National Indemnity Backs Kemper With Cut-through Agreement

The Kemper Insurance Companies reached an agreement-in-principle with Berkshire Hathaway Inc. subsidiary National Indemnity Company, under which National Indemnity will provide a cut-through endorsement on policies issued under the agreement beginning January 1, 2003. According to Kemper, these policies will be backed by the “A++” rating of National Indemnity.

“National Indemnity is the largest member of the Berkshire Hathaway group of companies and we’re delighted to have their support and the strength of their “A++” rating behind us,” said Kemper chairman and CEO David B. Mathis. “Under this agreement, we have the backing to continue operating our core businesses while we restructure our operations in preparation for demutualization, a process which we believe will ultimately enable us to access the capital needed to improve our balance sheet, enhance our ratings and profitably execute our business plan.”

The agreement-in-principle, which will be effective as of January 1, 2003, is subject to closing conditions, including regulatory and board approvals. Closing is expected in the first quarter of 2003. In connection with the closing, Kemper will repurchase for $125 million Berkshire’s minority equity investment in a Kemper subsidiary company.