Kemper Corporation Annual Report 2023

FY2023 Annual Report · Kemper Corporation

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2023 Annual Report

Kemper at a Glance
The Kemper (NYSE: KMPR) family of companies is one of the nation’s leading specialized insurers. With approximately $13 billion
in assets, Kemper is improving the world of insurance by providing affordable and easy-to-use personalized solutions to individuals,
families and businesses through its Kemper Auto and Kemper Life brands. Kemper serves over 4.9 million policies, is represented by
23,700 agents and brokers, and has approximately 8,100 associates dedicated to meeting the ever-changing needs of its customers.

Financial Highlights

Earned Premiums
Dollars in Millions

$5,179

$5,213

Earnings Per Share
Dollars Per Share

Book Value Per Share
Dollars Per Share

Net Loss

Adj. Consolidated Net Operating Loss1

BVPS

Adj. BVPS1

$(0.74)

$49.14

$33.99

$41.79

$39.08

$28.88

$25.39

$4,529

$(1.92)

$(1.82)

$(3.45)

$(4.50)

$(4.25)

2021

2022

2023

2021

2022

2023

2021

2022

2023

Return on Shareholders’ Equity
Percentage

Cash Flow From Operating Activities
Dollars in Millions

Return on Equity

Return on Tangible Equity
1

$351

(3.6)%

(5.0)%

(10.0)%

(10.7)%

(14.4)%

(15.9)%

$(134)

$(210)

2021

2022

2023

2021

2022

2023

1 Adjusted Consolidated Net Operating Loss Per Unrestricted Share, Book Value Per Share Excluding Net Unrealized Losses on Fixed Maturities and Changes
in the Discount Rate on Future Life Policyholder Benefits and Goodwill, and Return on Tangible Shareholders’ Equity are non-GAAP measures of performance.
Refer to the Investor Supplement for more information.

A Message from Joe Lacher
President, Chief Executive Officer and Chairman
Kemper Corporation

To Our Shareholders,

In 2023, we remained steadfast in our commitment to empower growing
specialty and underserved markets with affordable and easy-to-use solutions
that make a meaningful difference in our customer’s lives. This long-term
mission is achieved through the creation and cultivation of a set of systematic,
sustainable competitive advantages, and has the resilience to guide us
through both routine and challenging times.

The past four years have been far from normal for the
insurance industry, particularly in our focus areas—auto and
low face amount life insurance. In particular, the last three
years produced ﬁnancial results well below our long-term
targets. While many of the drivers of these results were
outside our control, I am disappointed in our inability to meet
the challenges faster. We have had to
navigate through a landscape marked
by signiﬁcant upheaval, notably in
personal auto insurance.

At the onset of the pandemic,
premium rates and loss inﬂation
were largely in balance. In the early
pandemic period, rate increases
dropped to zero and total loss
inﬂation was negative, driven by lower frequency from
less driving. Then, we quickly shifted to a period where the
balance between premium rates and inﬂation was disrupted
with inﬂation vastly outpacing rate increases. As a result,
proﬁtability was pressured, and signiﬁcant underwriting
and non-rate actions were needed to offset that imbalance.
We indicated that it would take time to restore balance,

and by mid-2023 cumulative earned rate exceeded loss
cost, generating three sequential quarters of underlying
improvement during the year. By the end of 2023, our
actions enabled the Specialty P&C business to achieve an
underwriting proﬁt in the fourth quarter of 2023.

Beyond restoring proﬁtability, our
goals also included making signiﬁcant
progress on the strategic initiatives we
announced in November 2022, aimed
at enhancing our operating model
and increasing ﬁnancial ﬂexibility.
We made signiﬁcant progress on key
strategic initiatives, and exceeded the
goals related to both the Bermuda
optimization and the multi-year

cost structure initiatives. These initiatives helped restore
proﬁtability and strengthen our capital and liquidity positions.
The reciprocal exchange project and the exit from the
preferred home and auto business are on track. The preferred
exit will release capital and increase the resources available
to support our core specialty auto and life businesses.

Kemper 2023 Annual Report | 1

By the end of 2023, our actions enabled

the Specialty P&C business to achieve

an underwriting proﬁt in the fourth

quarter of 2023.”

2023 Results
We generated a net loss of $272 million, or ($4.25) per
share, compared to a net loss of $287 million, or ($4.50)
per share in 2022. The adjusted consolidated net operating
loss1 was $47 million, or ($0.74) per share, compared to an
adjusted consolidated net operating loss1 of $116 million, or
($1.82) per share, in 2022.

Although overall ﬁnancial results were below our long-
term expectations, we met or exceeded the targets
communicated for our strategic initiatives.

• The Bermuda optimization project enabled approximately
$330 million in dividends to the parent, exceeding our
prior estimate of $250 million; this bolstered liquidity and
strengthened our ecosystem.

• Our expense reduction efforts exceeded our target of

$150 million and we achieved that goal in the program’s
ﬁrst year, well ahead of schedule. These savings will
allow us to preserve our low-cost competitive advantages
and set ourselves up for future growth and proﬁt margin
improvements.

1 Non-GAAP ﬁnancial measure. All Non-GAAP ﬁnancial measures are denoted with
footnote 1. See “Use of Non-GAAP Financial Measures” within the Investor Supplement
for additional information.

• We began writing business in our reciprocal structure in
2023; growth will initially be slow but is expected to ramp
up over the next several years as we receive approval to
expand into new states.

• We made substantial progress on the exit of the

Preferred P&C business, freeing up approximately $45
million of capital in 2023, with an additional $130 million
expected in 2024 and another $100 million in 2025. This
capital will be redeployed into our core businesses and
initiatives that meet or exceed our return targets.

Our insurance companies are well capitalized and have
signiﬁcant sources of liquidity. At the end of 2023, we
had $1.1 billion of holding company liquidity. This ensures
our ability to pay holding company dividends and interest
payments and support our operating subsidiaries as needed.

We made signiﬁcant progress on key

strategic initiatives, and exceeded the goals

related to both the Bermuda optimization

and the multi-year cost structure initiatives.”

2 | Kemper 2023 Annual Report

Business Performance
Our top priority for the Specialty Auto segment was to
restore the business to proﬁtability. We closed 2023 with an
underlying combined ratio of 98.2%, an improvement of 2.3
points sequentially, and 9.6 points year-over-year. This was
the result of relentless efforts to execute proﬁt improvement
actions.

Severity stabilized yet remained elevated—as it did for the
industry—throughout 2023, and incremental earned rate
continued to increase. Most of the improvement was driven
by private passenger auto, our most challenged line. Our
Commercial Vehicle business remains a source of strength,
and produced an underlying combined ratio of 93% at
year-end; we remain conﬁdent about our ability to generate
long-term value in this area.

Related to production, policies in force declined signiﬁcantly
as a result of the restrictive new business underwriting
actions we took to restore proﬁtability. We continued to
observe hard market conditions, especially in California—
policies renewed with higher premium rates and retention

We have well-capitalized insurance

businesses, a healthy liquidity balance, and

the capital needed to navigate this operating

environment and appropriately invest in our
core capabilities.“

remained consistent. Against this backdrop, we remain
optimistic about our ability to increase new business
writings and return to policies-in-force growth.

In our Life segment, despite the impact of continuing
inﬂation on our target customer’s disposable income,
consumer demand for our products remained consistent
and persistency was stable. We also successfully adopted
the new accounting standard on long-duration insurance
contracts (LDTI), primarily impacting the annual actuarial
assumption and reserve calculations.

Kemper 2023 Annual Report | 3

Looking Forward
As we move into 2024, we are optimistic about our
prospects as we transition to the next phase of our journey,
focused on a thoughtful balance between continued
improvement in underwriting proﬁtability and new business
generation. The inputs that drive further proﬁtability are
trending positively, including earned rate in excess of a
moderating loss trend.

We will apply a balanced approach centered on three key
priorities: 1) maintain our long-term target margins while
increasing policies in force; 2) remain an active player in the
marketplace with the ability to capture market share; and
3) continue to make strategic investments to enhance our
systematic, sustainable competitive advantages. Together,
these priorities will continue to enhance our ﬁnancial proﬁle
and strengthen our organization.

Our balance sheet will continue to provide long-term
ﬁnancial stability. We have well-capitalized insurance
businesses, a healthy liquidity balance, and the capital
needed to navigate this operating environment and
appropriately invest in our core capabilities.

Kemper is a strong company with a team dedicated to
delivering on our promises. These promises include
providing attractive, long-term intrinsic growth to our
shareholders, and value to all our stakeholders.

Thank you for being part of the Kemper journey.

Joseph P. Lacher, Jr.
President, CEO and Chairman
Kemper Corporation

4 | Kemper 2023 Annual Report

Kemper and ESG
Kemper’s ownership culture is the cornerstone of our
sustainability approach. We have an obligation to our
stakeholders to operate responsibly, with a focus on
improving our communities through a continued emphasis
on environmental, social and governance (ESG) factors. In
doing so, we ensure we continue to be a responsible business
partner to our customers, an attractive option to investors,
and an employer of choice in a competitive labor market.

ESG Governance and Areas of Focus
The Governance Committee of Kemper’s Board of Directors
oversees the ESG program to ensure proper governance
and accountability.

In 2023, Kemper refreshed our key areas of focus, prioritizing
areas of greatest importance to our key stakeholders. Our
approach to disclosure was informed by leading global
standards, including the Sustainability Accounting Standards
Board and Global Reporting Initiative. By embracing these
standards, we emphasized our commitment to responsible
corporate stewardship, shareholder value creation, and long-
term stability. Below are our key areas of focus:

ESG Governance
Structure

BOARD OF DIRECTORS
D OF DIREC
RNANCE COMM
GOVERNANCE COMMITTEE

ESG STEERING
COMMITTEE

ESG PROGRAM MANAGEMENT
OFFICE AND SUBJECT
MATTER EXPERTS

Kemper’s Key Areas of Focus for ESG

ENVIRONMENTAL

SOCIAL

GOVERNANCE

• Energy Efficiency

and Waste Management

• ESG Product Features

• Human Capital Development

• Governance and Ethics

• Employee Engagement and Culture

• Talent Management and

• Climate Risk Management and

Development

Enterprise Risk Management

• Health and Wellness

• Diversity, Equity and Inclusion

• Philanthropy and Community

Support

• Corporate Governance
• Ethics and Compliance
• Anti-Money Laundering
• Human Rights
• Health and Safety

• Executive Compensation

• Data Security and Privacy

• Customer Experience

Kemper 2023 Annual Report | 5

Environmental
We are committed to responsible environmental
management and conservation of resources. Our
environmental programs are focused on reducing waste,
managing energy consumption, and minimizing climate risk.
This focus has delivered improvements in energy efficiency
across our business footprint.

Energy Efficiency and Waste Management
Kemper is committed to mitigating climate change,
conserving natural resources, and taking steps to reduce our
overall carbon footprint. We understand our responsibility
to the environment and have developed a multi-year
environmental approach that represents our commitment
to sustainability. Kemper’s environmental approach is
structured to drive impactful change in addressing climate
change, while aligning to our overall enterprise strategy.

ESG Insurance Product Features
Kemper’s environmental approach includes product and
service offerings that promote sustainability throughout the
supply chain, encompassing insurance products tailored
for renewable energy, eco-friendly vehicles, and coverage
against climate-related risks. Examples include Kemper Co-
Pilot™ and discounts for going paperless.

Climate Risk Management and Underwriting
We understand the risks posed by climate change to our
company, our stakeholders, and the insurance industry of
which we are part. Kemper identiﬁes and models risks from
covered perils to assess the total risk exposure. Kemper
also manages its exposure to catastrophes and other
natural disasters through a combination of geographical

6 | Kemper 2023 Annual Report

diversiﬁcation, restrictions on the amount and location of
new business production in such regions, modiﬁcations of,
and/or limitations to, coverages and deductibles for certain
perils in such regions and reinsurance.

Social
Kemper’s successes are driven by our most important
asset, our employees. We are committed to equal pay and
an inclusive, equitable work environment. The focus on
sustainability across our businesses not only improves our
own competitiveness and drives returns for shareholders, but
also helps us attract, motivate, and retain the best people.

Human Capital Development
Employee Engagement
Kemper utilizes a focused and thoughtful approach to
positively impact the connection between our employees
and the workplace. Our hybrid work environment prioritizes
purposeful time in the office where engagement through

collaboration and team meetings is optimized. Kemper’s
ability to deliver on our commitments is dependent on our
capacity to identify, attract, develop, and retain a robust
pipeline of talent, capable of supporting the changing
needs of our business. To achieve this goal, we focus on
the following:

• Talent Acquisition

• Leadership, Learning and Development

• Performance Management

Diversity Equity and Inclusion (DEI)
Creating a workplace environment that is diverse, equitable
and inclusive is imperative to the success of our company.
Cultivating a welcoming work environment that allows
employees to thrive by being their authentic selves is part
of our culture. Our ownership culture integrates well with
our focus on creating a sense of belonging and provides our
employees the opportunity to reach their full potential while
contributing to the success of the company.

Kemper Philanthropy
Commitment to supporting philanthropic initiatives, causes
and organizations is an integral part of the Kemper culture.
Through outreach, employee volunteerism, and ﬁnancial
support, we aim to make a meaningful difference in the lives
of our customers, employees and the communities where we
live and work.

Governance
At Kemper, we are committed to earning the trust and
conﬁdence of our stakeholders, and a key means of achieving
that goal is through good corporate governance. We ensure
that strong governance, ethics and compliance practices
are followed, thereby increasing shareholder value over the
long term.

Our Governance practices
include areas such as (but not
limited to) the following:

• Corporate Governance

• Ethics and Compliance

• Responsible Investing

• Health and Safety

• Executive Compensation

• Human Rights

• Data Security and Privacy

• Transparent Information and Fair

Advice for Customers

• Ongoing Review of Claims Handling

Kemper 2023 Annual Report | 7

Building Stronger Communities
Kemper is dedicated to supporting the development of
resilient and thriving communities where our customers
and employees live and work. We help build stronger
communities by focusing our support on education, health
and community development, through our owned programs,
national partnerships, ﬁnancial donations and generous
employee volunteerism.

THE

FOUNDATION

In 2023, the total impact of
our philanthropic efforts was
$3.1 million. In collaboration
with our philanthropic partner, The Kemper Foundation,
we provided $2.4 million to local organizations through
donations, grants and sponsorships. Our employees alone
contributed over $84,000 to local charities through our
matching gift program and dedicated nearly 3,000 hours to
volunteering in their communities.

2023 Community Impact by the Numbers
In 2023, the collective impact of our philanthropic efforts
was $3.1 million and included:

$1.1M

in donations to our
health partners

$1.5M in donations to our
education partners

$377K

in donations to community
development organizations

$95K

in volunteer hour impact value
in our communities

Education
In partnership with The Kemper Foundation, we provide
ﬁnancial support to the next generation of talent and
business leaders as well as to education programs that
advance bilingual literacy in Hispanic and Latino children
and families.

Kemper Scholars Program
The Kemper Scholars Program partners with 10 universities,
including six Historically Black Colleges and Universities
and Hispanic-Serving Institutions to deliver need-based
scholarships, funding for on-campus organizations, and
support for diversity, equity and inclusion academic

8 | Kemper 2023 Annual Report

research. In 2023, the program awarded over $1.1 million in
scholarships to diverse, promising college students, including
faculty research grants. The program also partnered with
Kemper corporate offices across the country to offer over 50
internships to Kemper Scholars.

