Kemper Corporation (KMPR) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Kemper Corporation operates through two primary segments: Specialty Property & Casualty Insurance (personal and commercial automobile) and Life Insurance. The company also maintains Non-Core Operations (Preferred Insurance) which is in run-off. As of May 4, 2026, there were 58,874,232 shares of common stock outstanding.
Key Financial Metrics
| Metric (in millions, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $1,107.2 | $1,193.0 |
| Earned Premiums | $999.3 | $1,087.9 |
| Net Investment Income | $107.1 | $101.2 |
| Total Expenses | $1,115.1 | $1,073.2 |
| Net (Loss) Income Attributable to Kemper | $(1.7) | $99.7 |
| Diluted EPS | $(0.03) | $1.54 |
| Adjusted Consolidated Net Operating Income | $12.5 | $106.4 |
| Operating Cash Flow | $88.8 | $180.0 |
| Total Assets | $12,410.5 | $12,472.7 |
| Long-term Debt | $944.0 | $943.5 |
Material Changes vs. Prior Period
- Profitability Decline: Net income swung from a $99.7 million profit in Q1 2025 to a $1.7 million loss in Q1 2026. Adjusted Consolidated Net Operating Income dropped $93.9 million year-over-year.
- Revenue Pressure: Total revenues decreased $85.8 million, driven primarily by an $88.6 million decline in earned premiums. This was caused by lower personal automobile volumes and a $28.0 million reduction in earned premiums due to the Florida Statutory Profit Limit Refund.
- Underwriting Deterioration: The Specialty Property & Casualty segment's Combined Ratio worsened to 106.7% (from 92.7% in 2025). The Underlying Combined Ratio deteriorated 13.1 percentage points to 106.2%, driven by higher claim severity and frequency in California and the Florida refund.
- Investment Performance: Net Investment Income increased $5.9 million due to higher yields on alternative investments and fixed maturities. However, unrealized losses on fixed maturities increased $89.5 million due to rising interest rates.
- Expense Management: Insurance and Other Expenses decreased $17.5 million, and Interest Expense decreased $2.1 million following the redemption of $450 million in senior notes in early 2025.
Guidance, Outlook, and Risks
- Florida Statutory Profit Limit Refund: The company recorded a $28.0 million reduction to earned premiums in Q1 2026 related to expected refunds for accident years 2023-2025 and 2024-2026. Estimates for 2024-2026 remain subject to change based on development through March 31, 2027.
- Non-Core Operations: The company continues to run off its Preferred Insurance business. Losses from Non-Core Operations increased $3.3 million year-over-year due to reduced premiums outpacing expense reductions and adverse prior year development.
- Subsequent Event: On April 1, 2026, Kemper sold Newins Insurance Agency Holdings, LLC. The company expects to recognize a preliminary pre-tax gain of approximately $7.2 million in Q2 2026.
- Key Risks:
- Loss Trends: Continued deterioration in bodily injury and property damage claims, particularly in California.
- Regulatory Environment: Impact of insurance rate regulations and potential retroactive application of new requirements.
- Investment Volatility: Sensitivity of fixed maturity portfolio values to interest rate fluctuations.
- Cybersecurity: Risks related to data breaches and cyber attacks affecting operations.
Investor Verification Checklist
- Florida Refund Impact: Verify the final calculation of the Florida Statutory Profit Limit Refund and its impact on future quarters, specifically for the 2024-2026 accident years.
- California Loss Trends: Monitor the development of bodily injury and property damage claims in California to assess if the 17.6 percentage point deterioration in the personal auto underlying loss ratio stabilizes.
- Investment Portfolio: Review the aging of unrealized losses on fixed maturities ($811.5 million total) and the allowance for credit losses ($20.9 million) to assess potential future impairments.
- Non-Core Run-off: Track the pace of the Preferred Insurance run-off and associated adverse prior year development.
- Liquidity Position: Confirm the utilization of the $600 million credit facility (reduced to $350 million in May 2026) and the status of FHLB borrowings ($475 million outstanding).