Kemper’s Strong Third Quarter Includes Infinity Results

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Kemper Corp. reported net income of $92.2 million for the third quarter of 2018, compared to $47.7 million for the third quarter of 2017. As adjusted for the acquisition in the quarter of nonstandard auto insurer Infinity, net income was $131.7 million for the third quarter compared to $62.7 million for the third quarter of 2017.

Adjusted consolidated net operating income was $104.5 million for the third quarter of 2018, compared to $44.4 million for the same quarter of 2017.

Chicago-based Kemper Corp. closed on its $1.6 billion acquisition of Birmingham-based nonstandard auto insurer Infinity Property and Casualty Corp. in early July.

Property/Casualty earned premiums increased by 102 percent, or $452 million in the quarter, as reported, or 14 percent, or $107 million, as adjusted for the acquisition. The P/C insurance segment reported net operating income of $28.2 million for the quarter compared to $22.9 million in 2017.On an as adjusted basis, the P/C insurance segment’s net operating income was $68.0 million in the third quarter of 2018, compared to $39.6 million in 2017.

P/C results increased primarily from strong nonstandard personal auto growth and profitability and lower catastrophe losses, which were $19.7 million before taxes compared to $29.8 million for the same quarter last year.

The P/C insurance segment’s underlying combined ratio increased 5.4 percentage points to 98.0 percent in the third quarter of 2018, primarily from an increase in expenses related to the Infinity purchase. The underlying loss ratio increased 1.3 percentage points to 71.9 percent, primarily from a deterioration in homeowners, partially offset by improvements in nonstandard personal auto and preferred personal auto. Nonstandard auto’s underlying loss ratio improved 1.1 percentage points to 74.1 percent in the quarter, as average earned premium outpaced loss cost trends. Preferred personal auto’s underlying loss ratio improved 2.5 percentage points to 67.2 percent. The homeowners underlying loss ratio increased 3.5 percentage points to 58.9 percent due to the cost related to the insurer’s aggregate catastrophe program and a single large fire loss.

Nonstandard personal automobile’s earned premiums increased by 166 percent, or $409 million in the quarter, as reported, or 18 percent, or $101 million, as adjusted.

“I’m very pleased with our performance this quarter, including strong earnings and double-digit growth in our specialty auto business, continued stability in our life and health results, and solid gains in investment income,” said Joseph P. Lacher, Jr., Kemper’s president and CEO.