Read Conmigo Bilingual Educator Grant Program
Since 2022, the Read Conmigo grant program has
empowered bilingual educators and their Latino and
Hispanic elementary students. The program helps teachers
provide engaging and equitable learning experiences for
their students by providing $3,000 grants to assist them
with classroom resources, tools, materials and professional
development. Grant recipients report measurable
improvement in students’ bilingual
literacy skills and classroom
engagement, observed in both
formal and informal assessments.

(cid:53)(cid:72)(cid:68)(cid:71)
(cid:38)(cid:82)(cid:81)(cid:80)(cid:76)(cid:74)(cid:82)

THE

FOUNDATION

In 2023, the Read Conmigo grant
program awarded a total of $300,000 to bilingual educators
in the Dallas, Los Angeles and Miami areas. The program has
provided over $600,000 in grants since 2022.

Health
Kemper provides funding for leading national organizations
at the forefront of medical research, improving patient and
caregiver outcomes, and advancing health and wellness
education to make substantial progress on the nation’s most
prevalent diseases.

American Cancer Society
Kemper is a proud supporter of the American Cancer Society
and their work to improve the lives of people with cancer
and their families through advocacy, research, and patient
support. Kemper employees organized several fundraisers
for mission-driven events in 2023, including Making

Strides Against Breast Cancer,
Men Wear Pink, and Relay
for Life. They also gave their
time to support Hope Lodge®
communities, which offer a home
away from home for people

facing cancer and their caregivers when cancer treatment
is far away. Additionally, Kemper was a sponsor of ACS’
Discovery Ball, Taste of Hope, and Walk & Roll, the longest
running cancer fundraiser in Illinois. In 2023, our collective
impact totaled approximately $500,000.

In Jacksonville, FL Kemper employees raised money for
essential type 1 diabetes research and advocacy by taking
part in JDRF’s One Walk Jacksonville.

JDRF
Kemper partners with JDRF, the leading international
organization advancing life-changing discoveries for type 1
diabetes (T1D). In 2023, through employee volunteerism and
charitable contributions, we supported JDRF’s Spanish Care
Kit program, a free resource offering support and information

to more than 2,000
newly diagnosed
Hispanic and Latino
children, caregivers, and
adults. Other programs we supported included the JDRF One
Walk and T1 Detect, a screening and education awareness
program that reached 1,100 healthcare professionals. In
2023, our collective impact totaled approximately $390,000.

American Heart Association
Kemper is proud to support the American Heart
Association’s work to ﬁght heart disease and stroke,
with the goal of saving and improving lives. In 2023, the
Association’s Nation of Lifesavers initiative supported
emergency cardiovascular care,
including the distribution of
CPR Anytime and Anywhere
kits in at-risk communities.
Our support helped the Go
Red For Women movement improve women’s lives globally
and raise awareness of women’s heart health. Employees at
Kemper also rallied for heart health in 2023 by participating
in National Wear Red Day to increase awareness of heart
disease in women, organizing fundraisers for events like the
Heart Walk and distributing heart-healthy meals during the
holidays. Our collective impact in 2023 was nearly $120,000.

Kemper 2023 Annual Report | 9

Community Development
We partner with organizations that share our values in
creating a better world for our employees, customers and our
communities. We believe access to healthy food, affordable
housing, and support for organizations that advocate for civil
rights, and racial and economic justice, are crucial to building
an equitable future.

In 2023, Kemper supported Feeding America partner
food banks in 11 cities across the U.S. Through charitable
contributions totaling more than $100,000, we helped
distribute 341,000 pounds of
food and provided 383,000
meals. We also continued
support for two key national
civil rights organizations:
the National Urban League
and UnidosUS, by funding
programs and services to advance equality and improve
economic progress for Hispanics and Latinos, and African
Americans. We supported initiatives such as UnidosUS’
Financial Empowerment Network and the HOME: Home
Ownership Means Equity initiative, in addition to the
National Urban League’s education programs that promote
youth entrepreneurship and empowerment.

Kemper Cares: Employee
Volunteering and Giving
At Kemper, we enable opportunities for our employees
to use their skills and backgrounds to give back to the
communities in which they live and work. Employees can
take part in our 1:1 matching donation program, including 2:1
match days for initiatives like Giving Tuesday, and virtual and
in-person volunteer opportunities for Kemper-sponsored
community service events and those in which they have a
personal interest. Thanks to the Kemper Cares program,
committed philanthropy ambassadors, and our generous
employees, we make a real impact on the communities we
serve, whether through fundraising for a worthy cause or
volunteering for a local charity.

3,000
Volunteer hours logged

$156K
Total giving (employee
donations plus matches)

110
Company-sponsored
community support events

Kemper employees in Alpharetta, GA volunteered their time,
energy and enthusiasm during a food drive for Meals by Grace,
a local organization focused on relieving food insecurity.

10 | Kemper 2023 Annual Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

☒

☐

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

TRANSRR

ITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-18298
Kemper Corporation
(Exact name of registrant as specified in its charter)

DE
(State or other jurisdiction of
incorporation or organization)

95-4255452
(I.R.S. Employer
Identification No.)

200 E. Randolph Street
Suite 3300

Chicago

(Address of principal executive offiff ces)

60601
(Zip Code)

(312) 661-4600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, $0.10 par value per share
u

5.875% Fixed-Rate Reset Junior Subor

dinated Debenturt es due 2062

Trading Symbol(s)
KMPR
KMPB

Name of each exchange on which registered
NYSE
NYSE

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subju ect to such filing requirements for the past
90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submu
S-T during the preceding 12 months (or for such shorter period that the registrant was required to submu

itted electronically everyr

Interactive Data File required to be submu

itted pursuant to Rule 405 of Regulation

it such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Smaller reporting company

☒ Accelerated filer
☐ Emerging growth company

☐ Non-accelerated filer

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effeff ctiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect

the correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of

the registrant’s executive offiff cers during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2023, the aggregate market value of the registrant’s common stock held by non-affiff liates of the registrant was $2.9 billion based on the closing sale
price as reported on the New York Stock Exchange. Solely for purpos
affiff liates.

es of this calculation, all executive offiff cers and directors of the registrant are considered

Registrant had 64,323,693 shares of common stock outstanding as of Februarr

ry 5, 2024.

DOCUMENTS INCORPORATRR ED BY REFERENCE

Portions of the Proxy Statement for the 2024 Annual Meeting of Shareholders are incorporated by reference into Part III.

Tabla e of Contents

Caution Regarding Forward-Looking Statements..................................................................................................

Part I

Item 1.
Business ..............................................................................................................................................
Item 1A. Risk Factors.........................................................................................................................................
Item 1B. Unresolved Staffff Comments ...............................................................................................................
Item 1C. Cybersecurity ......................................................................................................................................
Item 2.
Properties ............................................................................................................................................
Item 3.
Legal Proceedings ...............................................................................................................................
Item 4.
Mine Safety Disclosures .....................................................................................................................

Part II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities..............................................................................................................................
Item 6.
Selected Financial Data.......................................................................................................................
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations .............
Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................................................
Item 8.
ementary Data...................................................................................
Financial Statements and Supplu
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............
Item 9A. Controls and Procedurd es .....................................................................................................................
Item 9B. Other Information................................................................................................................................

Part III

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

Directors, Executive Offiff cers and Corporate Governance..................................................................
Executive Compensation.....................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters.............................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence....................................
Principal Accounting Fees and Services .............................................................................................

Part IV

Item 15.

Item 16.

Exhibits, Financial Statement Schedules ............................................................................................
Form 10-K Summaryr

Exhibit Index ..........................................................................................................................................................
Power of Attorney ..................................................................................................................................................
Signatures ...............................................................................................................................................................
Financial Statement Schedules:

4
16
25
25
26
26
27

27
29
30
70
72
152
152
153

154
154

154
154
154

155
155

156
160
160

Schedule 1 - Investments Other than Investments in Related Parties................................................................
Schedule 2 - Parent Company Financial Statements .........................................................................................
Schedule 3 - Supplu
ementary Insurance Information..........................................................................................
Schedule 4 - Reinsurance Schedule ...................................................................................................................

SCH I-1
SCH II-2
SCH III-1
SCH IV-1

Caution Regarding Forward-Looking Statements

This 2023 Annual Report on Form 10-K (the “2023 Annual Report”), including, but not limited to, the accompanying
consolidated financial statements of Kemper Corporation (“Kemper” or the “Registrant”) and its subsu idiaries (individuad lly and
collectively referred to herein as the “Company”) as well as a variable interest entity (“VIE”) in which the Company is
considered the primary beneficiaryrr and the notes thereto appearing in Item 8 herein (the “Consolidated Financial Statements”),
the Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 7 herein (the
“MD&A”) and the other Exhibits and Financial Statement Schedules filed as a part hereof or incorporated by reference herein,
may contain or incorporate by reference information that includes or is based on forward-looking statements within the
meaning of the safe-harbor

provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements give expectations or forecasts of future events. The reader can identifyff
that they do not relate strictly to historical or current facts. They use words such as “believe(s),” “goal(s),” “target(s),”
“estimate(s),” “anticipate(s),” “forff ecast(s),” “projeo ct(s),” “plan(s),” “intend(s),” “expect(s),” “might,” “may,” “could” and other
terms of similar meaning. Forward-looking statements, in particular, include statements relating to future actions, prospective
services or products, future performance or results of current and anticipated services or products, sales effoff
rts, expenses, the
outcome of contingencies such as legal proceedings, trends in operations and financial results.

these statements by the fact

Any or all forward-looking statements may turn out to be wrong, and, accordingly, Kemper cautions readers not to place undue
reliance on such statements. Kemper bases these statements on current expectations and the current economic environment as of
the date of this 2023 Annual Report. They involve a number of risks and uncertainties that are difficult to predict. These
statements are not guarantees of future performance, and actuat
in the forward-looking statements. Forward-looking statements can be affeff cted by inaccurate assumptions or by known or
unknown risks and uncertainties that may be important in determining the Company’s actual future results and financial
condition.

l results could differ materially from those expressed or implied

In addition to the factors discussed below under Item 1A., “Risk Factors,” in this 2023 Annual Report, the reader should
consider the following list of factors that, among others, could cause the Company’s actual results and financial condition to
differ materially from estimated results and financial condition.

Factors related to the legal and regulatoryr environment in which Kemper and its subsu idiaries operate

•

Evolving policies, practices and interpretations by regulators and courts that increase operating costs and potential
liabilities, particularly any that involve retroactive application of new requirements, including, but not limited to,
initiatives related to unclaimed property laws or claims handling practices with respect to lifeff
ses;
the proactive use of death verification databaa

insurance policies and

Adverse outcomes in litigation or other legal or regulatoryrr proceedings involving Kemper or its subsu idiaries or
affiff liates or related to its business practices or business practices in the insurance industry;r

Governmental actions, including, but not limited to, implementation of new laws and regulations, and court decisions
interpreting existing and future laws and regulations or policy provisions;
Uncertainties related to regulatoryr approval of insurance rates, policy forms, insurance products, license applications,
business withdrawals, dividends from insurance subsu idiaries, acquisitions of businesses or strategic initiatives and
other matters within the purview of insurance regulators;
Increased costs and initiatives required to address new legal and regulatoryr
impacts arising from developments related to cybersecurity, privacy and data governance, including, without
limitation, cyber incidents that have occurred or could occur;

requirements; liabilities, costs and other

Factors relating to insurance claims and related reserves in the Company’s insurance businesses

•

•
•

•

The incidence, frequency and severity of catastrophes occurring in any particular reporting period or geographic area,
including natural disasters, pandemics and terrorist attacks or other man-made events;
The frequency and severity of insurance claims (including those associated with catastrophe losses and pandemics);
The interest rate environment, including proposed rate changes by the U.S. Federal Reserve, which may cause material
fluctuations in our life policyholder benefit reserves;
Changes in facts and circumstances affeff cting assumptions used in determining loss and loss adjud stment expenses
(“LAE”) reserves, including, but not limited to, the frequency and severity of insurance claims, changes in claims

handling procedurd es and closure patterns, development patterns and the impacts of technological and other
environmental conditions;
The impact of inflation on insurance claims, including, but not limited to, the effeff cts on material costs, personal injun ry
claims of increasing medical costs and the severity of claims resulting from a catastrophe;

The effeff cts on property claims attributed to supplu
damaged structurt es, including labor

y chain disrupt

ion and scarcity of resources availabla e to rebuild

and materials and the amount of salvage value recovered for damaged property;

The rising costs of insurance claims from increased and more targeted litigation, higher jury awards, broader
definitions of liability, and other effeff cts of legal system abuse and societal trends referred to as social inflation;

Developments related to insurance policy claims and coverage issues, including, but not limited to, interpretations,
pronouncements or decisions by courts or regulators that may govern or influence losses incurred in connection with
hurricanes and other catastrophes;

Orders, interpretations or other actions by regulators that impact the reporting, adjud stment and payment of claims;

Changes in the pricing or availabia lity of reinsurance, or in the financial condition of reinsurers and amounts
recoverabla e therefroff m;

•

Factors related to the Company’s ability to compete

•

Changes in the ratings of Kemper and/or its insurance company subsu idiaries by rating agencies with regard to credit,
financial strength, claims paying ability and other areas on which the Company is rated;

The level of success and costs incurred in realizing or maintaining economies of scale, integrating acquired businesses
and implementing significant business initiatives and the timing of the occurrence or completion of such events,
including, but not limited to, those related to expense and claims savings, the establa ishment and operation of the
Kemper Reciprocal Exchange, consolidations, reorganizations and technology;

Absolute and relative performance of the Company’s products and services, including, but not limited to, the level of
success achieved in designing and introducing new insurance producd ts and services;

Diffiff culties with technology, data and network security (including as a result of cyber attacks that have occurred or
could occur), outsourcing relationships or cloud-based technology that could negatively impact the Company’s ability
to conduct business, a heightened risk when subsu tantial numbers of employees utilize work from home arrangements;

The ability of the Company and its third-party service providers to maintain the availabia lity and required performance
of critical systems and manage technology initiatives cost-effectively to address insurance industryr developments and
regulatoryrr

requirements;

Heightened competition, including, with respect to pricing, consolidations of existing competitors or entryrr of new
competitors and alternate distribution channels, introduction of new technologies, use and enhancements of telematics,
refinements of existing products and development of new products by current or future competitors;

Expected benefits and synergies from mergers, acquisitions, divestitures and/or strategic initiatives that may not be
realized to the extent anticipated, within expected time frames or at all, due to a number of factors including, but not
limited to, the loss of key agents/brokers, customers or employees, increased costs, fees, expenses and related charges
and delays caused by unanticipated developments or factors outside of the Company’s control;
The successfulff
operational changes;

formulation and execution of the Company’s plan with regard to corporate strategy and significant

Increase in competition as a result of new competitors to the property and casualty insurance industryrr or existence of
competitors that receive subsu tantial infusion of capital or access to third-party capia tal;

Factors related to the business environment in which Kemper and its subsu idiaries operate

•

•
•

•

Changes in general economic conditions, including those related to, without limitation, performance of financial
markets, interest rates, inflation, unemployment rates, significant global catastrophes and/or pandemics, and
fluctuating values of particular investments held by the Company;

Absolute and relative performance of investments held by the Company;
Changes in insurance industryrr

trends and significant industryr developments;

Changes in consumer trends, including changes in number of miles driven by automobile insurance policyholders, and
significff ant consumer or product developments;
Changes in capital requirements, including the calculations thereof, used by regulators and rating agencies;

•

accounting or tax changes that may affeff ct the Company’s earnings, the cost of,ff or demand for, the

Regulatory,rr
Company’s products or services or afteff
The impact of required participation in state windpools and joint underwriting associations, residual market
assessments and assessments for insurance industryr

r-tax returns from the Company’s investments;

insolvencies;

Changes in distribution channels, methods or costs resulting from changes in laws or regulations, legal proceedings or
market forces;

Increasing competition and higher costs for executive talent and employees with necessary skills and industryr
experience;

Increased costs and risks related to cybersecurity that could materially affeff ct the Company’s operations including, but
not limited to, data breaches, cyber attacks, virus or malware attacks, or other infiltrations or incidents affeff cting system
integrity, availabia lity and performance, and actions taken to minimize and remediate the risks of such events that have
occurred or could occur;

Other risks and uncertainties described from time to time in Kemper’s filings with the U.S. Securities and Exchange
Commission (“SEC”).

