Kemper Corporation (NYSE:KMPR) reported a net loss of $146.3 million, or $(2.28) per share, for the third quarter of 2023, compared to a net loss of $74.8 million, or $(1.17) per share, for the third quarter of 2022. Net loss for the third quarter 2023 included a $55.5 million after-tax non-cash charge related to the termination of Kemper's remaining pension plan obligations, which was previously included within accumulated other comprehensive income (AOCI) and $22.9 million of after-tax net realized losses on investments.

Adjusted Consolidated Net Operating Loss¹ was $27.9 million, or $(0.44) per share, for the third quarter of 2023, compared to Adjusted Consolidated Net Operating Loss^1,2of $27.0 million, or $(0.43) per share, for the third quarter of 2022.

Key themes of the quarter include:

Specialty Auto Underlying Combined Ratio improved 1.5 points, sequentially
Unfavorable prior year reserve development was largely associated with Florida Personal Injury Protection (PIP)
Strategic initiatives on track to produce or exceed their targeted benefits
Life business trends remain stable; consumer demand remains strong

"We continue to make strong progress toward profitability against an ongoing, dynamic operating environment," said Joseph P. Lacher, Jr., President, CEO and Chairman. "We are encouraged by the incremental improvements in our underlying performance. The implementation of 30 points of California specialty auto rate, along with the cumulative benefits from our other actions, are providing a tailwind for the fourth quarter and full year 2024. In addition, this quarter we advanced our strategic initiatives, which are on track to produce or exceed the intended operational and financial targets."

*NOTE: In third quarter 2023, the Company finalized the establishment of Kemper Reciprocal, an Illinois-domiciled reciprocal insurance exchange that began writing policies in September 2023. The results of Kemper Reciprocal are required to be consolidated under US GAAP.

Unless specified otherwise, discussion of our third quarter 2023 results is focused on net income attributable to Kemper Corporation common shareholders, which does not include financial results from Kemper Reciprocal that are presented within the consolidated financial results in this release.

¹Non-GAAP financial measure. All Non-GAAP financial measures are denoted with footnote 1 throughout this release. See "Use of Non-GAAP Financial Measures" for additional information.

²The Company has recast all prior period results to reflect a change in the Adjusted Consolidated Operating Net Loss calculation to exclude the results of the Preferred Insurance business that we expect to fully exit (referred to as "Non-Core Operations"). The results of this business were previously reported as a reportable segment. Prior period amounts have been recast to reflect the change in reportable segments and the new segment measure of profitability.

	Three Months Ended						Nine Months Ended
(Dollars in Millions, Except Per Share Amounts) (Unaudited)	Sep 30, 2023			Sep 30, 2022³			Sep 30, 2023			Sep 30, 2022³
Net Loss	$	(146.3	)	$	(74.8	)	$	(323.5	)	$	(233.3	)
Adjusted Consolidated Net Operating Loss ^1,2	$	(27.9	)	$	(27.0	)	$	(97.8	)	$	(92.9	)

Impact of Catastrophe Losses and Related Loss Adjustment Expense (LAE) on Net Loss	$	(16.4	)	$	(21.3	)	$	(68.1	)	$	(56.2	)

Diluted Net Loss Per Share From:
Net Loss	$	(2.28	)	$	(1.17	)	$	(5.05	)	$	(3.66	)
Adjusted Consolidated Net Operating Loss^1,2	$	(0.44	)	$	(0.43	)	$	(1.53	)	$	(1.46	)

Impact of Catastrophe Losses and Related LAE on Net Loss Per Share	$	(0.32	)	$	(0.33	)	$	(1.35	)	$	(0.88	)

³This press release recasts previously reported financial information for the provisions of Accounting Standards Update No. 2018-12, "Targeted Improvements to the Accounting for Long-Duration Contracts and related amendments" ("LDTI") adopted as of January 1, 2023, with a transition date of January 1, 2021 under the modified retrospective method.

Revenues

Total revenues for the third quarter of 2023 decreased $162.1 million, or 11.9 percent, to $1,199.4 million, compared to the third quarter of 2022, mostly driven by $109.1 million of lower Specialty P&C earned premiums from a decrease in new business resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure from rate increases. The decrease in total revenues was also driven by $40.0 million of lower Life earned premiums mostly due to the disposition of Kemper Health that was completed in December 2022, and a $23.1 million decrease in total revenues from Non-Core Operations.

