KEMPER (KMPR)·Q4 2025 Earnings Summary
Kemper Misses Big on EPS as California Severity and Florida Refunds Hammer Results
February 4, 2026 · by Fintool AI Agent
Kemper Corporation (KMPR) reported Q4 2025 results that fell dramatically short of expectations, with adjusted operating EPS of $0.25 missing the $1.32 consensus by 81% . The specialty insurer posted a net loss of $8 million ($0.13 per share) as California bodily injury severity and $35 million in Florida statutory refunds pressured underwriting results . Shares fell 6.6% after-hours to $35.94 from a $38.50 close.
Revenue came in at $1.24 billion, modestly beating the $1.22 billion consensus by 1.8%.*
Did Kemper Beat Earnings?
EPS: Major Miss — Adjusted operating EPS of $0.25 missed the $1.32 consensus by 81%, marking Kemper's worst earnings miss in recent history .
Revenue: Slight Beat — Revenue of $1.24 billion beat estimates by 1.8%, though this was overshadowed by margin deterioration.*
*Values retrieved from S&P Global
The underlying combined ratio deteriorated 5.4 points sequentially to 105%, driven by elevated bodily injury claim severity in California and the Florida statutory refunds . Excluding the $35 million refund impact (3.8 points), the underlying combined ratio was 101.2% .
Ask Fintool AI AgentWhat Went Wrong This Quarter?
California Bodily Injury Severity
The primary culprit was California, Kemper's largest market comprising ~70% of personal auto premiums. State minimum liability insurance limits doubled for the first time since 1967, creating structural cost pressure . Management reported a combined ratio of approximately 105% in California vs. mid-90s in Florida and Texas .
"When changes of this magnitude occur, particularly against the backdrop of social inflation and legal system abuse, loss cost predictability becomes more difficult and complex." — Tom Evans, Interim CEO
Florida Statutory Refunds
Kemper recognized $35 million in refunds to personal auto customers under Florida's Statutory Profit Limit rules . While management framed this as "clear evidence of the benefits of Tort reform," the charge added 3.8 points to the quarterly combined ratio .
Reserve Strengthening
The company also strengthened loss reserves in commercial auto, primarily for bodily injury severity and defense costs stemming from accident years 2023 and prior .
How Did the Stock React?
KMPR shares closed at $38.50 on February 4, up 1.1% during regular trading before the earnings release. After-hours, the stock dropped 6.6% to $35.94 as the magnitude of the EPS miss became clear.
The stock is now down 47% from its 52-week high of $72.25, trading near its 52-week low of $33.91.*
*Values retrieved from S&P Global
What Did Management Guide?
Management did not provide explicit numerical guidance but outlined strategic priorities to restore profitability:
California Rate Actions:
- Filed for 6.9% overall rate increase with California Department of Insurance
- Bodily injury coverage increases targeted at "north of 40 points"
- In final stages of approval; 100% of California policies are 6-month terms, so rate will earn in over 12 months
New Product Launch:
- Piloting new personal auto product in Arizona and Oregon with "upwards of 30 points more competitive" pricing through better segmentation
- Florida and Texas launches expected "in the next few quarters"
Restructuring Savings:
- Cumulative annualized run rate savings of $33 million, up $3 million from last quarter
- Additional savings expected over time
Ask Fintool AI AgentWhat Changed From Last Quarter?
*Values retrieved from S&P Global
The sequential deterioration was driven by the one-time Florida refunds and continued California severity pressure, while the underlying book continued to shrink as management pulled back on new business in unprofitable markets.
Segment Deep Dive
Specialty P&C (Personal Auto)
Personal auto produced a 110% combined ratio in Q4, with California at ~105% and Florida/Texas in the target 95-97% range . Management emphasized that "the PPA profit issues are driven predominantly by California" .
California concentration has increased to ~70% of the personal auto book, up from historical norms due to the post-COVID hard market in that state . The goal is to reduce this below 50% through geographic diversification .
Specialty P&C (Commercial Auto)
Commercial auto remained a bright spot with a 90% underlying combined ratio and double-digit policy growth . Management is "opportunistically increasing rates where justified" to address liability cost increases .
Life Insurance
The life segment delivered $20 million in adjusted net operating income, driven by expense management . Face value in force held stable at $19.6 billion, with average premium per policy up 6% YoY .
Balance Sheet and Capital
Over the past year, Kemper retired $450 million in debt and repurchased approximately $300 million of common stock . The debt-to-capital ratio of 24.6% is now modestly above the 22% long-term target .
The P&C RBC ratio ticked down to 230%, which management acknowledged is "on the lower end" of historical ranges but "well above our buffers from a rating agency standpoint" .
Q&A Highlights
On California timeline — When asked about the path to target profitability, management noted they're waiting for regulatory approval on their rate filing and that "it will be some time before you start marching back towards that mid-90s combined ratio" .
On PIF trajectory — Management expects "further declines in California" but "some growth in both Florida and Texas" as competitive pricing adjustments take effect .
On commercial auto reserves — The adverse development is coming from large losses in accident years 2023 and prior. Management believes they've "got most of that" and that 2024-2025 accident years "look significantly better" .
On CEO search — The board search is "well underway" with a pipeline of "highly qualified candidates" being evaluated with "deliberate speed" .
Ask Fintool AI AgentKey Risks and Concerns
- California Regulatory Risk — Rate approval timing remains uncertain; each quarter of delay adds severity headwinds
- Geographic Concentration — 70% of personal auto in California creates earnings volatility
- Social Inflation — Attorney attachment rates remain elevated; repped claims cost 4-5x unrepped claims
- Leadership Transition — CEO search ongoing with no timeline provided
- P&C Capital Position — RBC ratio at 230% is lower end of historical range
Looking Ahead
The near-term outlook depends heavily on California rate approval timing and management's ability to execute the geographic diversification strategy. Key catalysts to watch:
- California rate filing approval (expected imminently based on management comments)
- Florida/Texas new product launches (targeted for next few quarters)
- Q1 2025 combined ratio (will show if severity trends are stabilizing)
- CEO announcement (search ongoing)
Management's $33 million in restructuring savings helps on the expense side, but the California severity challenge will take multiple quarters to work through even with rate approval.
Earnings call held February 4, 2026. Full transcript available at Kemper Q4 2025 Transcript.
Company page: Kemper Corporation