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KEMPER Corp (KMPR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid growth but missed Wall Street EPS consensus: adjusted EPS was $1.30 vs consensus $1.51 (miss $0.21); revenue was $1.23B vs $1.23B consensus (in line to slight miss), driven by strong Specialty P&C earned premium growth (+17% YoY) but higher claim severity and adverse prior-year development . Values retrieved from S&P Global.*
  • Specialty P&C continued to scale: earned premiums rose to $1.01B; personal auto underlying combined ratio was 94.5% and commercial auto 90.1%; policies-in-force grew 7.8% YoY .
  • Capital and liquidity strengthened with proactive capital returns: new $500M buyback authorization, $150M ASR initiated, and a $0.32 dividend; parent company liquidity cited at ~$1.1B (presentation), with “parent company liquidity” per capital metrics at $823M (definition differences), and debt-to-cap excluding AOCI at 22.7% .
  • Investment income was $95.9M, pressured by alternatives; trailing twelve-month operating cash flow reached ~$590M, supporting continued repurchases and balance sheet flexibility .

What Went Well and What Went Wrong

  • What Went Well
    • Specialty P&C earned premiums +17.1% YoY to $1.01B; PIF +7.8% YoY, while commercial auto underlying combined ratio remained strong at 90.1% .
    • Shareholder value creation: new $500M repurchase authorization and $150M ASR; dividend maintained at $0.32; BVPS and adjusted BVPS rose to $46.45 and $31.01, respectively .
    • Management reiterated confidence: “We’re pleased that we delivered another quarter of strong operating performance… Our balance sheet is strong and our capital and liquidity position provides significant financial flexibility” — CEO Joseph Lacher .
  • What Went Wrong
    • EPS missed consensus (adjusted $1.30 vs $1.51) and underlying combined ratio increased YoY to 93.6% (from 89.6% in Q2 2024) on higher claim severity and adverse prior-year development . Values retrieved from S&P Global.*
    • Net investment income was softer ($95.9M) due to alternative investments, tempering earnings leverage vs recent quarters .
    • Non-core operations continued to runoff, reducing earned premiums by $50.8M YoY; Specialty P&C prior-year development was adverse in the quarter .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$1,186.8 $1,193.0 $1,225.6
Diluted EPS ($)$1.51 $1.54 $1.12
Adjusted Diluted EPS ($)$1.78 $1.65 $1.30
Q2 vs Prior YearQ2 2024Q2 2025
Revenues ($USD Millions)$1,129.9 $1,225.6
Diluted EPS ($)$1.16 $1.12
Adjusted Diluted EPS ($)$1.42 $1.30
Segment Detail (Q2 2025)Amount
Specialty P&C Earned Premiums ($USD Millions)$1,010.8
- Personal Auto Earned Premiums ($USD Millions)$789.3
- Commercial Auto Earned Premiums ($USD Millions)$221.5
Net Investment Income ($USD Millions)$95.9
Specialty P&C Adjusted Net Operating Income ($USD Millions)$79.0
Life Adjusted Net Operating Income ($USD Millions)$12.6
Specialty P&C Underlying Combined Ratio (%)93.6%
Personal Auto Underlying Combined Ratio (%)94.5%
Commercial Auto Underlying Combined Ratio (%)90.1%
Policies in Force (000s)1,295
Estimates vs Actuals (Q2 2025)ConsensusActual
Primary EPS ($)1.50771.30
Revenue ($USD)1,227,365,6601,225,600,000
EPS # of Estimates6—
Revenue # of Estimates4—
Values retrieved from S&P Global.*
Estimate Revision ContextQ4 2024Q1 2025
Primary EPS Consensus vs Actual ($)1.361 → 1.781.488 → 1.65
Revenue Consensus vs Actual ($USD)1,163,722,960 → 1,187,100,0001,206,296,690 → 1,193,000,000
Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Revenue/EPS GuidanceFY/Q2 2025Not providedNot providedMaintained (no formal guidance)
Net Investment Income CommentaryQ2 2025~$105M/quarter (rolling view discussed in prior calls)$95.9M in Q2; noted pressure from alternativesInformational; no formal target
Share Repurchase AuthorizationOngoingPrior ~$50–$150M capacityNew $500M authorizationRaised
Accelerated Share RepurchaseOngoingN/A$150M ASR initiated; 2,279,203 initial shares deliveredNew action
DividendQ3 2025 pay date$0.32 per share$0.32 per share (payable Sep 2, 2025)Maintained
Catastrophe XoL Reinsurance2025 programPrior structure1/1/25: $60M xs $50M and $65M xs $110M (95% placed; 5% co-participation)Program refreshed