Segment Results

Unless otherwise noted, (i) the segment results discussed below are presented on an after-tax basis, (ii) prior-year development includes both catastrophe and non-catastrophe losses and LAE, (iii) catastrophe losses and LAE exclude the impact of prior-year development, (iv) loss ratio includes loss and LAE, and (v) all comparisons are made to the prior year quarter unless otherwise stated.

	Three Months Ended						Nine Months Ended
(Dollars in Millions) (Unaudited)	Sep 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
Segment Adjusted Net Operating (Loss) Income:
Specialty Property & Casualty Insurance	$	(33.2	)	$	(28.7	)	$	(102.4	)	$	(112.3	)
Life Insurance		14.7			14.0			36.8			45.8
Total Segment Adjusted Net Operating Loss		(18.5	)		(14.7	)		(65.6	)		(66.5	)
Corporate and Other Adjusted Net Operating Loss		(9.4	)		(12.3	)		(32.2	)		(26.4	)
Adjusted Consolidated Net Operating Loss^1,2		(27.9	)		(27.0	)		(97.8	)		(92.9	)
Net Income (Loss) From:
Change in Fair Value of Equity and Convertible Securities		2.3			(8.8	)		5.5			(63.1	)
Net Realized Investment (Losses) Gains		(22.9	)		(9.6	)		(30.3	)		0.3
Impairment (Losses) Gains		(0.8	)		(6.6	)		0.1			(17.5	)
Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs		(34.2	)		(20.7	)		(80.5	)		(32.2	)
Debt Extinguishment, Pension Settlement and Other Charges		(55.5	)		—			(55.5	)		(2.9	)
Goodwill Impairment Charge		—			—			(45.5	)		—
Non-Core Operations		(7.3	)		(2.1	)		(19.5	)		(25.0	)
Net Loss attributable to Kemper Corporation		(146.3	)		(74.8	)		(323.5	)		(233.3	)
Net Loss Noncontrolling Interest		(0.1	)		—			(0.1	)		—
Net Loss	$	(146.4	)	$	(74.8	)	$	(323.6	)	$	(233.3	)

The Specialty Property and Casualty Insurance segment reported net operating loss of $33.2 million for the third quarter of 2023, compared to net operating loss of $28.7 million in the third quarter of 2022. Results decreased due primarily to adverse prior year loss and LAE development, partially offset by an improvement in the Underlying Combined Ratio. Results for third quarter 2023 included $40.6 million of adverse prior year loss and LAE development from Florida personal injury protection driven by increased frequency and severity resulting from more litigated claim activity, mainly from policy years 2020 through 2022, and $23.9 million of adverse prior year loss and LAE development from bodily injury and property damage associated with claim activity from the second half of 2022. The segment's Underlying Combined Ratio¹ was 100.5 percent, compared to 106.8 percent in the third quarter of 2022. The improvement was primarily driven by higher average earned premiums per exposure resulting from rate increases and lower underlying claim frequency.

The Life Insurance segment reported net operating income of $14.7 million for the third quarter of 2023, compared to a net operating income of $14.0 million in the third quarter of 2022.

Capital

Total Shareholders' Equity at the end of the quarter was $2,361.3 million, a decrease of $309.3 million, or 12 percent, since year-end 2022 primarily driven by the net loss for the year. Kemper and its direct non-insurance subsidiaries ended the quarter with cash and investments of $153.9 million, and $376.0 million of available borrowing capacity under the revolving credit agreement.

On August 2, 2023, Kemper announced that its Board of Directors declared a quarterly dividend of $0.31 per share, or $20.2 million. The dividend was paid on August 28, 2023 to its shareholders of record as of August 14, 2023.

Kemper ended the quarter with a book value per share of $36.85, a decrease of 12 percent from $41.79 at the end of 2022. Book Value Per Share Excluding Net Unrealized Losses on Fixed Maturities and Changes in the Discount Rate on Future Life Policyholder Benefits¹ was $44.45, compared to $49.23 at the end of 2022.


Unaudited condensed Consolidated Statements of Loss for the three and nine months ended September 30, 2023 and 2022 are presented below.