Kemper cannot provide any assurances that the results and outcomes contemplated in any forward-looking statements will be
achieved or will be achieved in any particular timetabla e or that future events or developments will not cause such statements to
be inaccurate. Kemper assumes no obligation to correct or update any forward-looking statements publicly for any changes in
events or developments or in the Company’s expectations or results subsu equent to the date of this 2023 Annual Report. Kemper
advises the reader, however, to consult any further disclosures Kemper makes on related subju ects in its filings with the SEC.

Item 1.

Business.

PART I

Kemper is a diversifieff d insurance holding company, with subsu idiaries that provide automobile, life, and other insurance
products to individuals and businesses. Kemper’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments thereto are accessible free of charge through Kemper’s website, kemper.com, and as soon as
reasonabla y practicable afteff
r such materials are filed with, or furnished to, the SEC, which also maintains an Internet site at
sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC.

Registrant is a holding company incorporated under the laws of the State of Delaware in 1990, with equity securities traded on
the New York Stock Exchange (the “NYSE”). On August 25, 2011, Registrant adopted its current name, Kemper Corporation,
and changed its NYSE ticker symbol to KMPR. Prior to the name change, the Registrant was known as Unitrin, Inc. and traded
under the NYSE ticker symbol UTR.

The Kemper family of companies is one of the nation’s leading specialized insurers. With nearly $12.7 billion in assets,
Kemper is improving the world of insurance by providing affoff
families and businesses through its Kemper Auto and Kemper Life brands. Kemper serves over 4.9 million policies, is
represented by more than 23,700 agents and brokers, and has approximately 8,100 associates dedicated to meeting the ever-
changing needs of its customers.

rdable and easy-to-use personalized solutions to individuals,

The Company is engaged, through its subsu idiaries, in the property and casualty insurance and lifeff
Company conducts its operations through two operating segments: Specialty Property & Casualty Insurance and Life Insurance.
The Company conducts its operations solely in the United States.

insurance businesses. The

Kemper’s subsu idiaries employ approximately 8,100 associates suppor
ting their operations, of which approximately 2,900 are
employed in the Specialty Property & Casualty Insurance Segment, approximately 3,000 are employed in the Life Insurance
segment and the remainder are employed in various corporate and other functions.

General

Property and Casualty Insurance Business

The Company’s property & casualty insurance business operations are conducted primarily through the Specialty Property &
Casualty Insurance segment. The Specialty Property & Casualty Insurance segment distributes these products primarily through
independent agents and brokers who are paid commissions for their services. In addition, the Life Insurance segment’s career
agents also sell contents coverage for personal property to its customers against loss resulting from fire, lighting and other
causes. Collectively, these segments provide specialty automobile, fire/contents, and other types of property and casualty
insurance to individuals and commercial automobile insurance, and general liability as an endorsement to commercial
automobile, to businesses.

In the third quarter of 2023, the Company announced that it will exit the Preferff
and will actively reduce the business beginning in third quarter 2023, with all policies being non-renewed or canceled in
accordance with applicable state regulations. As a result, the Company will no longer provide preferff
homeowners insurance or other personal insurance. The results of this business, previously reported as a reportabla e segment, are
now reflected as Non-Core Operations and presented as a reconciling item from Net Loss to Adjud sted Consolidated Net
Operating Loss. Prior periods have been recast to reflect the change in calculation of Adjud sted Consolidated Operating Net
Loss.

red Property and Casualty Insurance business

red automobile,

Net Written Premiums for the Property and Casualty Business were as follows:

DOLLARS IN MILLIONS
Business Segments:

Specialty Property & Casualty Insurance Segment:

2023

2022

2021

Specialty Personal Automobile Insurance ......................................................... $
Commercial Automobile Insurance ...................................................................

2,677.5
627.9

3,305.1
629.3

3,587.2
470.1

Life Insurance Segment:

Fire/Contents Protection .....................................................................................

45.3

50.0

61.6

Total Segment Net Written Premiums..........................................................................

3,350.7

3,984.4

4,118.9

Non-Core Operations....................................................................................................

435.5

527.1

642.0

Total Property and Casualty Net Written Premiums .................................................... $

3,786.2

4,511.5

4,760.9

Property insurance indemnifieff s an insured with an interest in physical property for loss of,ff or damage to, such property.
Casualty insurance primarily covers liability for damage to property of,ff or injun ry to, a person or entity other than the insured. In
most cases, casualty insurance also obligates the insurance company to provide a defense for the insured in litigation arising out
of events covered by the policy.

Specialty Property & Casualty Insurance

The Specialty Property & Casualty Insurance segment, based in Chicago, Illinois, conducts business in 31 states under the
Kemper Auto brand. As shown in the following tabla e, three states provided 88% of the segment’s premium revenues in 2023.

State

Califorff nia ..................................................................................................................................................................

Florida ......................................................................................................................................................................

Texas ........................................................................................................................................................................

Percentage
of Total
Premiums

53 %

20 %

15 %

The Specialty Property & Casualty Insurance segment provides personal automobile insurance to consumers who have had
difficulty obtaining standard or preferff
payment history.r The segment also provides commercial automobile coverage to targeted markets and industries, with a focus
on contractors, short-haul delivery, and sales/services that is closely aligned to personal automobile insurance from both a
footprt

red risk insurance, usually because of their driving records, claims experience or premium

int and distribution perspective.

The segment also meets the insurance needs of other specialty automobile markets such as urbar n and Hispanic consumers. The
segment’s insurance products accounted for 80%, 78% and 76% of the Company’s consolidated insurance premiums in 2023,
2022 and 2021, respectively. The segment’s insurance products are marketed through approximately 16,800 independent agents
and brokers.

In the third quarter of 2023 the Company establa ished Kemper Reciprocal (the “Reciprocal Exchange” or “Exchange”), an
Illinois-domiciled reciprocal insurance exchange. The Exchange principally writes specialty automobile policies sold to
subsu cribers of the Exchange. Net written premiums and net earned premiums reported through the Exchange were $0.6 million
and $0.1 million, respectively, for the year ended December 31, 2023.

The Exchange is operated by a management company owned by Kemper that acts as the attorney-in-fact (“AIF”). The AIF
receives a management fee for the services provided to the Reciprocal Exchange. The management fee revenues are based upon
all premiums written or assumed by the Exchange. The AIF determines the management fee rate to be paid by the Exchange.
This rate cannot exceed 30% of the Exchange’s gross written and assumed premiums.

Property and Casualty Loss and Loss Adjud stment Expense Reserves

The Company’s reserves for losses and LAE for property and casualty insurance (“Property and Casualty Insurance Reserves”)
are reported using the Company’s estimate of its ultimate liability for losses and LAE for claims that occurred prior to the end
of any given accounting period but have not yet been paid.

Property and Casualty Insurance Reserves at December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS
Business Segments:

Specialty Property & Casualty Insurance:

2023

2022

Personal Automobile Insurance ......................................................................................................... $ 1,711.9
Commercial Automobile Insurance ...................................................................................................
596.8

$ 1,875.8
445.3

Life Insurance:

Fire/Contents Protection.....................................................................................................................
2.9
Total Segment Property and Casualty Insurance Reserves .......................................................................
2,311.6
Non-Core Operations ................................................................................................................................
356.4
Unallocated Reserves ................................................................................................................................
12.5
Total Property and Casualty Insurance Reserves ...................................................................................... $ 2,680.5

2.3
2,323.4
419.1
14.4
$ 2,756.9

In estimating the Company’s Property and Casualty Insurance Reserves, the Company’s actuat
judgment and must consider, and are influenced by, many variables that are difficult to quantify.ff Accordingly, the process of
estimating and establa ishing the Company’s Property and Casualty Insurance Reserves is inherently uncertain and the actual
ultimate net cost of claims may vary materially from the estimated amounts reserved. See MD&A, “Critical Accounting
Estimates,” under the caption “Property and Casualty Insurance Reserves for Losses and Loss Adjud stment Expenses” for a
discussion of the Company’s reserving process and the factors considered by the Company’s actuaries in estimating the
Company’s Property and Casualty Insurance Reserves.

ries exercise profesff

sional

The Company’s goal is to ensure that its total reserves for property and casualty insurance losses and LAE are adequate to
cover all costs, while minimizing variation from the time reserves for losses and LAE are initially estimated until losses and
LAE are fully paid. Changes in the Company’s estimates of these losses and LAE, also referred to as “development,” will occur
over time and have been and in the future may be material. Favorable development is recognized and reported in the
Consolidated Financial Statements when the Company decreases its previous estimate of ultimate losses and LAE and results in
an increase in net income in the period recognized, whereas adverse development is recognized and reported in the
Consolidated Financial Statements when the Company increases its previous estimate of ultimate losses and LAE and results in
a decrease in net income.

See Note 6, “Propertyy andd Casu lal yty Insurance Reserves,” to the Consolidated Financial Statements for information about
incurred and paid claims development for the 2019-2022 accident years as of December 31, 2023, net of reinsurance and
indemnificff ation, as well as cumulative claim frequency and the total of incurred but not reported (“IBNR”) liabilities, including
expected development on reported claims included within the net incurred losses and allocated LAE amounts as of
December 31, 2023. See Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for a
ar reconciliation of the three most recent annual periods setting forth the Company’s Property and Casualty Insurance
a
tabul
Reserves as of the beginning of each year, incurred losses and LAE for insured events of the current year, changes in incurred
losses and LAE for insured events of prior years, payments of losses and LAE for insured events of the current year, payments
of losses and LAE for insured events of prior years and the Company’s Property and Casualty Insurance Reserves at the end of
the year and additional information regarding the nature of adjud stments to incurred losses and LAE for insured events of prior
years.

Catastrophe Losses

types of catastrophic events are more likely to occur at

certain times within the year than others. This factor adds an element of seasonality to property and casualty insurance claims.
The occurrence and severity of catastrophic events cannot be accurately predicted in any year. However, some geographic
locations are more susceptible to these events than others. The Company has endeavored to manage its direct insurance
exposures in certain regions that are prone to naturally occurring catastrophic events through a combination of geographic
diversificff ation, restrictions on the amount and location of new business production in such regions, modifications of,ff and/or
limitations to coverages and deducd tibles for certain perils in such regions and reinsurance. The Company has adopted the
industry-r wide catastrophe classifications of storms and other events promulgated by Insurance Services Offiff ce, Inc. (“ISO”) to
track and report losses related to catastrophes. ISO classifies a disaster as a catastrophe when the event causes $25 million or
more in direct insured losses to property and affeff cts a significant number of policyholders and insurers. ISO-classified
catastrophes are assigned a unique serial number recognized throughout the insurance industry.r The discussions throughout this
2023 Annual Report utilize ISO’s definition of catastrophes.

The process of estimating and establa ishing reserves for catastrophe losses is inherently uncertain and the actual ultimate cost of
a claim, net of reinsurance recoveries, may vary materially from the estimated amount reserved. See Item 1A., “Risk Factors,”
under the caption “Catastrott pho
and/or//
Financial Statements for a discussion of the factors that influence the process of estimating and establa ishing reserves for
catastrophes.

finaii ncial conditidd on” for a discussion of catastrophe risk. See Note 25, “Catastrophe Reinsurance,” to the Consolidated

ly affeff ct the Company’n s’ results of operations,s liquidii

e losses couldll materiali

lyll and adverserr

tyii

Reinsurance

The Company manages its exposure to catastrophes and other natural disasters through a combination of geographical
diversificff ation, restrictions on the amount and location of new business production in such regions, modifications of,ff and/or
limitations to coverages and deducd tibles for certain perils in such regions and reinsurance. To limit its exposure to catastrophic
events, the Company maintains a catastrophe reinsurance program for its property and casualty insurance companies. Coverage
for the catastrophe reinsurance program is provided in various layers through multiple excess of loss reinsurance contracts. The
Company’s insurance subsu idiaries also purchase reinsurance from the Florida Hurricane Catastrophe Fund (the “FHCF”) for
hurricane losses in Florida at retentions lower than those described below for the Company’s catastrophe reinsurance program.

The 2024 catastrophe reinsurance program covering the property and casualty insurance companies is provided by a
combination of the annual and multi-year excess of loss reinsurance contracts.

Multi-year Excess of Loss Reinsurance Contract

The multi-year excess of loss reinsurance contract provides coverage over the three-year period of January 1, 2022 through
December 31, 2024 (the “2022 Reinsurance Contract”). The 2022 Reinsurance Contract provides coverage in two layers, which
together provide coverage for losses on individual catastrophes of $200 million in excess of $50 million. Under the 2022
Reinsurance Contract, the percentage of coverage is 31.66% for each year in the three-year period, and participation of each
reinsurer remains the same over the entire three-year period. Accordingly, the 2022 Reinsurance Contract provides coverage for
31.67% of losses on individual catastrophes of $200 million in excess of $50 million in 2024.

Annual Excess of Loss Reinsurance Contract

The 2024 Annual Excess of Loss Contracts provide coverage for the annual period of January 1, 2024 through December 31,
2024. The 2024 Annual Excess of Loss Contracts provide coverage in two layers for losses on individual catastrophes of $190
million in excess of $50 million. The 2024 Annual Excess of Loss Contract provides 53.33% coverage on the first layer of
losses on individual catastrophes of $100 million in excess of $50 million. The second layer provides 63.33% coverage on the
losses on individual catastrophes of $90 million in excess of $150 million.

Reinstatement of Excess of Loss Reinsurance Contracts

In the event that the Company’s incurred catastrophe losses and LAE covered by its catastrophe reinsurance program exceed
the retention for a particular layer, the program allows for one reinstatement of such coverage. In such an instance, the
Company must pay a reinstatement premium to the reinsurers to reinstate the full amount of the limit availabla e under such layer.
For each amount reinstated the Company shall pay additional premiums equal to the percentage of the reinsurer's loss limit for
the excess layer exhausted for the loss occurrence multiplied by 100% of the reinsurance premium paid or payabla e for the
excess layer for the term of the contract (50% of the reinsurance premium paid for $100 million excess of $150 million of the
2022 Reinsurance Contract).

Other

In addition to the catastrophe loss exposures caused by natural events described above, Kemper’s property and casualty
insurance companies are exposed to losses from catastrophic events that are not the result of acts of nature, such as acts of
terrorism, the nature, occurrence and severity of which in any period cannot be accurately predicted. The companies have
reinsurance coverage to address certain exposures to potential future terrorist attacks. The reinsurance coverage for certifieff d
events, as designated by the federal government, is from the Terrorist Risk Insurance Act. The coverage for non-certifieff d events
is availabla e in the catastrophe reinsurance program for property and casualty insurance companies. However, certain perils,
such as biological, chemical, nuclear pollution or contamination, are excluded from the reinsurance coverage for non-certifieff d
events.

