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KEMPER Corp (KMPR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 results came in below expectations: net loss of $(21.0)M and diluted EPS of $(0.34); adjusted consolidated net operating income was $20.4M and adjusted EPS was $0.33 .
  • Specialty P&C profitability deteriorated: underlying combined ratio rose to 99.6% vs 93.6% in Q2 and 91.3% in Q3 last year, driven by bodily injury severity and increased competition .
  • Versus consensus, EPS was a significant miss (actual $0.33 vs $1.32*) while revenue was a modest beat (actual $1.240B vs $1.219B*). Values retrieved from S&P Global.
  • Management launched a restructuring program (~$30M annualized savings) and executed sizeable buybacks (~5.1M shares, $266M from Jul–Oct); liquidity remains strong (“over $1 billion” parent liquidity) .
  • Leadership transition announced Oct 15 (Interim CEO C. Thomas Evans, Jr.); near‑term stock drivers: magnitude of EPS miss, Specialty Auto margin trajectory, execution on cost saves, and clarity post leadership changes .

What Went Well and What Went Wrong

What Went Well

  • Life Insurance delivered $18.6M adjusted net operating income, up ~27% YoY, aided by favorable mortality and lower expenses .
  • Net investment income was $104.8M, up $9M sequentially; core portfolio book yield contribution remained consistent and alternatives improved .
  • Book value per share and adjusted BVPS increased YoY; management emphasized strong capital flexibility and “over $1 billion” parent liquidity in the quarter .

Management quotes:

  • “Our results for the quarter were disappointing and below our expectations. We are moving swiftly with a number of actions to enhance execution, improve profitability, and position us for growth.” — C. Thomas Evans, Jr., Interim CEO .
  • “Restructuring program launched in 3Q’25…expected to generate ~$30 million of annualized run-rate savings” .

What Went Wrong

  • Specialty P&C profitability compressed: underlying combined ratio rose to 99.6%, with private passenger auto at 102.1% and commercial auto at 91.1% as BI severity and competition weighed on results .
  • Adverse prior-year development in commercial auto (driven by BI claims AY 2023 and prior) pressured results; Specialty P&C non‑CAT PYD was $40.6M in Q3 .
  • Bottom-line swung to a net loss; restructuring/integration costs ($19.6M) and non-core operations losses ($20.7M) further reduced GAAP earnings .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$1,193.0 $1,225.6 $1,239.7
Net Income (Loss) Attributable to KMPR ($USD Millions)$99.7 $72.6 $(21.0)
Diluted EPS ($)$1.54 $1.12 $(0.34)
Adjusted Consolidated Net Operating Income ($USD Millions)$106.4 $84.1 $20.4
Adjusted EPS ($)$1.65 $1.30 $0.33
Specialty P&C Underlying Combined Ratio (%)92.2% 93.6% 99.6%

Segment breakdown

MetricQ1 2025Q2 2025Q3 2025
Specialty P&C Earned Premiums ($USD Millions)$962.2 $1,010.8 $1,017.3
Specialty P&C Segment Adjusted Net Operating Income ($USD Millions)$97.9 $79.0 $7.6
Life Earned Premiums ($USD Millions)$99.7 $100.5 $99.8
Life Segment Adjusted Net Operating Income ($USD Millions)$17.2 $12.6 $18.6

KPIs

KPIQ1 2025Q2 2025Q3 2025
Specialty P&C PIF YoY Growth (%)+13.6% +7.8% +0.6%
Net Investment Income ($USD Millions)$101.2 $95.9 $104.8
TTM Operating Cash Flow ($USD Millions)~$520 ~$587 ~$585
Debt-to-Total Capitalization (%)24.4% 24.2% 25.7%

Consensus vs. Actuals and Forward Estimates (S&P Global)

MetricQ3 2025 ConsensusQ3 2025 ActualQ4 2025 ConsensusQ1 2026 Consensus
Revenue ($USD Millions)1,219.4*1,239.7 1,222.3*1,258.3*
EPS ($)1.32*0.33 0.87*1.22*