	Three Months Ended						Nine Months Ended
(Dollars in Millions, Except Per Share Amounts)	Sep 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
Revenues:
Earned Premiums	$	1,117.8		$	1,290.9		$	3,465.6		$	3,948.5
Net Investment Income		107.0			97.8			315.1			316.3
Change in Value of Alternative Energy Partnership Investments⁴		0.8			0.4			2.3			(21.2	)
Other Income		2.4			4.0			5.3			7.3
Income (Loss) from Change in Fair Value of Equity and Convertible Securities		2.8			(11.2	)		6.9			(79.9	)
Net Realized Investment (Losses) Gains		(30.3	)		(12.1	)		(38.3	)		0.4
Impairment (Losses) Gains		(1.1	)		(8.3	)		0.1			(22.1	)
Total Revenues		1,199.4			1,361.5			3,757.0			4,149.3
Expenses:
Policyholders' Benefits and Incurred Losses and Loss Adjustment Expenses		975.2			1,085.3			3,011.9			3,359.6
Insurance Expenses		259.0			300.5			794.4			913.0
Loss from Early Extinguishment of Debt		—			—			—			3.7
Interest and Other Expenses		156.0			63.5			311.7			171.1
Goodwill Impairment		—			—			49.6			—
Total Expenses		1,390.2			1,449.3			4,167.6			4,447.4
Loss before Income Taxes		(190.8	)		(87.8	)		(410.6	)		(298.1	)
Income Tax Benefit		44.4			13.0			87.0			64.8
Net Loss	$	(146.4	)	$	(74.8	)	$	(323.6	)	$	(233.3	)
Less: Net Loss attributable to Noncontrolling Interest		(0.1	)		—			(0.1	)		—
Net Loss attributable to Kemper Corporation	$	(146.3	)	$	(74.8	)	$	(323.5	)	$	(233.3	)

Net Loss Per Unrestricted Share:
Basic	$	(2.28	)	$	(1.17	)	$	(5.05	)	$	(3.66	)
Diluted	$	(2.28	)	$	(1.17	)	$	(5.05	)	$	(3.66	)

Weighted-average Outstanding (Shares in Thousands):
Unrestricted Shares - Basic		64,056.9			63,852.8			64,004.4			63,804.4
Unrestricted Shares and Equivalent Shares - Diluted		64,056.9			63,852.8			64,004.4			63,804.4

Dividends Paid to Shareholders Per Share	$	0.31		$	0.31		$	0.93		$	0.93

⁴Income related to Changes in Value of Alternative Energy Partnership Investments was $0.8 million for the three months ended September 30, 2023, compared to income of $0.4 million for the same period in 2022. Tax expense related to the Alternative Energy Partnership Investments was $0.2 million for the three months ended September 30, 2023, compared to tax expense of $0.1 million for the same period in 2022. This resulted in net income of $0.6 million and net income of $0.3 million attributable to Alternative Energy Partnership Investments for the three months ended September 30, 2023 and 2022, respectively.

⁴Income related to Changes in Value of Alternative Energy Partnership Investments was $2.3 million for the nine months ended September 30, 2023, compared to a loss of $21.2 million for the same period in 2022. Tax expense related to the Alternative Energy Partnership Investments was $0.6 million for the nine months ended September 30, 2023, compared to tax benefit of $8.0 million for the same period in 2022. This resulted in net income of $1.7 million and a net loss of $13.2 million attributable to Alternative Energy Partnership Investments for the nine months ended September 30, 2023 and 2022, respectively.


Unaudited business segment revenues for the three and nine months ended September 30, 2023 and 2022 are presented below.