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Specialty Auto marginsUnderlying combined ~91.7%; strong profitability Underlying combined 92.2%; still below 96% ceiling Underlying combined 93.6%; still healthy but higher vs prior periods Slightly worsening but within acceptable range
Growth/PIF trajectoryPIF +5% YoY; sequential Q4 growth unusual positive Strong PIF/new business; CA strong, FL/TX normalizing PIF +7.8% YoY; written premium +~7% YoY Improving scale
California regulatory/minimum limitsHard market; minimum limits hike benefits premiums; margin neutral with pricing actions Commentary on rate filings and margin neutrality; earned rate/loss trend balance Continued strong demand and growth backdrop in CA Supportive environment
Tariffs/macroHard market dynamics; minimal wildfire impact on auto Management sees tariff impact as manageable; quick repricing via 6‑month policies No new specific tariff commentary; overall competition increased Resilient posture
Investment income/alternativesNII $103M; plan to re-allocate to higher-yielding assets over 3–5 quarters NII $101M; alt investments softer; rolling ~$105M/quarter average NII $95.9M; alternatives pressured returns Soft in quarter; expected gradual improvement
Capital and liquidityParent liquidity ~$1.3B; dividend raised to $0.32; debt paydown plan Debt-to-cap ~23%; operating cash flow approaching peak New $500M buyback; $150M ASR; parent liquidity cited ~$1.1B (presentation) vs $823M (capital metrics definition); debt-to-cap 22.7% Strengthening with returns
Commercial auto developmentStrong multi-year profitability; occasional large losses; reserve philosophy Underlying CR ~92.3% Underlying CR 90.1% with higher PY development Solid margins; monitor development

Management Commentary

  • “We’re pleased that we delivered another quarter of strong operating performance… Our balance sheet is strong and our capital and liquidity position provides significant financial flexibility. We’re confident that our competitive advantages will drive attractive, sustained profitable growth. We remain committed to delivering value for our shareholders.” — Joseph P. Lacher, Jr., President & CEO .
  • Operating highlights emphasized: adjusted ROE 14.9%, adjusted BVPS up 14% YoY, all-time high TTM operating cash flow ($590M), and debt-to-cap below 23% as competitive pressures normalized .

Q&A Highlights

Note: A Q2 2025 earnings call transcript was not furnished. The below highlights reflect themes from recent calls that frame current period dynamics.

  • Tariff impact and pricing agility: Management expects tariffs to be manageable and addressed through ordinary-course rate changes; book largely priced to total loss cost trend, aided by 6‑month policy terms for rapid repricing .
  • State dynamics: California remains supply-constrained and favorable, with strong growth; Florida and Texas normalizing with competitive jockeying; broader non-CA markets competitive and back to “normal” .
  • Investment income outlook: Alternatives introduce volatility; rolling-average NII around ~$105M/quarter with planned asset reallocation to support higher yields over time .

Estimates Context

  • Q2 2025 results vs consensus: Adjusted EPS $1.30 vs $1.5077 (miss); revenue $1,225.6M vs $1,227.4M (in line/slight miss). Prior two quarters showed EPS beats relative to consensus (Q4: $1.78 vs $1.36; Q1: $1.65 vs $1.49) as margins remained strong . Values retrieved from S&P Global.*
  • Implications: Estimate revisions likely to edge lower for EPS given elevated underlying combined ratio and softer NII in Q2; revenue trajectory supported by earned premium growth as written growth earns through. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Specialty growth intact: Earned premiums rose +17% YoY with PIF +7.8%; margins still attractive though drifting higher as competition normalizes; watch the underlying combined ratio trajectory over coming quarters .
  • Capital return accelerates: New $500M authorization and $150M ASR signal confidence and undervaluation perception; dividend maintained; monitor ASR completion timing and repurchase pace .
  • Investment income variability: Alternatives pressured NII in Q2 ($95.9M); reallocation plan should gradually improve run-rate in back half; quarter-to-quarter volatility remains a swing factor .
  • CA regulatory backdrop supportive on growth; management indicates minimum limit changes are margin-neutral via pricing actions; non-CA markets competitive but normalizing .
  • Balance sheet strength: debt-to-cap (ex-AOCI) at 22.7% and robust TTM operating cash flow (~$590M) underpin flexibility for organic growth and returns .
  • Watch claim severity/prior-year development: Q2 reflected higher severity and adverse PY development; any persistence could weigh on EPS vs consensus in near term .
  • Trading lens: Near-term—stock reaction may hinge on ASR progress and margin prints; medium-term—earned premium momentum and NII recovery vs alternative investment performance should drive estimate recalibration and narrative stabilization .
*Estimates and consensus values retrieved from S&P Global (Capital IQ). Actuals are company-reported.

Citations:

  • Press release and 8-K exhibits covering Q2 2025 results, investor supplement, and earnings presentation .
  • Share repurchase authorization and dividend press release/8-K .
  • Accelerated share repurchase 8-K and press release .
  • Prior quarters’ press releases and transcripts framing trends .