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Kemper (KMPR) Incurs Loss in Q3; Revenues Beat Estimates
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Kemper Corporation (KMPR - Free Report) reported third-quarter 2016 net operating loss of 40 cents per share. The Zacks Consensus Estimate was of an income of 53 cents per share. Moreover, the quarterly loss compared unfavorably with the net operating income of 70 cents per share in the year-ago quarter. Nonetheless, the company’s share price inched up 0.1% in the last two trading sessions.
Excluding extraordinary items, net loss was 32 cents per share. The company had posted net income of 73 cents per share in the third quarter of 2015.
Total revenue rose 4.1% year over year to $640.7 million due to higher premiums earned in the Property and Casualty segment. The top line also beat the Zacks Consensus Estimate of $618 million by 3.7%.
Total earned premiums increased 4.1% to $558.9 million in the third quarter of 2016.
Net investment income rose 2.4% to $77.7 million due to higher interest income on fixed maturities. The improvement was partially offset by lower returns on the alternative investments portfolio and lower dividends on equity securities, excluding alternative investments. Net realized gains on Sales of Investments soared 118.9% year over year to $11.6 million.
Total expenses were up 19.1% to $673.9 million due to higher policyholders’ benefits and incurred losses and loss adjustment expenses as well as insurance expenses.
Segment Update
Property & Casualty Insurance segment reported 5.7% year-over-year growth in total revenue to $427.4 million. Earned premiums increased 5.4% to $406.9 million due to higher Personal Automobile premiums. This segment includes the impact of the performance of Alliance United, which was acquired by Kemper on Apr 30, 2015.
The segment reported net operating income of $12.1 million, down 39.8% from the year-ago income of $21.0 million. Weak performance by Alliance United, higher catastrophe losses and the impact of prior-year reserve development were the main reasons behind the decrease in income. Improvement in the legacy underlying loss ratio and higher net investment income partially offset the downside.
Life & Health Insurance segment’s total revenue inched up 0.4% year over year to $207.2 million. Earned premiums grew 0.9% to 152 million. The segment reported operating loss of $29.4 million, which compared unfavorably with the prior-year operating income of $23.5 million. A charge of $50.6 million, related to life insurance voluntary outreach efforts, contributed to the downside.
Financial Update
As of Sep 30, 2016, Kemper held an investment portfolio worth $6.7 billion. This reflects an improvement of 4.9% from year-end 2015. Cash increased 5.8% to $171.1 million and total assets grew 4.4% to $8.4 billion from the end of 2015. Shareholders’ equity increased 4.1% to $2.1 billion from year-end 2015.
In the third quarter, reported book value per share of $40.51 improved 4.4% from $38.82 at the end of 2015. However, excluding net unrealized gains on fixed maturities, book value per share declined to $34.27 from $35.13 as of Dec 31, 2015.
Share Repurchase and Dividend Update
For the first nine months of 2016, Kemper returned $40.7 million capital to its shareholders through dividends and share buybacks worth $36.9 million and $3.8 million, respectively.
Kemper paid dividends worth $12.4 million in the reported quarter.
Among the other players from the insurance industry that have reported their third-quarter earnings so far, the bottom line at Progressive Corp. (PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
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Kemper (KMPR) Incurs Loss in Q3; Revenues Beat Estimates
Kemper Corporation (KMPR - Free Report) reported third-quarter 2016 net operating loss of 40 cents per share. The Zacks Consensus Estimate was of an income of 53 cents per share. Moreover, the quarterly loss compared unfavorably with the net operating income of 70 cents per share in the year-ago quarter. Nonetheless, the company’s share price inched up 0.1% in the last two trading sessions.
Excluding extraordinary items, net loss was 32 cents per share. The company had posted net income of 73 cents per share in the third quarter of 2015.
Total revenue rose 4.1% year over year to $640.7 million due to higher premiums earned in the Property and Casualty segment. The top line also beat the Zacks Consensus Estimate of $618 million by 3.7%.
Total earned premiums increased 4.1% to $558.9 million in the third quarter of 2016.
Net investment income rose 2.4% to $77.7 million due to higher interest income on fixed maturities. The improvement was partially offset by lower returns on the alternative investments portfolio and lower dividends on equity securities, excluding alternative investments. Net realized gains on Sales of Investments soared 118.9% year over year to $11.6 million.
Total expenses were up 19.1% to $673.9 million due to higher policyholders’ benefits and incurred losses and loss adjustment expenses as well as insurance expenses.
Segment Update
Property & Casualty Insurance segment reported 5.7% year-over-year growth in total revenue to $427.4 million. Earned premiums increased 5.4% to $406.9 million due to higher Personal Automobile premiums. This segment includes the impact of the performance of Alliance United, which was acquired by Kemper on Apr 30, 2015.
The segment reported net operating income of $12.1 million, down 39.8% from the year-ago income of $21.0 million. Weak performance by Alliance United, higher catastrophe losses and the impact of prior-year reserve development were the main reasons behind the decrease in income. Improvement in the legacy underlying loss ratio and higher net investment income partially offset the downside.
Life & Health Insurance segment’s total revenue inched up 0.4% year over year to $207.2 million. Earned premiums grew 0.9% to 152 million. The segment reported operating loss of $29.4 million, which compared unfavorably with the prior-year operating income of $23.5 million. A charge of $50.6 million, related to life insurance voluntary outreach efforts, contributed to the downside.
Financial Update
As of Sep 30, 2016, Kemper held an investment portfolio worth $6.7 billion. This reflects an improvement of 4.9% from year-end 2015. Cash increased 5.8% to $171.1 million and total assets grew 4.4% to $8.4 billion from the end of 2015. Shareholders’ equity increased 4.1% to $2.1 billion from year-end 2015.
In the third quarter, reported book value per share of $40.51 improved 4.4% from $38.82 at the end of 2015. However, excluding net unrealized gains on fixed maturities, book value per share declined to $34.27 from $35.13 as of Dec 31, 2015.
Share Repurchase and Dividend Update
For the first nine months of 2016, Kemper returned $40.7 million capital to its shareholders through dividends and share buybacks worth $36.9 million and $3.8 million, respectively.
Kemper paid dividends worth $12.4 million in the reported quarter.
KEMPER CORP Price, Consensus and EPS Surprise
KEMPER CORP Price, Consensus and EPS Surprise | KEMPER CORP Quote
Zacks Rank
Currently, Kemper Corporation carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Performance of Other Insurers
Among the other players from the insurance industry that have reported their third-quarter earnings so far, the bottom line at Progressive Corp. (PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>