Under the various reinsurance arrangements, Kemper’s property and casualty insurance companies are indemnifieff d by
reinsurers for certain losses incurred under insurance policies issued by the reinsurers. As indemnity reinsurance does not
discharge an insurer from its direct obligations to policyholders on risks insured, Kemper’s property and casualty insurance
companies remain directly liable. However, provided that the reinsurers meet their obligations, the net liabia lity for Kemper’s
property and casualty insurance companies is limited to the amount of risk that they retain. Kemper’s property and casualty
insurance companies purchase their reinsurance only from reinsurers rated “A-” or better by A. M. Best Co., Inc. (“A.M.
Best”), at the time of purchase. A.M. Best is an organization that specializes in rating insurance and reinsurance companies.

For further discussion of the reinsurance programs, see Note 25, “Catastrophe Reinsurance,” and Note 26, “Other Reinsurance,”
to the Consolidated Financial Statements.

Pricing

Pricing levels for property and casualty insurance products are influenced by many factors, including the frequency and severity
of claims, state regulation and legislation, competition, general business and economic conditions, including market rates of
interest, inflation, expense levels, and judicial decisions. In addition, many state regulators require consideration of investment
income when approving or setting rates, which could reduce underwriting margins. Further, some states have regulations that
limit the afteff
in premium refunds. The Company derives a significant portion of its earned premiums in two such states, Califorff nia and
Florida. See MD&A under the caption “Specialty Property & Casualty Insurance”.

r-tax return on underwriting profitff allowed for an insurer and may impact the price charged for premiums or result

Competition

Based on the most recent annual data published by A.M. Best, as of the end of 2022, there were 1,110 property and casualty
insurance groups in the United States. Kemper’s property and casualty group was among the top 6% of property and casualty
insurance groups in the United States as measured by net written premiums, policyholders’ surplus and net admitted assets in
2022. Among all personal lines automobile insurance writers, Kemper’s property and casualty group was the 12th largest writer
as measured by net written premiums in 2022.

Rankings by net admitted assets, net premiums written and capia tal and surplus were:

Measurement

Net Admitted Assets ..............................................................................................................................
Net Written Premiums ...........................................................................................................................
Capia tal and Surplus................................................................................................................................

Ordinal

Percentile

Rank

49
32
69

96 %
97
94

s estimated net premiums written were $782.3 billion, of which
In 2022, the U.S. property and casualty insurance industry’r
nearly 81% were accounted for by the top 50 groups of property and casualty insurance companies. Kemper’s property and
casualty insurance companies wrote less than 1% of the industry’rr

s 2022 premium volume.

The property and casualty insurance industryrr
is highly competitive, particularly with respect to personal automobile insurance.
Kemper’s property and casualty insurance companies compete on the basis of,ff among other measures, (i) using suitabla e pricing
segmentation, (ii) maintaining underwriting discipline, (iii) settling claims timely and effiff ciently, (iv) offeff
selected markets or geographies, (v) utilizing technological innovations for the marketing and sale of insurance, (vi) controlling
expenses, (vii) maintaining adequate ratings from A.M. Best and other ratings agencies and (viii) providing quality services to
independent agents and policyholders. See Item 1A., “Risk Factors,” under the caption “The insurance industrytt
liii tyii and withii
competitivtt

cult to grow profitff abi

iott ns of investors.”

ring products in

in expexx ctattt

e, makingii

is highi

i
it diffi

General

Life Insurance Business

The Company’s life & health insurance business operations are conducted primarily through the Life Insurance segment. The
Life Insurance segment distributes its products through a network of employee, or “career” agents. These career agents are paid
commissions for their services. Earned premiums from the life insurance segment accounted for 7%, of the Company’s
consolidated insurance premiums earned in 2023 and 2022, respectively, and 6% of the Company’s insurance premium earned
in 2021.

The Life Insurance segment, primarily based in St. Louis, Missouri, focuses on providing individual lifeff and suppl
accident and health insurance products to customers of modest incomes who desire basic protection for themselves and their
families. Their leading product is individual lifeff
red on a limited or
red primarily on a non-
recurring pay basis, term insurance and guaranteed issue insurance. Individual life insurance is offeff
participating, guaranteed-cost basis. Face amounts of these policies are lower than those of policies typically sold to higher
income customers by other companies in the lifeff
with an average face value of $6,308.

insurance, including permanent insurance that can be offeff

insurance industry.r Premiums average approximately $28 per policy per month

emental

As of January 1, 2023, the Company adopted ASU 2018-12 using the modified retrospective method applied as of the transition
date of January 1, 2021. Prior period amounts have been recast to reflect application of the new guidance. See Note 2,
“Summary of Accounting Policies and Accounting Changes” to the Consolidated Financial Statements for additional
information.

DOLLARS IN MILLIONS

Life Insurance Segment:

2023

2022

2021

Life Insurance ..................................................................................................... $
Accident and Health Insurance1..........................................................................
517.1
Total Earned Premiums ................................................................................................ $
1 The Company sold Reserve National on December 1, 2022. Reserve National was based in Oklahoma City, Oklahoma, and was licensed in 49 states and the
District of Columbia. The Company specialized in the sale of supplu
ement, fixed hospital
indemnity, home health care, specified disease, and accident-only plans. For further discussion of the Reserve National Disposition, see Note 4, “Dispositions,”
to the Consolidated Financial Statements.

emental accident & health insurance products such as: Medicare Supplu

327.2
189.9

352.8
168.2

319.2
23.1

521.0

342.3

The Life Insurance segment employs nearly 2,300 career agents, operating in 26 states and the District of Columbia. These
career agents are full-time employees who call on customers in their homes to sell insurance products, provide services related
to policies in force and collect premiums, typically monthly. These career agents also distribute and/or service contents
coverage for personal property providing coverage against loss resulting from fire, lightning, and other causes.

As shown in the following tabla e, five states provided 69% of the premium revenues in this segment in 2023.

State

Texas ..........................................................................................................................................................................
Louisiana ....................................................................................................................................................................
Alabama.......................................................................................................................................................................
Florida ........................................................................................................................................................................
Georgia ........................................................................................................................................................................

Percentage
of Total
Premiums

30 %
15
11
7
6

Life Insurance Reserves

The Company’s Life Insurance Reserves are reported using the Company’s estimate of its liabia lity for future policyholder
benefits. Life Insurance Reserves by business segment at December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS
Business Segments:
Life Insurance:

2023

2022

Life Insurance................................................................................................................................... $ 3,417.7
4.7
Accident & Health Insurance ...........................................................................................................
Total Life Insurance Reserves.................................................................................................................... $ 3,422.4

$ 3,271.9
4.3
$ 3,276.2

es, and

ries use a variety of generally accepted actuarial methodologies, in
e assumptions. These assumptions are

Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapsa
discount rates (both accretion and current). Kemper groups together policies with similar types of business for its cohorts,
which typically vary by issue year. The Company’s actuat
accordance with Actuarial Standards of Practice, in determining the mortality and lapsa
based on judgments that consider the Company’s historical experience, industryrr data, and other relevant factors. The Company
reviews and updates its estimate of cash flows expected over the lifetime of a group of contracts using actual historical
experience quarterly and current future cash flow assumptions at least annually to calculate its revised net premium ratio. The
revised net premium ratios are then used to calculate an updated liabia lity for future policyholder benefits for the current
reporting period, discounted at the original contract issuance discount rate. The Company has elected to use expense
assumptions that are locked in at contract inception and are not subsu equently reviewed or updated. Resulting changes in the
liabia lity due to differences in actual versus expected experience, changes in current cash flow assumptions, and prefundi
ng and
payout of benefits compared to the carrying amount of the liability as of that same date are recorded as a separate component of
benefit expense in the Consolidated Statements of Loss. The current discount rate assumption is an equivalent spot rate curve of
annually compounded rates at monthly increments that is derived based on A-credit rated fixed-income instruments reflecting
the duration characteristics of the liability. The discount rate assumption is updated quarterly and used to remeasure the liabia lity
at the reporting date, with the resulting change reflected in Accumulated Other Comprehensive Loss on the Consolidated
Balance Sheets.

sional judgment and must
In estimating the Company’s Life Insurance Reserves, the Company’s actuat
consider, and are influenced by, many variables that are difficult to quantify.ff Accordingly, the process of estimating and
establa ishing the Company’s Life Insurance Reserves is inherently uncertain. See MD&A, “Critical Accounting Estimates,”
under the caption “Lifeff
the Company’s actuat

Insurance Reserves” for more details on the Company’s reserving process and the factors considered by

ries in estimating the Company’s Life Insurance Reserves.

ries exercise profesff

Reinsurance

Consistent with insurance industryrr practice, the Company’s Life insurance segment utilizes reinsurance arrangements to limit
its maximum loss, provide greater diversificff ation of risk and minimize exposures on larger risks. As the face amounts of the
Company’s issued policies are relatively small, the ceded risks and corresponding premiums are also relatively small,
particularly when compared to other companies in the industry.r The segment is also exposed to losses from catastrophes arising
from insurance policies for contents coverage for personal property. The Life Insurance segment is a party to the FHCF and the
Property & Casualty catastrophe excess of loss reinsurance contracts.

Lapse Ratio

The lapsa
e ratio is a measure of a life insurer’s loss of in-force policies. For a given year, this ratio is commonly computed as the
total face amount of individual life insurance policies lapsa ed, surrendered, expired and decreased during such year, less policies
increased and revived during such year, divided by the total face amount of policies at the beginning of the year plus the face
amount of policies issued and reinsurance assumed in the prior year. The Life Insurance segment’s lapsa
insurance was 5%, 6%, and 3% in 2023, 2022 and 2021 respectively.

e ratio for individual lifeff

The customer base served by the Life Insurance segment tends to have a higher incidence of lapsa e than other demographic
segments of the population. Thus, to maintain or increase the level of its business, the Life Insurance segment must write a
higher volume of new policies than competitors serving other demographic segments of the population.

Pricing

insurance producd ts are based on assumptions with respect to mortality, morbidity, investment yields,

Premiums for lifeff
expenses, and lapsa es and are also affeff cted by state laws and regulations, as well as competition. Pricing assumptions are based
on the experience of the Life Insurance segment, as well as the industryrr
in general, depending on the factor being considered.
The actuat
assumptions used in pricing the product.

l profitff or loss produced by a product will vary from the anticipated profitff

l experience differs from the

if the actuat

Premiums for policies sold by the Life Insurance segment are set at levels designed to cover the relatively high cost of “in-
home” servicing of such policies. As a result, the Life Insurance segment premiums have a higher expense load than the lifeff
insurance industryr average.

Competition

Based on the most recent data published by A.M. Best, as of the end of 2022, there were 389 life and health insurance company
groups in the United States. The Company’s Life Insurance segment ranked in the top 29% of life and health insurance
company groups, as measured by net admitted assets, net premiums written and capia tal and surplus. Rankings by net admitted
assets, net premiums written and capia tal and surplus were:

Measurement

Net Admitted Assets ..............................................................................................................................

Net Written Premiums ...........................................................................................................................

Capia tal and Surplus................................................................................................................................

Ordinal

Percentile

Rank

107

112

75 %

Kemper’s lifeff and health insurance subsu idiaries generally compete by using appropriate pricing, offeff
markets or geographies, controlling expenses, maintaining adequate ratings from A.M. Best and providing competitive services
to agents and policyholders.

ring products to selected

Investments

The quality, nature and amount of the various types of investments that can be made by insurance companies are regulated by
state laws. Depending on the state, these laws permit investments in qualifieff d assets, including, but not limited to, municipal,
state and federal government obligations, corporate bonds, real estate, preferff
red and common stocks, investment partnerships,
limited liabia lity investment companies and limited partnerships. In addition, the quality, nature, amount and concentration of
the various types of investments held by Kemper’s insurance subsu idiaries affeff ct the amount of asset risk calculated by
regulators and rating agencies in determining required capital. See “Regulation” immediately following this subsu ection and
Item 1A., “Risk Factors,” under the caption “The Company’n s’ investmett
skk that maya
negat
s and cause realizll ed
e
and unrealized losses.”

nt income,e the change in fair value of equityii and convertibli ell securitieii

ed to a varietytt of riskii

impact net investmett

nt portfolff

is exposxx

ivtt elyll

ioll

The Company employs a total return investment strategy, with an emphasis on yield, while maintaining liquidity to meet both
its short- and medium-term insurance obligations. See the discussions of the Company’s investments under the headings
“Investment Results,” “Investment Quality and Concentrations,” “Investments in Limited Liability Companies and Limited
Partnerships,” “Liquidity and Capia tal Resources” and “Critical Accounting Estimates,” in the MD&A, “Quantitative and
Qualitative Disclosures about Market Risk,” in Item 7A and Note 10, “Investments,” Note 11, “Income from Investments,”
Note 12, “Derivatives,” and Note 13, “Fair Value Measurements,” to the Consolidated Financial Statements.

Overview of State Regulation

Regulation

Kemper’s insurance subsu idiaries are subju ect to extensive regulation, primarily, but not exclusively, at the state level. Such
regulation pertains to a variety of matters, including, but not limited to, policy forms, rate setting, licensing to transact business,
market conduct, trade practices, underwriting standards, claims handling practices, transactions with affiff liates, payment of
dividends, nature and amount of investments, solvency, reserve adequacy, statutt oryr accounting methods, risk management and
corporate governance. In addition, insurance regulatoryr authorities perform periodic examinations of an insurer’s financial
condition, market conduct activities and other affaff

irs. Some of these matters are discussed in more detail below.

Approval of Policy Rates and Forms

The majoa rity of Kemper’s insurance operations are in states requiring prior approval by regulators before proposed policy or
coverage forms and rates for insurance policies may be implemented and used. The Company’s ability to take actions to address
market developments or increased costs can be adversely impacted by lengthy delays in the approval process or the failure to
receive the required approval of state regulators.

Restrictions on Withdrawal, Cancellation and Nonrenewal

Many states have laws restricting an insurer’s ability to withdraw from particular markets. Laws that limit an insurer’s ability to
cancel or non-renew a block of policies by line of business, or that subju ect its withdrawal to prior approval requirements, may
restrict the ability of our insurance subsu idiaries to exit unprofitaff bla e markets.

Financial Reports and Standards

Insurance companies are required to report their financial condition and results of operations in accordance with statutt oryr
accounting practices prescribed or permitted by state insurance regulators in conjunction with the National Association of
Insurance Commissioners (“NAIC”). State insurance regulators also prescribe the form and content of statutt oryr
financial
statements, set minimum reserve and loss ratio requirements and establa ish standards for the types and amounts of investments.
In addition, state laws and regulations require minimum capital and surplus levels and incorporate risk-based capia tal (“RBC”)
standards developed by the NAIC. Similar reporting obligations and requirements are imposed under Bermuda law on Kemper
Bermuda Ltd., Kemper’s offsff hore subsu idiary. RBC standards are intended to enable regulators to assess the level of risk
inherent in an insurance company’s business based on asset risk, credit risk, underwriting risk and other business risks relevant
to its operations. A company’s requirements are calculated based on an RBC formula and compared to its total adjud sted capital
to determine whether regulatoryr
Kemper’s insurance subsu idiaries exceeded the minimum levels required under applicable RBC requirements.

intervention is warranted. At December 31, 2023, the total amount of capital held by each of

Guaranty Funds and Risk Pools

Kemper’s insurance subsu idiaries are required to pay assessments up to prescribed levels to fund policyholder losses or liabilities
of insolvent insurance companies under the guaranty fund laws of most states in which they transact business. Kemper’s
insurance subsu idiaries are also required to participate in various involuntaryr pools or assigned risk pools, principally involving
windstorms and high risk drivers. In most states, the involuntaryr pool participation of Kemper’s insurance subsu idiaries is
determined in proportion to their voluntaryr writings of related lines of business in such states.