	Three Months Ended						Nine Months Ended
(Dollars in Millions)	Sep 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
REVENUES:
Specialty Property & Casualty Insurance:
Earned Premiums:
Personal Automobile	$	724.0		$	858.8		$	2,278.5		$	2,666.3
Commercial Automobile		166.4			140.7			488.4			398.5
Total Earned Premiums		890.4			999.5			2,766.9			3,064.8
Net Investment Income		42.7			33.9			125.7			102.8
Change in Value of Alternative Energy Partnership Investments		0.5			0.3			1.3			(10.6	)
Other Income		1.6			2.3			3.2			5.0
Total Specialty Property & Casualty Insurance Revenues		935.2			1,036.0			2,897.1			3,162.0
Life & Health Insurance:
Earned Premiums:
Life		84.9			84.3			251.9			253.8
Accident & Health		5.8			45.9			17.5			136.8
Property		11.4			11.9			34.2			38.3
Total Earned Premiums		102.1			142.1			303.6			428.9
Net Investment Income		49.4			52.6			146.3			163.9
Change in Value of Alternative Energy Partnership Investments		0.2			0.1			0.6			(5.6	)
Other (Loss) Income		(0.1	)		—			(0.4	)		(0.8	)
Total Life & Health Insurance Revenues		151.6			194.8			450.1			586.4
Total Segment Revenues		1,086.8			1,230.8			3,347.2			3,748.4
Income (Loss) from Change in Fair Value of Equity and Convertible Securities		2.8			(11.2	)		6.9			(79.9	)
Net Realized Investment (Losses) Gains		(30.3	)		(12.1	)		(38.3	)		0.4
Impairment (Losses) Gains		(1.1	)		(8.3	)		0.1			(22.1	)
Non-Core Operations		138.0			161.1			431.7			486.0
Other		3.2			1.2			9.4			16.5
Total Revenues	$	1,199.4		$	1,361.5		$	3,757.0		$	4,149.3


KEMPER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Millions) (Unaudited)

	Sep 30, 2023			Dec 31, 2022
Assets:
Investments:
Fixed Maturities at Fair Value	$	6,474.5		$	6,894.8
Equity Securities at Fair Value		233.4			243.2
Equity Method Limited Liability Investments		224.1			217.0
Alternative Energy Partnership Investments		17.2			16.3
Short-term Investments at Cost which Approximates Fair Value		418.5			278.4
Company-Owned Life Insurance		506.9			586.5
Loans to Policyholders		281.8			283.4
Other Investments		273.1			269.9
Total Investments		8,429.5			8,789.5
Cash		110.0			212.4
Receivables from Policyholders		1,102.6			1,286.6
Other Receivables		223.4			262.6
Deferred Policy Acquisition Costs		622.2			635.6
Goodwill		1,250.7			1,300.3
Current Income Tax Assets		59.5			167.6
Deferred Income Tax Assets		258.5			129.0
Other Assets		488.7			530.0
Assets of Consolidated Variable Interest Entity
Fixed Maturities at Fair Value		1.6			—
Cash		2.4			—
Receivables from Policyholders		0.1			—
Other Assets		0.1			—
Total Assets	$	12,549.3		$	13,313.6
Liabilities and Shareholders' Equity:
Insurance Reserves:
Life & Health	$	3,098.1		$	3,276.2
Property & Casualty		2,724.5			2,756.9
Total Insurance Reserves		5,822.6			6,033.1
Unearned Premiums		1,485.1			1,704.4
Policyholder Contract Liabilities		656.3			701.3
Deferred Income Tax Liabilities		57.8			—
Accrued Expenses and Other Liabilities		777.6			817.3
Long-term Debt, Current and Non-current, at Amortized Cost		1,388.6			1,386.9
Liabilities of Consolidated Variable Interest Entity
Insurance Reserves		—			—
Unearned Premiums		0.1			—
Accrued Expenses and Other Liabilities		—			—
Total Liabilities		10,188.1			10,643.0
Shareholders' Equity:
Common Stock		6.4			6.4
Paid-in Capital		1,845.9			1,812.7
Retained Earnings		982.4			1,366.4
Accumulated Other Comprehensive Loss		(473.4	)		(514.9	)
Total Kemper Corporation Shareholders' Equity		2,361.3			2,670.6
Noncontrolling Interest		(0.1	)		—
Total Shareholders' Equity		2,361.2			2,670.6
Total Liabilities and Shareholders' Equity	$	12,549.3		$	13,313.6


Unaudited selected financial information for the Specialty Property & Casualty Insurance segment follows.

