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Kemper (KMPR) Q3 Earnings & Revenues Top Estimates, Up Y/Y

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Kemper Corporation (KMPR - Free Report) delivered third-quarter 2018 net operating income of $1.59 per share, outpacing the Zacks Consensus Estimate by 32.5%. Also, the bottom line improved 87% year over year.

Kemper Corporation Price, Consensus and EPS Surprise

This upside was aided by strong earnings and double-digit growth in specialty auto business, consistent stability in life and health results as well as solid gains in investment income.

Adjusted revenues increased 14% year over year to $1.2 billion, boosted by higher nonstandard personal auto earned premiums. The top line also beat the Zacks Consensus Estimate by 2.2%.

Total earned premiums rose 76% to $1.1 million on higher premiums at Property & Casualty Insurance segment. Net investment income increased 7.1% to $92 million, driven by a better interest on fixed income securities.

Total expenses shot up 79% to $1.1 billion due to higher policyholders’ benefits plus incurred losses and loss adjustment expenses besides insurance expenses as well as interest and other expenses.

Segment Update

Property & Casualty Insurance segment reaped total revenues of $930.1 million, up 97.2% year on year.

Net operating income came in at $28.2 million, up 23% year over year. This uptick was driven by strong nonstandard personal auto growth plus profitability and lower catastrophe loss, partially offset by the impact of the amortization of the Infinity purchase accounting adjustments.

Underlying combined ratio deteriorated 540 bps to 98% due to an increase in the insurance expense ratio due to the amortization of the Infinity purchase accounting adjustments.

Life & Health Insurance segment’s total revenues dipped 0.9% year over year to $209.4 million.

Net operating income of $26.7 million was up 13.6% year over year. This upside stemmed from higher earned premiums, an improved benefits ratio and to a lesser extent, an improved expense ratio, which is partially offset by a reduced investment income in the Life business.

Financial Update

As of Sep 30, 2018, Kemper held an investment portfolio worth $8.2 billion. This reflects an improvement of 21.2% from year-end 2017. Cash soared 103.1% to $92.8 million from 2017-end level. Shareholders’ equity surged 44.8% to $3.1 billion from year-end 2017.

Reported book value per share of $47.33 improved 15% from 2017-end level.

Dividend Update

Kemper paid dividends worth $15.7 million in the reported quarter.

Performance of Other Insurers

Among other Multi Line insurers having reported third-quarter earnings so far, the bottom line of MGIC Investment Corporation (MTG - Free Report) , Radian Group Inc. (RDN - Free Report) and CNO Financial Group (CNO - Free Report) beat the respective Zacks Consensus Estimate.

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