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Kemper (KMPR) Q3 Earnings Lag Estimates, Revenues Rise Y/Y

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Kemper Corporation (KMPR - Free Report) reported third-quarter 2021 adjusted loss of $1.19 per share. The loss was wider than the Zacks Consensus Estimate of a loss of 7 cents. The company reported adjusted earnings of $1.36 in the year-ago quarter.

Kemper witnessed higher expenses in the quarter that offset the improvement in the top line.

Kemper Corporation Price, Consensus and EPS Surprise

Behind the Headlines

Kemper's total operating revenues of $1.5 billion were up 12.1% year over year on the back of higher Specialty P&C earned premiums. The top line missed the Zacks Consensus Estimate by 0.5%.

Net investment income came in at $101.9 million in the quarter under review, up 10.6% year over year, primarily owing to higher income from alternative investments, higher levels of investments in fixed income securities, and higher levels of investments and rate on company-owned life insurance.

Catastrophe losses were $32.4 million, primarily related to Hurricane Ida and several wind/hail events

Total expenses increased 39.1% year over year to $1.6 billion due to steep policyholders’ benefits. The company incurred losses and loss adjustment expenses along with insurance costs and interest and other expenses.

Segment Details

Specialty Property & Casualty Insurance's revenues increased 16.9% from the prior-year quarter’s level to $1.1 billion. Its total earned premiums rose 18% year over year, driven by the acquisition of American Access Casualty Company and higher volumes in both the Private Passenger Auto and Commercial Automobile product lines. The company reported a net operating loss of $59.3 million against net operating income of $119.2 million in the third quarter of 2020. The combined ratio deteriorated 2300 basis points (bps) year over year to 108.9 owing to higher claim frequency and severity trends.

Preferred Property & Casualty Insurance's revenues decreased 6.2% from the prior-year quarter to $173.4 million. Total earned premiums declined 6.2% year over year owing to lower automobile and homeowners insurance volumes and ongoing profit improvement actions. Net operating loss of $6.4 million narrowed from $32.7 million loss incurred in the year-ago period driven by lower catastrophe losses and LAE. The combined ratio deteriorated 1150 bps year over year to 102.2 due to higher incurred losses and losses and loss adjustment expenses.

Life & Health Insurance's revenues declined 2.3% from the prior-year quarter’s level to $206.5 million. Total earned premiums increased 2.2% year over year driven by higher volume on life insurance products, partially offset by lower volume on accident and health insurance products and property insurance products as well as a reduction in the estimated return premium reserve for insurance product. Net operating income dropped 77% to $2.8 million.

Financial Update (as of Sep 30, 2021)

Kemper had cash of $119.8 million, down 41.8% from the level as of Dec 31, 2020.

Total shareholders' equity was $4.2 billion, down 9% from the level as of Dec 31, 2020.

Book value per share was $65.22, down 6% from $69.74 as of Dec 31, 2020.

Dividend Update

During the third quarter of 2021, Kemper paid out dividends worth $19.7 million.

On Aug 4, 2021, its board of directors declared a quarterly dividend of 31 cents per share.

Zacks Rank

Currently, Kemper carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other insurance industry players, which have reported third-quarter earnings so far, the bottom line of RLI Corp. (RLI - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat the Zacks Consensus Estimate while that of The Progressive Corporation (PGR - Free Report) missed estimates.