	Three Months Ended						Nine Months Ended
(Dollars in Millions)	Sep 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022

Results of Operations
Net Premiums Written	$	733.0		$	968.5		$	2,585.7		$	3,012.1

Earned Premiums	$	890.4		$	999.5		$	2,766.9		$	3,064.8
Net Investment Income		42.7			33.9			125.7			102.8
Change in Value of Alternative Energy Partnership Investments		0.5			0.3			1.3			(10.6	)
Other Income		1.6			2.3			3.2			5.0
Total Revenues		935.2			1,036.0			2,897.1			3,162.0
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE		712.1			868.0			2,301.4			2,709.9
Catastrophe Losses and LAE		6.2			14.8			32.0			23.1
Prior Years:
Non-catastrophe Losses and LAE		78.8			(6.6	)		135.4			(24.8	)
Catastrophe Losses and LAE		(1.0	)		0.2			(2.4	)		0.7
Total Incurred Losses and LAE		796.1			876.4			2,466.4			2,708.9
Insurance Expenses		182.3			198.8			563.6			603.5
Segment Adjusted Operating Loss		(43.2	)		(39.2	)		(132.9	)		(150.4	)
Income Tax Benefit		10.0			10.5			30.5			38.1
Total Segment Adjusted Net Operating Loss	$	(33.2	)	$	(28.7	)	$	(102.4	)	$	(112.3	)

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio		80.0	%		86.9	%		83.1	%		88.4	%
Current Year Catastrophe Losses and LAE Ratio		0.7			1.5			1.2			0.8
Prior Years Non-catastrophe Losses and LAE Ratio		8.8			(0.7	)		4.9			(0.8	)
Prior Years Catastrophe Losses and LAE Ratio		(0.1	)		—			(0.1	)		—
Total Incurred Loss and LAE Ratio		89.4			87.7			89.1			88.4
Insurance Expense Ratio		20.5			19.9			20.4			19.7
Combined Ratio		109.9	%		107.6	%		109.5	%		108.1	%

Underlying Combined Ratio¹
Current Year Non-catastrophe Losses and LAE Ratio		80.0	%		86.9	%		83.1	%		88.4	%
Insurance Expense Ratio		20.5			19.9			20.4			19.7
Underlying Combined Ratio¹		100.5	%		106.8	%		103.5	%		108.1	%

Non-GAAP Measure Reconciliation
Combined Ratio		109.9	%		107.6	%		109.5	%		108.1	%
Less:
Current Year Catastrophe Losses and LAE Ratio		0.7			1.5			1.2			0.8
Prior Years Non-catastrophe Losses and LAE Ratio		8.8			(0.7	)		4.9			(0.8	)
Prior Years Catastrophe Losses and LAE Ratio		(0.1	)		—			(0.1	)		—
Underlying Combined Ratio¹		100.5	%		106.8	%		103.5	%		108.1	%


Unaudited selected financial information for the Life Insurance segment follows.

	Three Months Ended						Nine Months Ended
(Dollars in Millions)	Sep 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022

Results of Operations
Earned Premiums	$	102.1		$	142.1		$	303.6		$	428.9
Net Investment Income		49.4			52.6			146.3			163.9
Change in Value of Alternative Energy Partnership Investments		0.2			0.1			0.6			(5.6	)
Other (Loss) Income		(0.1	)		—			(0.4	)		(0.8	)
Total Revenues		151.6			194.8			450.1			586.4
Policyholders' Benefits and Incurred Losses and LAE		64.7			88.5			202.9			272.7
Insurance Expenses		69.4			90.7			204.8			262.2
Segment Adjusted Operating Income		17.5			15.6			42.4			51.5
Income Tax Expense		(2.8	)		(1.6	)		(5.6	)		(5.7	)
Total Segment Adjusted Net Operating Income	$	14.7		$	14.0		$	36.8		$	45.8

Use of Non-GAAP Financial Measures

Adjusted Consolidated Net Operating Loss¹is an after-tax, non-GAAP financial measure and is computed by excluding from Net Loss the after-tax impact of:

(i) Income (Loss) from Change in Fair Value of Equity and Convertible Securities;

(ii) Net Realized Investment (Losses) Gains;

(iii) Impairment (Losses) Gains;

(iv) Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs;

(v) Debt Extinguishment, Pension Settlement and Other Charges;

(vi) Goodwill Impairment Charges;

(vii) Non-Core Operations; and

(viii) Significant non-recurring or infrequent items that may not be indicative of ongoing operations

Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, and (b) there has been no similar charge or gain within the prior two years. The most directly comparable GAAP financial measure is Net Loss. There were no applicable significant non-recurring items that Kemper excluded from the calculation of Adjusted Consolidated Net Operating Loss¹ for the three and nine months ended September 30, 2023 or 2022.

