		)	(0.01		)
Loss from Early Extinguishment of Debt	(0.11		)	—			—			—			—
Income from Continuing Operations Per Unrestricted Share	$	0.26		$	1.20		$	0.09		$	0.17		$	0.63

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.

Page 28

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Form 8-K KEMPER Corp For: May 07

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