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Analyst Blog

On Dec 14, Zacks Investment Research upgraded Kemper Corporation (KMPR - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Kemper Corporation has witnessed rising earnings estimate on the back of strong third-quarter 2013 results. The multiline insurer delivered positive earnings surprises for three straight quarters, with an average beat of 51.5%. The expected long-term earnings growth rate for the stock is 10%.

Kemper’s third-quarter operating earnings of 69 cents per share surpassed the Zacks Consensus Estimate by 56.8% and year-ago earnings by 64.3%.

Solid performance in underlying property and casualty and higher net investment income aided the outperformance. A lower share count due to share buybacks also boosted the bottom-line.

While the top-line exceeded the Zacks Consensus Estimate by 8.8%, total expenses declined 5.4% year over year. The improvement in expenditure came following lower Policyholders’ benefits and Incurred losses and loss adjustment expenses. Lower insurance, interest and other expenses also aided the improvement.

The combined ratio of Kemper improved 400 basis points during the third quarter, primarily due to its strategic actions implemented for rate increases and conservative underwriting.

In the third quarter, Kemper spent $36.3 million to buy back over 1 million shares taking the year to date tally to 2.5 million shares bought back for $85.2 million. Kemper also paid total dividends of $13.6 million.

The Zacks Consensus Estimate for 2013 increased 5.4% to $2.35 per share over the last 60 days. For 2014, the same moved north by 1.6% to $2.45 per share over the same time frame.

Other Stocks to Consider

Other well-performing multi-line insurers like Old Republic International (ORI - Snapshot Report)  and Prudential plc (PUK - Snapshot Report) each with a Zacks Rank #1 (Strong Buy), and Assurant Inc. (AIZ - Analyst Report) with a Zacks Rank #2 (Buy) are also worth considering.

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