Kemper believes that Adjusted Consolidated Net Operating Loss¹ provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Income (Loss) from Change in Fair Value of Equity and Convertible Securities, Net Realized Investment (Losses) Gains and Impairment (Losses) Gains related to investments included in Kemper's results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of Kemper's investments, the timing of which is unrelated to the insurance underwriting process. Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs may vary significantly between periods and are generally driven by the timing of acquisitions and business decisions which are unrelated to the insurance underwriting process. Debt Extinguishment, Pension Settlement and Other Charges relate to (i) loss from early extinguishment of debt, which is driven by Kemper's financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process; (ii) settlement of pension plan obligations which are business decisions made by Kemper, the timing of which is unrelated to the underwriting process; and (iii) other charges that are non-standard, not part of the ordinary course of business, and unrelated to the insurance underwriting process. Goodwill impairment charges are excluded because they are infrequent and non-recurring charges. Non-Core Operations includes the results of our Preferred Insurance business which we expect to fully exit. These results are excluded because they are irrelevant to our ongoing operations and do not qualify for Discontinued Operations under Generally Accepted Accounting Principles ("GAAP"). Significant non-recurring items are excluded because, by their nature, they are not indicative of Kemper's business or economic trends.

The preceding non-GAAP financial measures should not be considered a substitute for the comparable GAAP financial measures, as they do not fully recognize the profitability of Kemper's businesses.

A reconciliation of Net Loss to Adjusted Consolidated Net Operating Loss¹ for the three and nine months ended September 30, 2023 and 2022 is presented below.

	Three Months Ended						Nine Months Ended
(Dollars in Millions) (Unaudited)	Sep 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
Net Loss	$	(146.4	)	$	(74.8	)	$	(323.6	)	$	(233.3	)
Less: Net Loss attributable to noncontrolling interest		(0.1	)		—			(0.1	)		—
Net Loss attributable to Kemper Corporation	$	(146.3	)	$	(74.8	)	$	(323.5	)	$	(233.3	)
Less Net Income (Loss) From:
Change in Fair Value of Equity and Convertible Securities		2.3			(8.8	)		5.5			(63.1	)
Net Realized Investment (Losses) Gains		(22.9	)		(9.6	)		(30.3	)		0.3
Impairment (Losses) Gains		(0.8	)		(6.6	)		0.1			(17.5	)
Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs		(34.2	)		(20.7	)		(80.5	)		(32.2	)
Debt Extinguishment, Pension Settlement and Other Charges		(55.5	)		—			(55.5	)		(2.9	)
Goodwill Impairment Charge		—			—			(45.5	)		—
Non-Core Operations		(7.3	)		(2.1	)		(19.5	)		(25.0	)
Adjusted Consolidated Net Operating Loss^1,2	$	(27.9	)	$	(27.0	)	$	(97.8	)	$	(92.9	)

Diluted Adjusted Net Operating Loss Per Unrestricted Share¹is a non-GAAP financial measure computed by dividing Adjusted Net Operating Loss¹ attributed to unrestricted shares by the weighted-average unrestricted shares and equivalent shares outstanding. The most directly comparable GAAP financial measure is Diluted Net Loss Per Unrestricted Share.

A reconciliation of Diluted Net Loss Per Unrestricted Share to Diluted Adjusted Net Operating Loss Per Unrestricted Share¹ for the three and nine months ended September 30, 2023 and 2022 is presented below.