Privacy and Cybersecurity Regulation and Oversight

The Company is subju ect to numerous federal and state laws and state insurance regulations that impose significant requirements
and standards for protecting personally identifiaff bla e information of insurance company policyholders, employees, and other
individuals.

Federal Regul

ation

The federal Gramm-Leach-Bliley Act requires financial institutt
information, to restrict use of such information and disclosure to non-affiff liated third parties, and to provide notices to customers
regarding use of their non-public personal information and an opportunity to “opt out” of certain disclosures. State departments
of insurance and certain federal agencies adopted implementing regulations as required by federal law. In addition, SEC rules
require disclosure regarding cybersecurity oversight and incidents.

ions, including insurers, to protect the privacy of non-public

State Laws and Regul

ations

In recent years, state insurance regulators have focused increasing attention on cybersecurity. For example, insurance
companies are required to maintain a cybersecurity program, incident response plan and information technology system
safeguards that protect customer information under extensive cybersecurity regulations implemented by the New York
Department of Financial Services and statutt es adopted by a number of states based on a model data security law adopted by the
NAIC. In addition, state insurance regulators focus significant attention on data security during financial exams, and the NAIC
has strengthened and enhanced the cybersecurity guidance included in its handbook for state insurance examiners. Additional
state laws outside of the insurance industryrr
impose notificff ation requirements in the event of cybersecurity breaches affeff cting
their residents. On the privacy front, the Califorff nia Consumer Privacy Act, as amended, by the Califorff nia Privacy Rights Act
(“CPRA”), which went into effeff ct in January 2023, among other things, requires companies to provide privacy notices and

respond to any request made to the company by a California resident regarding his or her personal information used or
maintained by the company outside the scope of the GLBA privacy laws. The Company anticipates a continuing focus on new
regulatoryrr and legislative proposals at the state and federal levels that further regulate practices regarding privacy and security
of personal information.

Holding Company Regulation, Including Enterprise Risk Management and Governance

The Company is regulated as an insurance holding company system and is subju ect to the insurance holding company acts of the
states in which its insurance subsu idiaries are domiciled and, in some cases, additional states in which the insurance subsu idiary is
deemed commercially domiciled. These laws and related regulations contain certain reporting requirements as well as
restrictions on transactions between an insurer and its affiff liates. They also generally require insurance companies within an
insurance holding company system to register with the insurance department of each state where they are domiciled and to file
certain reports with those insurance departments describing capia tal structurt e, ownership, financial condition, certain
intercompany transactions, an enterprise risk report and general business operations. In addition, various notice and reporting
requirements generally apply to transactions between insurance companies and their affiff liates within the insurance holding
company system, depending on the size and nature of the transactions. Some insurance holding company laws and regulations
require prior regulatoryr approval or, in certain circumstances, prior notice of certain material intercompany transferff s of assets as
well as certain transactions between insurance companies, their parent holding companies and affiff liates.

Dividends

As a holding company with no significant business operations of its own, Kemper relies on dividends from its insurance
subsu idiaries to meet its obligations. Certain dividends and distributions by an insurance subsu idiary are subju ect to prior approval
by the insurance regulator in which it is domiciled or commercially domiciled. See Item 1A., “Risk Factors,” under the capta ion,
“The abilityii
materiallyll

rs and/or// make repuee
ient dividei ndsdd received from its subsidiadd ries.”

of Kemper to service its debt,tt to pay dividei ndsdd to itstt shareholdell

rchases of itstt stoctt k maya be

impacm ted by lack of timeii

ly and/or//

suffu icff

Change in Controt

l Requirementstt

State insurance laws also impose requirements that must be met prior to a change of control of an insurance company or
insurance holding company based on the insurer’s state of domicile and, in some cases, additional states in which the insurance
subsu idiary is deemed commercially domiciled. These requirements may include the advance filing of specificff
information with
the state insurance regulators, a public hearing on the matter, and the review and approval of the change of control by such
regulators. The Company has insurance subsu idiaries domiciled or deemed commercially domiciled in Alabama, Califorff nia,
Florida, Illinois, Indiana, Louisiana, Missouri, New York, Ohio, Oregon, Texas and Wisconsin. In these states, except Alabama,
“control” generally is presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of an
insurance company. Control is presumed to exist in Alabama with a 5% or more ownership interest in such securities. Any
purchase of Kemper’s shares that would result in the purchaser owning Kemper’s voting securities in the foregoing percentages
for the states indicated would be presumed to result in the acquisition of control of the Company’s insurance subsu idiaries in
those states. Thereforff e, acquisitions subju ect to the 10% threshold generally would require the prior approval of insurance
regulators in each state in which the Company’s insurance subsu idiaries are domiciled or deemed commercially domiciled,
including those in Alabama, while acquisitions subju ect to the 5% threshold generally would require the prior approval of only
Alabama regulators. Similarly, consistent with the Model Holding Company Act, several of the states in which the Company’s
insurance subsu idiaries are domiciled have enacted legislation that requires either the divesting and/or acquiring company to
notifyff

regulators of,ff and in some cases to receive regulatoryr approval for, a change in control.

Many state statutt es also require pre-acquisition notificff ation to state insurance regulators of a change of control of an insurance
company licensed in the state if specificff market concentration thresholds would be triggered by the acquisition. Such statutt es
authorize the issuance of a cease and desist order with respect to the insurance company if certain conditions, such as undue
requirements may deter, delay or prevent transactions
market concentration, would result from the acquisition. These regulatoryr
effeff cting control of Kemper or its insurance subsu idiaries, or the ownership of Kemper’s voting securities, including transactions
that could be advantageous to Kemper’s shareholders.

Many states have made, or are in the process of making, modifications to their holding company laws. These modifications
impose new reporting requirements and subsu tantially expand the oversight and examination powers of state insurance regulators
to assess enterprise risks within the entire holding company system that may arise from both insurance and non-insurance
subsu idiaries. They also impose new reporting requirements on affiff liated transactions and divestiture of a controlling interest in
an insurance subsu idiary.

Other Federal Government Regulation

Dodd-Frank Wall Stret et Refoe rm and Consumer Protection Act and Othett

r Financial Refoe rm Effoff rtstt

rt to strengthen the regulation of the financial services market, the Dodd-Frank Wall Street Reform and

As part of an effoff
Consumer Protection Act (“Dodd-Frank Act”) was enacted in 2010. The Dodd-Frank Act also created the Federal Insurance
Offiff ce (“FIO”) within the U.S. Department of the Treasury (“Treasury”rr
provides
advice to the Financial Stability Oversight Council (“FSOC”), represents the U.S. on international insurance matters, and
studi
es the current regulatoryrr system. The Dodd-Frank Act includes a number of financial reforms and regulations that may
t
affeff ct our business and financial reporting. However, there remains uncertainty regarding the future of the Dodd-Frank Act and
how it may impact our business.

). The FIO monitors the insurance industry,rr

Additional regulations or new requirements may emerge from activities of various regulatoryr entities, including the Federal
Reserve Board, FIO, FSOC, NAIC and the International Association of Insurance Supeu rvisors (“IAIS”), that are evaluating
solvency and capia tal standards for insurance company groups. The outcome of these actions is uncertain; however, these actions
may result in an increase in the level of capia tal and liquidity required by insurance holding companies.

Company Culture

Human Capital Management

Kemper proudly serves growing niche and underserved markets through appropriate and affoff
solutions. Kemper’s strategic intent is focused on empowering each employee on our team to Act Like an Owner to deliver on
our promises to our stakeholders. This concept describes one of the most important parts of executing on our purpos
employees—and infuses our ownership culturt e in everytr hing we do.

rdable insurance and financial

e—our

Our culture enables everyone
level, to take authority and accountability for their respective roles and responsibilities
and strive towards high performance. We promote this through dynamic, diverse, and innovative team members who act like
owners and are continually driven by intellectuat

l curiosity, analytic supeu riority, and being world class operators.

, at everyr

Diversirr ty,yy Equity and Inclusion

Diversity, equity and inclusion (“DE&I”) are fundamental to the Company’s success. Kemper is committed to driving our
DE&I effoff

rts within our workforce, workplkk ace, and marketplt ace, as outlined below:

• Workplace: Maintain an inclusive “Act Like an Owner” workplk ace culture where all employees can own their career

while contributing to the success of the company

• Workforff ce: Our workforce reaches its fullest potential by attracting, developing, and retaining diverse talent
• Marketplace: Sustain a competitive advantage in the underserved markets we serve via strategic partnerships and

community engagement.

Compliance and Ethitt cs

A culture that includes compliance and ethical behaviors is key to protecting the Company from actions that could negatively
impact our reputation and business results. These values are also critical to the sound operation of our business and contribute
to a positive work experience for our employees. Kemper provides a variety of tools and resources to ensure that these values
ultimately result in an environment that’s welcoming for everyr member of the Kemper community.

Kemper maintains an open communication environment to all employees that featurt es multiple channels for reporting instances
of fraud, theft,ff violence, and misconduct. Our compliance reporting protocol enhances our effoff
rts to foster a culture of integrity
and ethical behavior while facilitating corrective actions necessary to address identifieff d problems. In addition, Kemper
encourages employees to reach out to their direct manager, another manager, the Kemper Corporate Responsibility Hotline, or
Human Resources with any compliance or ethical misconduct questions or concerns.

Emplm oyee Development

Kemper’s long-term success is inextricably linked to our employees’ development and engagement. Kemper provides valuable
opportunities for personal development and profesff
internships and rotational development programs to leadership development. Individual growth and development are promoted
through various programs and outlets, including the Own Your Career initiative. This program provides employees with the
resources and tools necessary to continue to build momentumt

sional challenge at all career stages, from early career programs including

toward career success and development. Kemper’s commitment

rs individuals the opportunity for skill building,
to Own Your Career is closely tied to our Act Like an Owner culture, and offeff
t employees on their path forward.
u
talent development, and opportunities to connect with peers and managers to suppor

Engagement with Company Culture

Employee engagement is a critical element in driving the Company’s culture and success. Kemper encourages elevated
engagement through various initiatives and programs, and reinforces behaviors through recognition to employees who
consistently go above and beyond in their contributions to the Company’s success.

We measure engagement through an employee survey which offeff
key drivers of overall work satisfact
ff
recognition, collabor
a
functional and Human Resources leadership teams to understand employees’ emotional commitment to the most critical areas
of employee engagement, further define and improve our culturt e, and address areas of opportunity to enhance the work
experience.

ation, communication, resources, culturt e, DE&I, and ethics. The feedbad ck is evaluated by our business,

ion, including career growth and development, company leadership, pay and benefits,

rs all team members the opportunity to provide feedbad ck on

Total Rewardsdd

Total rewards represent investments Kemper makes to recognize and reward employees for their contributions. Total rewards
includes both benefits and compensation (base salary, short- and long-term incentives). Kemper is committed to providing a
robust and market competitive total rewards package that enables us to attract and retain the talent we need to grow our
company, and achieve our results. Our total rewards are a vital part of the employee experience at Kemper, and are designed to
add value to our business and promote the health and well-being of all employees.

Kemper is focused on investing in the physical, emotional, financial and social well-being of our people by providing a wide
range of benefits. These include, but are not limited to:

coverage

Health insurance including medical, dental, vision and prescription drugr
Lifeff and disabia lity insurance
Tax-advantaged Flexible Spending Accounts for health care and dependent care
Health Savings Accounts for the High-Deductible Health Plan, including a company match
401(k) retirement savings program, including a company match and 100% vesting upon hire
Employee Stock Purchase Program (ESPP)
Employee Assistance & Work/Lkk ifeff Program (EAP)
Tuition reimbursement
Adoption assistance
Employee discount programs
Voluntaryr benefit programs
Leave and time offff programs
Flexible work arrangements based on function and role

•
•
•
•
•
•
•
•
•
•
•
•
•
t
• Wellness resources, including diabetes, hypertension, weight management and pregnancy suppor
•
•

Commuter benefits
navigation
Benefitsff

Future of Work

Kemper’s top priority in responding to the COVID-19 pandemic was to ensure the health, safety, and well-being of our
employees, agents, and customers. As the business landscapea
responded by evolving our working models to stay competitive. Kemper’s Future of Work initiative was deployed in 2022 to
focus on creating a framework for a multifaceted approach to work location. The approach is suppor
models: Offiff ce-based, Hybrid, and Remote-based. This is designed to continue to attract and retain a high performing
workforce, cultivate a culture that suppor
continue to deliver on our promises to customers.

ts teamwork and collaboration, remain highly adaptive to environmental changes, and

has shifteff d following the pandemic, Kemper has proactively

ted by three key work

Item 1A.

Risk Factors.

Kemper is exposed to numerous risk factors that could cause actual results to differ materially from recent results or anticipated
future results. The following discussion details the significant risk factors that are specificff
to the Company. In addition to those
described below, the Company’s business, financial condition and results of operations could be materially affeff cted by other
factors not presently known or considered material by the Company. Readers are advised to consider all of these factors along
with the other information included in this 2023 Annual Report, including the factors set forth under the capta ion “Caution
Regarding Forward-Looking Statements”, and to consult any further disclosures Kemper makes on related subju ects in its filings
with the SEC.

Risks Relating to Estimating Property and Casualty Insurance Losses and Loss Adjud stment Expenses and Catastrophes

Estimating losses and LAE for determining propertytt and casualtyll
Company’n s’ resultstt of operations maya be materiali

lyll

insurance reserves is inherentlytt uncertain, and the

impacm ted if the Company’n s’ insurance reserves are insuffiu cient.

The Company establa ishes loss and LAE reserves to cover estimated liabia lities, which remain unpaid as of the end of each
accounting period, and to investigate and settle all claims incurred under the property and casualty insurance policies that it has
issued. Loss and LAE reserves are establa ished for claims that have been reported to the Company as of the end of the
accounting period, as well as for estimated claims that have occurred but have not yet been reported to the Company. The
estimates of loss and LAE reserves are based on the Company’s assessment of the facts and circumstances known to it at the
time, as well as estimates of the impact of future trends in the severity of claims, the frequency of claims and other factors.

landscapea

and economic, technological, and other environmental conditions in which the Company

These estimates can be inaccurate or may change over time due to many variables, including changes driven by the evolving
legal and regulatoryr
operates and the rising costs of insurance claims from increased litigation (in part as a result of proliferff ation of class-action suits
and growth in third party litigation funding), increase in so-called "nuclear verdicts" leading to higher jury awards, broader
definitions of liabia lity, other effeff cts of legal system abuse and societal trends referred to as social inflation. In recent periods,
these estimates have been impacted by reserve developments related to Florida personal injun ry protection (“PIP”) coverage. See
the risk factor below titled “Kemper has a signi
and Florida,dd
Company’s profitff ability.”

fii cant concentration of peff
e

rsonal automobile insurance business in California

or economic conditions in these states maya adverserr

ive developmentstt

latory,yy legal

ly affeff ct the

in the regue

e
and negat

The process of estimating property and casualty insurance reserves is complex and imprecise. The reserves establa ished by the
Company are inherently uncertain estimates and could prove to be inadequate to cover its ultimate losses and expenses. The
estimate of the ultimate cost of claims for insured events that have occurred must take into consideration many factors that are
dependent on the outcome of future events associated with the reporting, investigation and settlement of claims. The impacts on
the Company’s estimates of property and casualty insurance reserves from these factors are difficult to assess accurately. A
change in any one or more of the factors, such as that relating to Florida PIP coverage, will likely result in a projected ultimate
loss that is different than the previous projected ultimate loss and may have a material impact on the Company’s estimates. For
example, increases in the estimates of ultimate losses and LAE will decrease earnings, while decreases in these estimates will
increase earnings, as reported by the Company in the results of its operations for the periods in which the changes to the
estimates are made. See MD&A, “Critical Accounting Estimates,” under the capta ion “Property and Casualty Insurance
Reserves for Losses and Loss Adjud stment Expenses” for a discussion of the Company’s reserving process and the factors
considered by the Company’s actuaries in estimating the Company’s Property and Casualty Insurance Reserves.