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Restructuring savings (annualized)Run‑rate by end 2025 with further savings through 2027N/A~$30M annualized run‑rate savings; ongoing evaluation through 2027 New
Quarterly dividendQ4 2025 payable Dec 3$0.32 per share$0.32 per share (payable Dec 3; record Nov 17) Maintained
Share repurchase activityQ3 2025$500M authorization announced in Q2 Repurchased ~5.1M shares at $52.65 avg for ~$266M (Jul 1–Oct 31) Executing authorization
Capital/liquidity commentaryOngoing“~$1.1B” parent liquidity in Q2 “Over $1 billion” parent liquidity in Q3 remarks Maintained strong liquidity narrative

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Specialty Auto competition & pricingCompetition normalizing; strong PIF growth and 93.6% UCR in Q2 ; 92.2% UCR in Q1 Increased competition; UCR worsened to 99.6% with PPA at 102.1% Worsening margin pressure
Bodily injury severity & PYDHigher severity and some PYD noted in Q2 Adverse PYD in commercial auto driven by BI in AY 2023 and prior; Specialty P&C non‑CAT PYD $40.6M Elevated severity/PYD
Life segment performanceStable premiums; mortality in line; $12.6M adjusted NOI in Q2; $17.2M in Q1 $18.6M adjusted NOI with favorable mortality and lower expenses Improving
Capital allocation (buybacks)New $500M repurchase authorization; $80M bought since Apr 1 ~$266M repurchased in Q3 period; ASR completed (~2.9M shares) Accelerated buybacks
Cost actions & efficiencyFocus on profitable growth; no restructuring program disclosed in Q2 Launch of restructuring (~$30M run‑rate savings) New cost initiative
Liquidity & leverageDebt-to-cap near target, strong liquidity Liquidity “over $1B”; debt-to-cap ~24–26% range Stable/strong

Management Commentary

  • Strategy and near-term focus: “Results did not meet expectations; actions underway to improve profitability and growth,” with a sharpened focus on disciplined execution and efficiency .
  • Cost program: “Restructuring program launched in 3Q’25…expected to generate ~$30 million of annualized run‑rate savings; ongoing evaluation of additional expense savings opportunities through 2027” .
  • Capital and liquidity: “Parent company liquidity remains strong at over $1 billion” .
  • CEO tone: “We remain on solid financial footing…believe strongly in our strategy, and are confident that we can achieve our full potential” — Interim CEO C. Thomas Evans, Jr. .

Q&A Highlights

  • The Q3 earnings call transcript was not available in our document catalog; highlights above are derived from the press release, investor supplement, and earnings presentation . Guidance clarifications centered on the restructuring savings and profitability actions communicated in prepared materials .

Estimates Context

  • EPS was a major negative surprise: actual $0.33 vs $1.32 consensus*, driven by weaker Specialty P&C underwriting, adverse PYD in commercial auto, and restructuring/non-core impacts on GAAP . Values retrieved from S&P Global.
  • Revenue modestly exceeded consensus: $1,239.7M vs $1,219.4M*, supported by higher earned premiums in Specialty P&C despite lower non-core premiums . Values retrieved from S&P Global.
  • Forward estimates: consensus revenue for Q4 2025 $1,222.3M* and Q1 2026 $1,258.3M*; consensus EPS for Q4 2025 $0.87* and Q1 2026 $1.22*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Specialty Auto margin reset: monitor rate/non‑rate actions and loss-cost trends; UCR at 102.1% PPA and 99.6% segment underscores near-term profitability risk .
  • Commercial auto BI severity and PYD are key swing factors; watch reserve actions and claims development in AY 2023 and prior .
  • Cost savings execution is critical: ~$30M annualized restructuring savings should support margin recovery if delivered on schedule .
  • Capital deployment remains active: ~$266M buybacks in Q3 period and ASR completion support per-share metrics amid earnings volatility .
  • Liquidity and leverage provide cushion: “over $1B” parent liquidity and debt-to-cap ~24–26% enable flexibility while underwriting improves .
  • Life Insurance is a stabilizer: consistent earnings ($18.6M in Q3) and favorable mortality provide diversification .
  • Leadership transition: Interim CEO and Board search add an execution focus; monitor strategic updates and tone in future calls .

Appendix: Additional Specialty P&C detail (Q3)

  • Earned premiums $1,017.3M (+10.7% YoY), UCR 99.6%; PIF +0.6% YoY; private passenger auto UCR 102.1%, commercial auto UCR 91.1% .
  • Total incurred loss & LAE ratio 83.7%; expense ratio 21.1%; combined ratio 104.8% .

Values retrieved from S&P Global for consensus/estimate figures.