Kemper Corporation has reported a net loss of $80.1 million for the first quarter of 2023, compared to a net loss of $86.3 million in Q1 2022.
Total revenues for Q1 of 2023 decreased $75.3 million, or 5.5%, to $1,294.8 million, compared to the first quarter of 2022, mostly driven by $77.4 million of lower Specialty P&C earned premiums due to a decrease in new business resulting from targeted underwriting actions to improve profitability, partially offset by higher average earned premium per exposure from rate increases.
The decrease was also driven by $43.5 million of lower Life & Health earned premiums mostly due to the disposition of Kemper Health that was completed in December 2022, and $18.2 million of lower Preferred P&C earned premiums.
These decreases were partially offset by $29.9 million of higher revenue from changes in fair value of equity and convertible securities and $17.4 million of higher revenue from changes in fair value of alternative energy partnership investments.
The Adjusted Consolidated Net Operating Loss for the quarter was $65.2 million, adds Kemper, compared to the Adjusted Consolidated Net Operating Loss of $51.6 million for Q1 of 2022.
Additionally, The Specialty Property & Casualty Insurance segment reported net operating loss of $58.4 million for the first quarter of 2023, compared to net operating loss of $44.7 million in the first quarter of 2022. The unfavorable results were due primarily to adverse prior year loss and Loss Adjustment Expense (LAE) development and underlying losses and LAE as a percentage of earned premium.
The company states that the segment’s Underlying Combined Ratio was was 108.0 percent, compared to 108.7 percent in the first quarter of 2022. This improvement was driven primarily by higher average earned premiums per exposure resulting from rate increases mostly offset by higher claims frequency from commercial automobile insurance.
The Life & Health Insurance segment reported net operating income of $13.2 million for the first quarter of 2023, compared to a net operating income of $11.6 million in the first quarter of 2022.
The Preferred Property and Casualty Insurance segment reported net operating loss of $9.5 million for the first quarter of 2023, compared to a net operating loss of $6.1 million in the first quarter of 2022.
The segment’s Underlying Combined Ratio was 97.1 percent, compared to 105.1 percent in the first quarter of 2022. This improvement was driven primarily by higher average earned premiums per exposure resulting from rate increases and lower frequency of auto claims.
Total Shareholders’ Equity by the quarter’s end was $2,646.9 million, a decrease of $23.7 million, or 1 percent, since year-end 2022
Kemper states this was primarily driven by the net operating loss for the quarter, partially offset by a reduction in the net accumulated other comprehensive loss mostly driven by a decrease in interest rates.
Kemper and its direct non-insurance subsidiaries ended the quarter with cash and investments of $240.6 million, and $520.0 million of available borrowing capacity under the revolving credit agreement.
On February 1, 2023, the company announced that its Board of Directors declared a quarterly dividend of $0.31 per share, or $19.4 million. The dividend was paid on February 28, 2023 to its shareholders of record as of February 13, 2023.
“First quarter results were below our expectations, and we are not satisfied with where we stand today,” said Joseph P. Lacher, Jr., President, CEO and Chairman.
“Results were impacted by the combination of elevated catastrophe losses, prior year adverse development, and higher-than-anticipated frequency, and we believe weather was a significant contributor to the frequency increase and episodic in nature,” Lacher added.
“We are relentlessly focused on taking actions intended to make the necessary improvements and deliver long-term value to our shareholders. We continue to expect a return to underwriting profitability by the end of 2023 and to achieve our financial targets in 2024.”