If the Companyn is unable to charger
operations and finaii ncial conditdd iott n couldll be materiali

competitivtt

lyll and adverserr

.dd
ly affeff ctedtt

e yet profitff abl

ell rates to its customtt

ers,rr

the Company’n s’ busineii

ss, results of

The Company considers trends in the severity and frequency of claims and other factors when determining the premium rates to
charge for its property and casualty insurance products. An unanticipated change in any one or more of these factors or trends,
as well as a change in competitive conditions, may result in inadequate premium rates charged for insurance policies issued by
Kemper’s property and casualty insurance subsu idiaries in the future. Typically there is a time lag between when changes in
frequency and severity are identifieff d and when rate changes are approved, implemented and earned in. Material changes in
frequency and severity and the time lag between when rates are approved, implemented and earned into the Company’s results
of operations may have a material adverse impact on the Company’s operations. Because of restrictions placed on the
Company’s ability to increase premium rates in certain states, including California, a pricing inadequacy may continue for a
prolonged period. These pricing inadequacies have had a material impact on the Company’s operating results in recent periods
and may impact operating results in future periods. If the Company overestimates the severity or frequency of claims and other

factors in determining the rates to charge for insurance products, the rates for the Company’s products could be noncompetitive
and result in loss of revenue and market share.

Catastrott pho
conditdd iott n.

e losses couldll matertt

ially and adverserr

ly affeff ct the Company’n s’ results of operations,s liquii

iditydd

and/or//

finaii ncial

Kemper’s property and casualty insurance subsu idiaries are subju ect to claims arising out of catastrophes that may have a
significant effeff ct on their results of operations, liquidity and financial condition. Catastrophes can be caused by various events,
including, but not limited to, hurricanes, tornadoes, windstorms, earthquakes, hailstorms, explosions, severe winter weather,
wildfires and pandemics, and may also include man-made events, such as cyber events, terrorist attacks, and hazardous material
spills. The incidence, frequency and severity of catastrophes are inherently unpredictabla e and may be impacted by the uncertain
effeff cts of climate change, which could cause increases in hurricanes, floods, wildfires, and other risks that could produce losses
affeff cting our business. The extent of the Company’s losses from a catastrophe is a function of both the total amount of its
insured exposure in the geographic area affeff cted by the event and the severity of the event. In recent periods, the Company has
experienced significant catastrophe losses relating to tropical storm activity as well as rain and hail events. The effeff cts of
inflation could increase the severity of claims resulting from a catastrophe. For example, in recent periods, the effeff cts of
inflation, including as a result of post-event damage surge, have increased catastrophe losses, and this could continue in the
future. Furthermore, the Company could experience more than one severe catastrophic event in any given period.

The property and casualty insurance subsu idiaries use catastrophe modeling tools developed by third parties to project their
potential exposure to property damage resulting from certain types of catastrophic events under various scenarios. These
models are based on various assumptions and judgments which may turn out to be wrong or materially different than our actual
results. The actuat

l impact of one or more catastrophic events could adversely and materially differ from these projections.

insurance subsu idiaries are particularly exposed to risks of catastrophic mortality, such as pandemics or other

Kemper’s lifeff
events that result in large numbers of deaths. For example, during the COVID-19 pandemic, the Company experienced
increased mortality that had an adverse impact on our Life business. In addition, the occurrence of a pandemic or other
catastrophes in a concentrated geographic area could have a severe disrupt
operations. The likelihood and severity of such events cannot be predicted and are difficult to estimate.

ive effeff ct on the Company’s workforce and business

Changes in the availaii bilitii ytt and cost of catastrott pho
couldll result in Kemper’s insurance subsidiadd ries retaining more riskii
Company’n s’ resultstt of operations,s finaii ncial conditidd on and/or//

liqui

iditydd .yy

e reinsurance and in the abilityii

of reinsurers to meet theirii obligll atiott ns

and couldll adverserr

ly and materiali

lyll affeff ct the

Kemper’s property and casualty insurance subsu idiaries seek to reduce their exposure to catastrophe losses through the purchase
of catastrophe reinsurance. Catastrophe reinsurance does not relieve these subsu idiaries of their direct liabia lity to their
policyholders. As long as the reinsurers meet their obligations, the net liability for each subsu idiary is limited to the amount of
risk it retains. While Kemper’s subsu idiaries’ principal reinsurers are each rated “A-” or better by A.M. Best at the time
reinsurance is purchased, the Company cannot be certain that reinsurers will pay the amounts due from them either now, in the
future, or on a timely basis. A reinsurer’s insolvency or inability to make payments under the terms of its reinsurance agreement
could materially and adversely affeff ct the Company’s financial position, results of operations and liquidity.

In addition, market conditions beyond the Company’s control determine the availabia lity and cost of the reinsurance protection
that Kemper’s property and casualty insurance subsu idiaries may purchase. A decrease in the amount of reinsurance coverage
that these subsu idiaries purchase generally should increase their risk of a more severe loss. If the amount of availabla e reinsurance
ient reinsurance
is reduced, the cost to obtain reinsurance may increase or Kemper’s subsu idiaries may be unabla e to obtain sufficff
on acceptabla e terms, which could adversely affeff ct their ability to write future insurance policies or result in their retaining more
risk with respect to those policies.

The extent to which Kemper’s insurance subsidiadd ries can managea
stratt
ii
operations,s finaii ncial conditdd iott n and/or//

latory action and couldll adverserr
liquidii

teii d by law or regue

tegie es maya be limi

.yy
tyii

theiri catastrott pho

ure throughgg underdd writing
xx
e expos
lyll affeff ct the Company’n s’ results of
ly and materiali

Kemper’s property and casualty insurance subsu idiaries also manage their exposure to catastrophe losses through underwriting
strategies such as reducing exposures in, or withdrawing from, catastrophe-prone areas, establa ishing underwriting guidelines,
and setting appropriate rates, deducd tibles, exclusions and policy limits. The extent to which Kemper’s subsu idiaries can manage
their exposure through these strategies may be limited by law or regulatoryr action. For example, laws and regulations may limit
the rate or timing at which insurers may not renew insurance policies in catastrophe-prone areas or require insurers to
participate in wind pools and joint underwriting associations. Generally, participation in these pools and associations is based

on an insurer’s market share determined on a state-wide basis. Accordingly, even though Kemper’s property and casualty
insurance subsu idiaries may not incur a direct insured loss as a result of managing direct catastrophe exposures, they may incur
indirect losses from required participation in pools and associations. In addition, laws and regulations requiring prior approval
of policy forms and premium rates may limit the ability of Kemper’s property and casualty insurance subsu idiaries to increase
rates or deductibles on a timely basis, which may result in additional losses or lower returns than otherwise would have
occurred in an unregulated market.

Risks Relating to Estimating Life Insurance Reserves

Estimating future policll yhc oldell
results of operations maya be matertt

r benefie tsii
iallyll

for determining lifei
impacted if the Company’n s’ Lifei

insurance reserves is inherentlytt uncertain, and the Company’n s’

Insurance Reserves are insuffiu cient.

landscapea

and economic, technological, and other environmental conditions in which the Company

The estimates of future policyholder benefits are based on the Company’s assessment of the facts and circumstances known to
it at the time and are estimating losses many years into the future. Significant assumption inputs to the calculation of the
liabia lity for future policyholder benefits include mortality, lapsa es, and discount rates (both accretion and current).
These estimates can be inaccurate or may change over time due to many variables, including changes driven by the evolving
legal and regulatoryr
operates. In recent periods, these estimates have been impacted by the effeff ct the COVID-19 pandemic and the related
II
governmental responses have had on certain of these variables. See the risk factor below titled “The impacm t of COVID-
related economic conditions couldll materially affeff ct Kemper’s resultstt of operations, financial position and/or//
liquidity.”
The process of estimating lifeff
inherently uncertain estimates and could prove to be inadequate. The estimates underlying future policyholder benefits must
take into consideration many factors that are dependent on the outcome of future events including, but not limited to, the
reporting and settlement of claims and policyholder behavior. Certain events may not occur until many years in the future so the
impacts on the Company’s estimates of life insurance reserves from these factors are difficult to assess accurately. A change in
any one or more of the factors is likely to result in projected future policyholder benefits that are different than the previous
projections and may have a material impact on the Company’s estimates. Increases in the estimates of future policyholder
benefits will decrease earnings, while decreases in these estimates will increase earnings, as reported by the Company in the
results of its operations for the periods in which the changes to the estimates are made. See MD&A, “Critical Accounting
Estimates,” under the caption “Lifeff
considered by the Company’s actuaries in estimating the Company’s Life Insurance Reserves.

insurance reserves is complex and imprecise. The reserves establa ished by the Company are

Insurance Reserves” for a discussion of the Company’s reserving process and the factors

19 and

Risks Relating to Competition

A downgrade in the ratings of Kemper or itstt
Company.n

insurance subsidiadd ries below A- couldll materiallyll and adverserr

ly affeff ct the

Third-party rating agencies assess the financial strength and rate the claims-paying ability of insurance companies based on
criteria establa ished by the rating agencies. Third-party ratings are important competitive factors in the insurance industry.r
Financial strength ratings are used to assess the financial strength and quality of insurers. Ratings agencies may downgrade the
ratings of Kemper and/or its insurance subsu idiaries or require Kemper to retain more capital in its insurance businesses to
maintain existing ratings following developments that they deem negative. This can include factors directly related to the
Company, such as an increase in the catastrophic risk retained by Kemper’s insurance subsu idiaries, or developments in industryrr
or general economic conditions. A downgrade by A.M. Best in the ratings of Kemper’s insurance subsu idiaries below A- could
result in a subsu tantial loss of business if independent agents and brokers or policyholders move to other companies with higher
claims-paying and financial strength ratings. Any subsu tantial loss of business could materially and adversely affeff ct the financial
condition and results of operations of such subsu idiaries. A downgrade in Kemper’s credit rating by Standard & Poor’s (“S&P”),
Moody’s Investors Services (“Moody’s”) or Fitch Ratings (“Fitch”) may reduce Kemper’s ability to cost-effect
ively access the
capital markets or may increase the cost to refinance existing debt.

The insurance industrytt

is highi

ly competitivtt

e, makingii

i
it diffi

cult to grow profitaff

bilityii

and withii

in expexx ctattt

iott ns of investors.

The Company’s insurance businesses face significant competition, and their ability to compete is affeff cted by a variety of issues
relative to others in the industry,r
innovation, financial strength and name recognition. Additionally, in recent years, various types of investors have increasingly
sought to participate in the insurance industry.r Well-capitalized new entrants to the property and casualty insurance industry,r
or
existing competitors that receive subsu tantial infusions of capital or access to third-party capia tal, provide increasing competition,

such as management effeff ctiveness, product pricing, service quality, ease of doing business,

which may adversely impact our business and profitaff bia lity. Competitive success is based on many factors, including, but not
limited to, the following:

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

talent;

Competitiveness of prices charged for insurance policies;
Sophistication of pricing segmentation;
Design and introduction of insurance products to meet emerging consumer trends;
Ability to attract and retain experienced industryr
Selection and retention of agents and other business partners;
Compensation paid to agents;
Underwriting discipline;
Selectiveness of sales markets;
Effectiveness of marketing materials and name recognition;
Product and technological innovation;
Effectiveness of online servicing platforms;
Ability to settle claims timely, effiff ciently, and without incurring extra-contractuat
Ability to detect and prevent fraudulent insurance claims;
Effectiveness of deployment and use of information technology across all aspects of operations;
Ability to control operating expenses;
Financial strength ratings; and
Quality of services provided to, and ease of doing business with, independent agents, brokers, or policyholders.

l liabia lity;

The inability to compete effeff ctively in any of the Company’s insurance businesses could materially reduce the Company’s
customer base and revenues and could materially and adversely affeff ct the future results and financial condition of the Company.

See “Competition” in Item 1 of Part I for more information on the competitive rankings in the property and casualty insurance
markets and the life insurance markets, respectively, in the United States.

Risks Relating to Legal and Regulatory Environment

Kemper’s insurance subsidiadd ries are subject to signi
which they operate couldll result in increased operatingii

ificff ant regue
costs,tt

lation, and the evolvill ngii

reduced profitaff

bilityii

e
legal

and regue
and limited growth.

latory landscdd ape in

Kemper’s insurance subsu idiaries operate under an extensive insurance regulatoryrr system. Current laws and regulations affeff ct a
wide variety of matters, including policy forms, premium rates, licensing, market conduct, trade practices, claims handling
practices, reserve and loss ratio requirements, investment standards, statutt oryr capia tal and surplus requirements, restrictions on
the payment of dividends, approvals of transactions involving a change in control of one or more insurance companies,
restrictions on transactions among affiff liates, climate change, and consumer privacy and data security. Pre-approval
requirements ofteff n restrict or delay actions to implement premium rate changes for insurance policies, or to introducd e new, or
make changes to existing, policy forms and many other actions. These delays can adversely impact Kemper’s business,
especially where external factors, such as inflation, may result in a pricing imbalance for the Company’s insurance products.

Insurance regulators conduct periodic examinations of Kemper’s insurance subsu idiaries and can suspend or delay operations or
licenses, require corrective actions, and impose penalties or other remedies availabla e for compliance failures. For a more
detailed discussion of the regulations applicable to Kemper’s subsu idiaries and related emerging developments, see “Regulation”
in Item 1.

landscapea within which Kemper’s insurance subsu idiaries conduct their businesses is ofteff n

These laws and regulations, and their application by regulators and courts, are subju ect to continuous interpretation and revision.
The legal and regulatoryr
unpredictabla e. As industryrr practices and regulatory,rr
judicial, political, social and other conditions change, new issues may
emerge. These changes and emerging issues could adversely affeff ct Kemper’s business in a variety of ways, including, for
example, by expanding coverages beyond the underwriting intent, increasing the number or size of claims increasing the
likelihood of class-action suits and other legislative and judicial actions, accelerating the payment of claims, repealing or
weakening tort reforms or otherwise adding to operational costs or adversely affeff cting the Company’s competitive advantages.
Practices in the industryr or within the Company that were once considered approved, compliant and reasonabla e may suddenly
be deemed unacceptabla e by virtuet
is not possible for the Company to predict such shiftsff
they may have on the Company and its operations.

of a court or regulatory ruling or changes in regulatoryrr enforcement policies and practices. It

in legal or regulatoryrr enforcement or to accurately estimate the impact

landscape experienced significant change is in connection with the mandated use of

ses by life insurance companies. A majoa rity of states now have laws requiring insurers to proactively
ses, including the Social Security Administration’s Death Master File (the “DMF”), in order to ascertain if an

One area where the legal and regulatoryr
death verification databaa
use such databaa
insured may be deceased. Kemper cannot predict whether additional states will enact similar legislation. These laws require the
insurer to initiate the claims process even though the insureds’ beneficiaries have not submu
otherwise unaware of the insured’s death. In a related development, many states expanded their unclaimed property laws,
particularly as they relate to life insurance proceeds, and have examined lifeff
and remittance of such proceeds under these laws. The push to alter practices previously considered lawfulff
relative to both claims handling and remittance of life insurance proceeds has led to the Company’s involvement in compliance
audits, market conduct examinations and litigation. The Company has a comprehensive process in place to compare lifeff
insurance records against the DMF and other databaa
ses to determine if any of its insureds may be deceased. See Note 2,
“Summary of Accounting Policies and Accounting Changes” to the Consolidated Financial Statements for further details.

insurance companies with respect to the reporting

itted a claim and the insurer was

and appropriate

In addition, there is increased legislative and regulatoryrr
laws that expand the oversight and examination powers of insurance regulators beyond licensed insurance companies to include
non-insurance affiff liates and their organizations as a whole, particularly with respect to enterprise risk. See the discussion of
these matters under “Regulation” in Item 1.

focus on cybersecurity and on amendments to state holding company

These developments and significant changes in, or new interpretations of,ff existing laws and regulations could make it more
expensive for Kemper’s insurance subsu idiaries to conduct and grow their businesses which could materially impact the
Company’s operating results.