	Three Months Ended						Nine Months Ended
(Unaudited)	Sep 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
Diluted Net Loss Per Unrestricted Share	$	(2.28	)	$	(1.17	)	$	(5.05	)	$	(3.66	)
Less Net Income (Loss) Per Unrestricted Share From:
Change in Fair Value of Equity and Convertible Securities		0.04			(0.14	)		0.09			(0.99	)
Net Realized Investment (Losses) Gains		(0.35	)		(0.15	)		(0.47	)		—
Impairment (Losses) Gains		(0.01	)		(0.10	)		—			(0.27	)
Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs		(0.54	)		(0.32	)		(1.26	)		(0.50	)
Debt Extinguishment, Pension Settlement and Other Charges		(0.87	)		—			(0.87	)		(0.05	)
Goodwill Impairment Charge		—			—			(0.71	)		—
Non-Core Operations		(0.11	)		(0.03	)		(0.30	)		(0.39	)
Diluted Adjusted Net Operating Loss Per Unrestricted Share^1,2	$	(0.44	)	$	(0.43	)	$	(1.53	)	$	(1.46	)

Book Value Per Share Excluding Net Unrealized Gains and Losses Losses on Fixed Maturities and the Change in Discount Rate on Future Life Policyholder Benefits¹ is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders' equity after excluding the after-tax impact of net unrealized gains and losses on fixed income securities and the change in discount rate on future life policyholder benefits by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. The Company uses the trends in book value per share excluding the after-tax impact of net unrealized gains and losses on fixed income securities and the change in discount rate on future life policyholder benefits in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods. The Company believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are not influenced by management. The Company believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.

A reconciliation of the numerator used in the computation of Book Value Per Share Excluding Net Unrealized Gains and Losses on Fixed Maturities and the Change in Discount Rate on Future Life Policyholder Benefits¹ and Book Value Per Share at September 30, 2023 and December 31, 2022 is presented below.

(Dollars in Millions) (Unaudited)	Sep 30, 2023			Dec 31, 2022
Shareholders' Equity	$	2,361.3		$	2,670.6
Less: Net Unrealized Losses on Fixed Maturities		(900.1	)		(716.8	)
Less: Change in Discount Rate on Future Life Policyholder Benefits		412.8			241.1
Kemper Corporation Shareholders' Equity Excluding Net Unrealized Losses on Fixed Maturities and Change in Discount Rate on Future Life Policyholder Benefits¹	$	2,848.6		$	3,146.3

Underlying Combined Ratio¹is a non-GAAP financial measure. It is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio. The most directly comparable GAAP financial measure is the Combined Ratio, which is computed by adding Total Incurred Losses and LAE Ratio, including the impact of catastrophe losses and loss and LAE reserve development from prior years, with the Insurance Expense Ratio.

Kemper believes Underlying Losses and LAE and the Underlying Combined Ratio are useful to investors and uses these financial measures to reveal the trends in Kemper's Property & Casualty Insurance segment that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses may cause Kemper's loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on incurred losses and LAE and the Combined Ratio. Prior-year reserve developments are caused by unexpected loss development on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing on the performance of Kemper's insurance products in the current period. Kemper believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing Kemper's underwriting performance.

Conference Call

Kemper will host its conference call to discuss third quarter 2023 results on Monday October 30th, at 5:00 p.m. Eastern (4:00 p.m. Central). The conference call will be accessible via the internet and by telephone at 888.259.6580, access code 15917686. To listen via webcast, register online at the investor section of kemper.com at least 15 minutes prior to the webcast to download and install any necessary software.

A replay of the call will be available online at the investor section of kemper.com.

More detailed financial information can be found in Kemper's Investor Financial Supplement and Earnings Call Presentation for the third quarter of 2023, which is available at the investor section of kemper.com.

About Kemper

The Kemper family of companies is one of the nation's leading specialized insurers. With approximately $13 billion in assets, Kemper is improving the world of insurance by providing affordable and easy-to-use personalized solutions to individuals, families and businesses through its Auto and Life brands. Kemper serves over 5.1 million policies, is represented by approximately 25,000 agents and brokers, and has approximately 8,400 associates dedicated to meeting the ever-changing needs of its customers.

Learn more about Kemper at kemper.com.

Caution Regarding Forward-Looking Statements

This press release may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Such statements involve known and unknown risks, uncertainties, and other factors, including but not limited to:

changes in the frequency and severity of insurance claims;
claim development and the process of estimating claim reserves;
the impacts of inflation;
changes in the interest rate environment;
supply chain disruption;
product demand and pricing;
effects of governmental and regulatory actions;
litigation outcomes and trends;
investment risks;
cybersecurity risks;
impact of catastrophes; and
other risks and uncertainties detailed in Kemper's Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission ("SEC").

Kemper assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this press release.

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Kemper Reports Third Quarter 2023 Operating Results*