Kemper has a signi
developmll
profitaff

.yy
bilityii

ificff ant concentratiott n of peff

ents in the regue

latory,yy legal

rsonal automobileii
or economic conditiodd

insurance busineii
ns in these stattt estt maya

ss in Califorff niai and Florll
ly affeff ct
adverserr

ida,dd

ivtt e
and negat
the Company’n s’

Califorff nia and Florida represented 71% of the Company’s total personal automobile insurance gross written premiums in 2023.
Consequently, the dynamic nature of regulatory,rr
revenues and profitff ability. For example, in Florida, recent court decisions were unfavff orable to the insurance industryrr
Florida PIP coverage and have resulted in increased severity in PIP coverage and significant adverse loss and LAE reserve
development in 2023. Significant legislative changes relating to Florida PIP coverage have recently become effeff ctive, but it is
too early to determine the ultimate impact of these changes. Further, both Califorff nia and Florida have regulations that limit the
afteff
r-tax return on underwriting profitff allowed for an insurer. Changes in any of these conditions could negatively impact the
Company's results of operations.

legal, competitive and economic conditions in these states affeff cts Kemper’s

relating to

Legal
and regue
e
materiallyll and adverserr

latory proceedingii

sgg are unpredictabl

ell and couldll produce one or more unexpe

ctedtt

outcomes that couldll

ly affeff ct the Company’n s’ finaii ncial results for anyn given period.

inquiries and other legal proceedings arising

Kemper and its subsu idiaries are from time to time involved in lawsuits, regulatoryr
out of the ordinary course of their businesses. Some of these proceedings may involve matters particular to Kemper or one or
more of its subsu idiaries, while others may pertain to industryr business practices. Some lawsuits may seek class action statust
that, if granted, could expose the Company to potentially significant liability by virtuet
of the size of the punitive classes. In
addition, the Company’s insurance subsu idiaries are subju ect to litigation relating to claims handling practices in connection with
otherwise routine claims, including actions that make allegations of bad faith and seek extra-contractuat
l and legal issues and are subju ect to uncertainties and complexities. The outcomes of these
matters ofteff n raise difficult factuat
matters are difficult to predict, and the amounts or ranges of potential loss at particular stages in the proceedings are in most
cases difficult or impossible to ascertain. Even where the possibility of an adverse outcome is remote under traditional legal
analysis, juries sometimes subsu titute their subju ective views in place of facts and establa ished legal principles. Given the
unpredictabia lity of the legal and regulatoryr
in which the Company operates, there can be no assurance that one or
more of these matters will not produce a result that could materially and adversely affeff ct the Company’s financial results for
any given period.

l damages. These

landscapea

For information about the Company’s pending legal proceedings, see Note 28, “Commitments and Contingencies,” to the
Consolidated Financial Statements.

Changes in the availaii bilitii ytt of insurance coverage or in the abilityii
Companyn being exposxx

ificff ant losses.

ed to signi

of insurers to meet theirii obligll atiott ns couldll result in the

Kemper maintains insurance coverage to limit its risk exposure to certain perils, including cybersecurity, errors and omissions,
directors and offiff cers liability insurance, fiduciary, insurance company profesff
coverages. The market for certain of these coverages has tightened over recent periods and the availabia lity of these coverages
could be significantly reduced in the future. There is no guarantee that if coverage is availabla e it will be in an amount sufficient
to cover the losses of one or more covered incidents or on terms that Kemper finds acceptabla e. An insurer’s insolvency or
inability to make payments under the insurance coverage it provides to Kemper could also result in Kemper being exposed to
significant losses.

sional liability and other financial indemnity

The Companyn couldll be adverserr

ly affeff ctedtt

by future changes in U.S. Federal or Bermudadd income taxaa laws.

Changes to tax laws or interpretation of such laws could increase Kemper’s corporate tax and reduce earnings. It is possible that
tax law could be changed through a technical corrections bill or with entirely new legislation or be interpreted by regulatoryr
authorities in a manner different than the Company’s interpretation. It is difficult to predict whether there will be any tax law
changes, guidance issued by tax authorities or other interpretations which would have a material adverse effeff ct on our business
or financial condition, as the impact of proposals on our business can vary subsu tantially depending upon the specificff
changes or
further guidance made and how the changes or guidance are implemented by the taxing authorities.

If our contrott
the Companyn couldll be adverserr

ed to ensure compliall nce withii
.dd
ly affeff ctedtt

ls designi

guideldd inll es,s policll

ies and legal

and regue

latory stantt

dards are not effeff ctivtt e,

Kemper’s business is highly dependent on its ability to engage on a real-time basis in a large number of insurance underwriting,
claim processing and investment activities, and these are highly sophisticated, complicated and constantly evolving. These
activities are frequently subju ect to internal guidelines and policies, as well as legal and regulatoryr standards. A control system,
no matter how well designed and operated, can provide only reasonabla e assurance that the control system’s objectives will be
met. If the Company’s controls are not effeff ctive (including with respect to the prevention or identificff ation of misconduct by
employees or others with whom we do business), it could lead to financial loss, unanticipated risk exposure (including
underwriting, credit and investment risk), errors in financial reporting, litigation (including actions seeking extra-contractuat
l
damages), regulatoryr proceedings or damage to our reputation.

Risks Relating to Security of Personal Data, Availability of Critical Systems, and Technology Initiatives

t againsii

Failure to protectt
Companyn couldll result in busineii
ii
r liabi
litie
i
tational harm, and othett
repuee

ss interruptu iott n, legal
s and expexx nses.

t cyber attatt ckskk or othett

r exposxx

ures that compromiseii
and consultinll

g fees,s regue

includindd g personal data,tt held by the
ss,

atiott n, lost busineii

latory penalties, litigii

data,tt

es, including marketing, policy origination, claims and payment processing, and competitive differentiation. The data has

Kemper’s insurance subsu idiaries obtain, process and store large amounts of data, including personal data, for various business
purpos
r
significant value and Kemper is regularly targeted by cyber attacks seeking to misappropriate the information. Cyber attacks
featurt e increasing sophistication and frequency and include the use of viruses, ransomware, spyware and other malware and
infiltration methods. In addition, the Company has exposure through equipment and system failure and as a result of the
conduct of our employees and contractors (through inadvertent error, negligence or intentional misconduct). These exposures
can create or increase the Company’s vulnerabia lity to the loss or misuse of its data. The Company uses an array of security
measures, with policies and procedurd es designed to secure this information and the Company’s data systems. Notwithstanding
these effoff
security breaches or other exposures. Successfulff
reputational damage, ransom demands, investigations and litigation. The Company has been and will continue to be exposed to
damages, regulatoryrr penalties and other liabilities, reputational risk and significant increases in compliance and litigation costs
as a result of these occurrences, which could have a material adverse impact on our financial condition and results of
operations.

rts, the Company’s data systems, have been breached or otherwise exposed in the past and remain vulnerabla e to future

breaches or other exposures could result in data loss, business interruptu ion,

Kemper’s busineii
of our direii ct contrott

ss operations rely on third parties, which are inherentlytt prone to technologyo

and cybersecurityii

riskii

skk outsidedd

Kemper relies on third parties to provide services that are essential to business operations, such as policy origination, claims
processing, procurement, payments, back-office functions, and IT hosting. The software, systems and services provided by our
third-party providers may not meet our expectations, contain errors or weaknesses, become compromised or experience
breaches or outages. The Company’s ability to prevent or remediate such an occurrence is limited. A failure of such third-party

systems to perform effeff ctively, maintain information security, or provide uninterruptu ed service and access to those systems,
could materially adversely affeff ct Kemper’s business. For example, the Company could be prevented from conducting business
functions, including the timely payment and/or processing of claims, or the information of customers could be compromised.
Any such failures could adversely impact the ability to serve existing customers and attract new business, and could create
regulatoryrr and litigation exposure.

We are subject to extensive cybersecurityii and privacyc regue
federal authoritiett s. These policll
findii
adverserr

indd g that the Companyn has breached these regue

ly impact finaii ncial conditiodd

n or resultstt of operations.

ies and regue

lation throughgg policll

ies and requirements imposed by stattt ett and

lations are complex,ee diffi

lations couldll result in litigatiott n, fineii

icff ultll to implement and sometimes contratt dictortt y.r A
lyll

s, and expexx nses that materiali

Kemper operates under multiple cybersecurity and privacy regulations, imposed at both the state and federal level. While
Kemper seeks to comply with each of those mandates, frequent and recent changes in the legal and regulatoryr environment
create a difficulty in implementation, a lack of clarity and some requirements that may be overlapping or inconsistent. These
difficulties increase the risk that the Company will be subju ect to regulatoryr proceedings, litigation, fines, and other adverse
consequences that may have a material impact on the Company’s financial condition and results of operations.

Cybersecurityii
withii

an adverserr

impact finaii ncial conditdd iott n or results of operations.

events,s busineii

ss interruptu iott ns or othett

xx
r expos

ures maya cause potentt

tial deterioratiott n in Kemper’s repuee

tation

Kemper’s business depends on its reputation with agents and customers. The Company or its third party services providers may
experience cybersecurity or business disrupt
brand image. It may be difficult to control or effeff ctively manage negative publicity or regulatoryr consequences. Negative events
and publicity or regulatoryr action could quickly and materially damage perceptions of Kemper and its business, which, in turn,
could negatively impact the Company through loss of customers or agents, loss of business opportunities, employee retention or
other difficulties.

ion events beyond our control that could affeff ct our reputation or our corporate or

Failure to maintaitt nii
penalties and othett

r costs.tt

the availaii bilityii

of critictt al systemtt

s couldll result in busineii

ss interruptu iott n, lost busineii

ss, repuee

tational harm,

The Company’s business operations rely on the continuous availabia lity of its own computer systems, systems and software
hosted by vendors, and computer systems used by third party administrators and contractors working on behalf of the Company.
Certain technology-based service providers provide a sizable portion of our IT infrastructurt e, platforms software and related IT
services. From time to time these systems have been, and may again be, adversely affeff cted or disrupt
ed by cyber attacks, other
data breaches, natural and man-made catastrophes, human action or error or other significant events. The failure of the
Company, or its third party administrators or other business partners, to maintain business continuity in the wake of such events
may prevent the timely performance of critical processes across its operations, including, for example, insurance policy
administration, claims processing, billing, payment processing, treasuryrr and investment operations and payroll and other
employer-related functions. These failures could result in significant loss of business, increased costs, fines and other adverse
consequences.

If Kemper is unablell

to send or accept elect

rott nic payments,tt our busineii

ss and finaii ncial results couldll be adverserr

ly affeff ctett d.

The Company relies increasingly on electronic payments from policyholders, including, but not limited to, payment by credit
and debit cards. Kemper’s ability to use electronic payments depends on its ability to comply with applicable laws and
rules
regulations and with the rules of the various payment networks. Failure to maintain compliance with laws and industryrr
and regulations governing such transactions could result in additional costs and damages. For example, in the event of non-
compliance with the Payment Card Industryr Data Security Standard, an information security framework for organizations that
handle cardholder information for the maja or debit, credit, prepaid, and other payment card methods, Kemper’s insurance
subsu idiaries could be prohibited from collecting premium payments from customers by way of such methods and be subju ect to
significant fines.

initiatt

Technologyo
and implement such initiatt
ent coststt
re developmll
softo watt

tives couldll present signi
tives in a timeii

that maya not be recoverable.ll

ificff ant economic and competitivtt
ly manner couldll result in the loss of busineii

e challell nges to the Company.n Failure to complete

ss and incurrence of internal use

Data and analytics play an increasingly important role in the insurance industry.r The Company may periodically initiate multi-
year technology projects to enhance operations or replace systems. While technology developments can facilitate the use and
enhance the value of data and analytics, streamline business processes and ultimately reduce the cost of operations, technology

initiatives can present significant economic and organizational challenges to the Company and potential short-term cost and
implementation risks. In addition, projections of expenses and implementation schedules could change materially and costs
could escalate over time, while the ultimate utility of a technology initiative could deteriorate over time or system development
projects may not deliver the benefits or perform as expected. If the Company does not effeff ctively and effiff ciently manage and
upgrade our technology portfolff
competitive services to, and conduct business with, new and existing customers in a cost effeff ctive manner and the Company’s
ability to implement our strategic initiatives could be adversely impacted.

io, or if the costs of doing so are higher than expected, the Company’s ability to provide

Due to the highly-regulated nature of the financial services industry,r
constraints in adapta ing technology to meet compliance requirements of new and proposed regulations. The costs to develop and
implement systems to replace the Company’s existing systems and to comply with new regulatoryr
expected to be material. Due to the complexities involved, there can be no assurances that new system development and
implementation projects will be successfulff
, that the costs for such projects will not exceed estimates and that the incurred costs
will be recoverabla e. Furthermore, failure to implement replacement systems in a timely manner could result in loss of business
from the Company’s delay or inability to design and introduce new insurance products that meet emerging consumer needs and
competitive trends.

the Company also faces rising costs and competing time

requirements as needed are

Risks Relating to Investments

The Company’n s’ investmett
change in fair value of equityii and convertible securitiii es and cause realizll ed and unrealizeii d losses.

ed to a varietytt of riskii

skk that maya negat

nt portfolff

is exposxx

ivtt elyll

ioll

impact net investment income,e the

The Company maintains a diversifieff d investment portfolff
including interest rate (risk-free and spread), equity price, and liquidity, as well as risks from changes in tax laws and
regulations and other risks from changes in general economic conditions.

io that is exposed to significant financial and capital market risks,

The interest rate environment has a significant impact on the Company’s financial results and position. An increase in interest
io, particularly fixed income
rates or credit spreads generally reduces the carrying value of the Company’s investment portfolff
securities, and limited liabia lity investment companies and limited partnerships accounted for under the equity method of
accounting (“Equity Method Limited Liability Investments”) that invest in distressed and mezzanine debt of other companies
that exhibit debt-like characteristics. A decline in interest rates would adversely affeff ct the Company’s investment income as it
io’s average rate. In a declining interest rate environment,
invests cash in new investments that may yield less than the portfolff
borrowers may seek to refinance their borrowings at lower rates and, accordingly, prepay or redeem securities the Company
holds as investments more quickly than the Company initially expected. Such prepayment or redemption action may cause the
Company to reinvest the redeemed proceeds in lower yielding investments.

Kemper’s Life business writes long duration insurance contracts which are priced in consideration of the interest rate
environment. If the Company is not able to purchase investments that match that duration of the liabilities and there is a
decline in interest rates, the Company could experience a significant deterioration in results.

The Company invests a portion of its investment portfolff
fixed income securities and may experience sustained periods of depressed values. There are multiple factors that could
negatively impact the performance of the Company’s equity portfolff
sector deterioration and issuer-specific concerns. A decline in equity values will result in losses being recognized by the
Company in the period such change in fair value occurs, which may be significant. In addition, a decline in equity values may
result in a decrease in dividend income.

io in equity securities, which generally have more volatile returns than

io, including general economic conditions, industryr or

io. For example, if the Company were to experience several significant catastrophic events over a relatively short period

The nature and cash flow needs of the Company present certain liquidity risks that may impact the return of the investment
portfolff
of time, investments may have to be sold in advance of their maturity dates to fund payments to claimants, which could result
in realized losses. Additionally, increases in illiquidity in the financial markets may increase uncertainty in the valuations of
the Company’s investments. This increases the risk that the fair values reported in the Company’s consolidated financial
statements may differ from the actuat

l price that may be obtained in an orderly sales transaction.

The Company has also benefited from certain tax laws related to its investment portfolff
deductions and tax-exempt investment income. Changes in tax laws may have a detrimental effeff ct on the afteff
Company’s investment portfolff
and result in a decline in the value of the Company’s investment portfolff

io. A reduction in income tax rates could also reduce the demand for tax-preferff enced securities

io, including dividends received

io of such securities.

r-tax return of the

The Company’s entire investment portfolff
to, inflation, regulatoryrr changes, inactive capital markets, governmental and social stability, economic outlooks,
unemployment, and recession. Changes to these risks and how the market perceives them may impact the financial
performance of the Company’s investments, and in such cases, more securities may require additional subju ectivity and
management judgment.

io is subju ect to broad risks inherent in the financial markets, including, but not limited

Kemper and its insurance subsu idiaries are subju ect to various capia tal adequacy measurements that are significantly impacted by
various characteristics of their invested assets, including, but not limited to, asset type, class, duration and credit rating. The
Company’s insurance subsu idiaries are also subju ect to various limitations on the amounts at which they can invest in individual
assets or certain asset classes in the aggregate. Asset risk is one factor used by insurance regulators and rating agencies to
determine required capia tal for Kemper’s insurance subsu idiaries. Accordingly, a deterioration in the quality of the investments
held by Kemper’s insurance subsu idiaries or an increase in the investment risk inherent in their investment portfolff
increase capital requirements. See the risk factor below titled “The ability of Kemper to service its debt,t pay dividends to itstt
fund targeted transactions maya be materially impacm ted by lack of timely and/or//
shareholdell
received from its subsidiaries.” These factors may inhibit the Company from shiftiff ng its investment mix to produce higher
returns. The Company is also subju ect to concentration of investment risk to the extent that the portfolff
any particular time, in specific asset types, classes, industries, sectors or collateral types, among other defining featurt es.
te the negative effeff cts on the
Developments in and the market’s perception of any of these concentrations may exacerbar
Company’s investment portfolff

io compared to other companies.

io is heavily invested, at

ient dividends

rs and/or//

ios could

sufficu

The determinatiott n of the fair values of the Company’n s’ investments and whethett
is othett
economic outcome.

porm aryr are based on managea ment’s judgment and maya prove to be materiali

r-than-temtt

r a declinll e in the fair value of an investmett

lyll diffei

rent than the actual

The Company holds a significant amount of assets without readily availabla e, active, quoted market prices or for which fair
value cannot be measured from actively quoted prices. These assets are generally deemed to require a higher degree of
judgment in measuring fair value. The assumptions used by management to measure fair values could turn out to be different
than the actuat
l amounts that may be realized in an orderly transaction with a willing market participant could be either lower
or higher than the Company’s estimates of fair value.

The Company reviews its investment portfolff
other-than-temporary.r This evaluation is based on subju ective factors, assumptions and estimates and may be materially
different than the actuat
new information emerges or recognizing losses currently that may never materialize in the future in an orderly transaction with
a willing market participant.

l economic outcome, which may result in the Company recognizing additional losses in the future as

io for factors that may indicate that a decline in the fair value of an investment is

Risks Relating to Servicing Debt, Paying Dividends and/or Funding Targeted Transactions

The abilityii
materiallyll

of Kemper to service its debt,tt pay dividendsdd to its shareholdell
impacm ted by lack of timeii

fund targetedtt
ient dividei ndsdd received from its subsidiadd ries.

rs and/or//

ly and/or//

suffu icff

transactiott ns maya be

As a holding company, Kemper depends on the dividend income that it receives from its subsu idiaries as a primaryrr source of
funds to meet its payment obligations. Kemper’s insurance subsu idiaries are subju ect to regulatoryr
restrictions under insurance
laws and regulations that limit their ability to declare and pay dividends. These laws and regulations impose minimum solvency
and liquidity requirements on dividends between affiff liated companies and require prior notice to, and may require approval
from, state insurance regulators before dividends can be paid. In addition, third-party rating agencies monitor statutt oryr capital
and surplus levels for capital adequacy. Even though a dividend may be payabla e without regulatoryrr approval, an insurance
subsu idiary may forgo paying a dividend to Kemper and retain the capia tal to maintain or improve ratings or to offsff et increases in
required capia tal from increases in premium volume or investment risk. The inability of one or more of Kemper’s insurance
subsu idiaries to pay sufficient dividends to Kemper may materially affeff ct Kemper’s ability to pay its debt obligations on time,
pay dividends to its shareholders or undertake funding for targeted transactions.

General Risks Relating to Mergers, Acquisitions, Divestitures, and/or other Strategic Initiatives

The expexx ctedtt
realizll ed to the extent anticipatedtt

or withii

in the anticipat

edtt

timeii

frames.

benefie tsii and synergies from mergers,rr acquisitiott ns,s divestitutt

res, and/or//

othett

r stratt

tegie c initiatives maya not be

The Company routinely evaluates opportunities for transactions such as mergers, acquisitions, divestitures, and/or other
strategic initiatives that would enhance its business and align with the Company’s strategic plans. Kemper’s ability to achieve

the anticipated financial benefits from transactions may not be realized due to any number of factors, including, but not limited
to, integration or execution difficulties or failures that may result in subsu tantial disrupt
ions, costs, or delays and adversely affeff ct
the Company’s ability to compete, the loss of key agents/brokers, customers or employees, unexpected or underestimated
liabia lities, increased costs, fees, expenses and charges related to transactions, or may be delayed by factors outside of the
Company’s control. These adverse events could result in a decrease in the estimated fair value of goodwill or other intangible
assets establa ished as a result of such transactions, triggering an impairment. In addition, the Company’s strategic initiatives,
such as the establa ishment of Kemper Reciprocal, may not perform as expected or deliver the expected benefits to the Company.
Failure to successfully and timely realize the anticipated benefits of these transactions or initiatives could have a negative
impact on Kemper’s financial condition, profitff ability, and results from operations.

Risks Relating to General Economic and Market Factors

Changes in the global
ll
finaii ncial conditiodd

economy and capia taii

l marketstt couldll adverserr

ly impact the Company’n s’ resultstt of operations and

Significant changes in the economic and capia tal market environment could adversely affeff ct consumer demands for the
Company’s products, results of operations, investment returns and financial condition. The following are examples of economic
market conditions that could adversely affeff ct the Company’s financial condition, liquidity, and results of operations:

•
•
•
•
•
•

Volla iltilityity iin ddebbt andd eq iui yty ma krkets
Changes in interest rates
Increases in inflation
Reducd ed availability of credit
Economic downturt ns
Increased unemployment and reduced consumer spending

Stressed conditions, volatility and disrupt
investment portfolff

io and the Company’s ability to access the capia tal markets.

ions in global capital markets or financial asset classes could adversely affeff ct our

The Company’n s’ defee rred taxaa assets couldll become impaim reii d which wouldll adverserr
operations and finaii ncial conditdd iott n.

ly impacm t the Company’n s’ results of

ient taxabla e income and character. If future events
The realization of deferred tax assets depends on the recognition of sufficff
differ from our current forecasts, it is possible we could determine that some or all of our gross deferred tax assets cannot be
realized and a deferred tax valuation allowance would be recorded as an adverse charge.

Item 1B.

Unresolved Staffff Comments.

The Company has no unresolved staffff comments issued more than 180 days before December 31, 2023, the date of this Annual
Report on Form 10-K.

Item 1C.

Cybersecurity.

The Company has developed an information security program to assess, identify,ff
and monitor cybersecurity risks. Each year,
the Company assesses cybersecurity risks arising from the operating environment. In developing the assessment process, the
Company reviews guidance from national standards organizations such as the NIST and the Center for Internet Security. In
evaluating the risks identifieff d as a part of this assessment, the Company’s information security team considers the likelihood
and severity of the risk and the possible impact of the risk on the Company, its customers, and its employees. These risks are
then monitored by the Company’s information security team.

The Company conducts periodic testing of software, hardware, defensive capaa bia lities, and other information security systems.
Tests are conducted by both internal security teams and third-party consultants. In developing the testing procedurd es, the
Company considers its individual risks and industryr standards. Testing procedurd es are supplu
exercises and employee training. Executive exercises such as “tabletops” are used to develop and refine the Company’s incident
response plans. Employees undergo security awareness training annually and upon hire.

emented by executive cyber threat

As a part of its inforff mation security program, the Company addresses cyber risks posed by its relationships with third-party
service and application providers. The Company assesses third parties as a part of the procurement process, including through
pre-acquisition diligence. Contractuat

requirements and industryr standards are used in the

l provisions based on regulatoryrr

contracting process, and the Company conducts on-going performance monitoring of key vendors. Security audits are also
performed on certain vendors to review compliance with contractuat

l requirements and industryrr standards.

The Company maintains an incident response plan that includes procedurd es for evaluating and addressing a cybersecurity event.
The initial impact of each cybersecurity event is evaluated by a designated team using pre-establa ished risk criteria. If an event
meets certain parameters, it is escalated to a cross-functional core team of executives, including the Company’s Chief
Information Security Offiff cer (“CISO”) and designated internal legal counsel. The Company has a cyber incident disclosure
committee that evaluates and considers whether public disclosure of an event is required. The incident response plan identifies
certain third-party advisors, consultants and legal counsel who have been designated to assist if necessary. The plan contains
procedurd es for escalating cybersecurity incidents to the Board of Directors.

The Company’s CISO is primarily responsible for management of the Company’s information security program. The
Company’s current CISO has significant experience in information security, as do members of the information security team.
The Company participates in certain industryrr cybersecurity intelligence and risk sharing organizations, such as FS-ISAC and
the Domestic Security Alliance Council.

Kemper’s information security program is an element of the Company’s broader Enterprise Risk Management (ERM)
framework. This framework employs a management committee structurt e to review technology, compliance, and operational
risks. The Company’s Enterprise Risk Committee (“ERC”), composed of the Chief Executive Offiff cer, the Chief Risk Offiff cer,
all executive vice presidents and the head of internal audit, meets at least quarterly to oversee the Company’s ERM framework.
This committee monitors the implementation of the ERM framework and makes modifications to the program from time to time
as it believes appropriate. The ERC has several subcu ommittees that oversee particular risks, including cyber and information
security.

Through its role in providing oversight for the Company’s ERM framework, the Risk Committee of the Kemper Board of
Directors (the “Risk Committee”) provides oversight of the Company’s information security program. On a quarterly basis,
management discusses Kemper’s information security program, cybersecurity risks, and related developments with the Risk
Committee. The Risk Committee periodically reviews and evaluates information security and cybersecurity risks and provides
oversight of events that have been escalated as a part of the incident response plan.

Item 2.

Properties.

Owned Properties

Kemper’s subsu idiaries together own and occupyu
square feet in the aggregate. Kemper’s subsu idiaries hold, solely for investment purpos
occupiu ed by Kemper or its subsu idiaries. Included in Kemper’s owned and occupiu ed properties is a corporate data processing
facility with aggregate square footage of approximately 110,000 square feet.

eleven buildings located in seven states consisting of approximately 337,000

es, additional properties that are not

Leased Facilities

The Company leases four floors, or approximately 92,000 square feet, in an 83-storyrr offiff ce building in Chicago, Illinois, for its
corporate headquarters. The lease expires on December 31, 2033. Kemper’s property and casualty insurance subsu idiaries lease
facilities with an aggregate square footage of approximately 624,000 at 92 locations in eleven states. The latest expiration date
of the existing leases is in June 2031. Kemper’s lifeff
approximately 379,000 at 96 locations in 23 states. The latest expiration date of the existing leases is in September 2029.

insurance subsu idiaries lease facilities with aggregate square footage of

The properties described above are in good condition. The properties utilized in the Company’s operations consist of facilities
suitabla e for general offiff ce space, call centers and data processing operations. Leased properties with aggregate square footage of
335,000 are not currently utilized in the Company's operations and are not expected to be utilized by the Company throughout
the remainder of their respective lease terms.

Item 3.

Legal Proceedings.

Proceedings

Information concerning pending legal proceedings is incorporated herein by reference to Note 28, “Commitments and
Contingencies,” to the Consolidated Financial Statements.

Item 4.

Mine Safetff y Disclosures.

Not applicable.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.

Market Information

Kemper’s common stock is traded on the NYSE under the symbol of “KMPR.”

Holders

As of January 31, 2024, the number of record holders of Kemper’s common stock was 2,575.

Dividends

Quarterly information pertaining to payment of dividends on Kemper’s common stock is presented below.

DOLLARS PEREE SHAREHH
Cash Dividends Paid to Shareholders (per share) ...... $

Mar 31, 2023
0.31

Jun 30, 2023
0.31
$

Sep 30, 2023
0.31
$

Dec 31, 2023
0.31
$

Dec 31, 2023
1.24
$

Three Months Ended

Year Ended

Three Months Ended

Year Ended

DOLLARS PEREE SHAREHH
Cash Dividends Paid to Shareholders (per share) ...... $

Mar 31, 2022
0.31

Jun 30, 2022
0.31
$

Sep 30, 2022
0.31
$

Dec 31, 2022
0.31
$

Dec 31, 2022
1.24
$

Kemper’s insurance subsu idiaries are subju ect to various state insurance laws that may restrict the ability of these insurance
subsu idiaries to pay dividends without prior regulatoryrr approval. See MD&A, “Liquidity and Capia tal Resources” and Note 17,
“Shareholders’ Equity,” to the Consolidated Financial Statements for information on Kemper’s ability and intent to pay
dividends.

Issuer Purchases of Equity Securities

On May 6, 2020, Kemper’s Board of Directors authorized the repurchase of up to an additional $200.0 million of Kemper
common stock, in addition to the $133.3 million remaining under the August 6, 2014 authorization, bringing the remaining
share repurchase authorization to approximately $333.3 million. As of December 31, 2023, the remaining share repurchase
authorization was $171.6 million under the repurchase program.

During the years ended 2023 and 2022, Kemper did not repurchase any of its common stock. During 2021, Kemper repurchased
and retired approximately 2,085,000 shares of its common stock under its share repurchase authorization for an aggregate cost
of $161.7 million and an average cost per share of $77.58.

These purchases were made in the open market in accordance with applicable federal securities laws, including Rule 10b-18
and Rule 10b5-1 of the Securities Exchange Act of 1934.

Kemper Common Stock Perforff mance Graph

The following graph assumes $100 invested on December 31, 2018 in (i) Kemper common stock, (ii) the S&P MidCap 400
Index and (iii) the S&P Supeu rcomposite Insurance Index, in each case with dividends reinvested. Kemper is a constituent of
each of these two indices.

The comparisons in the graph below are based on historical data and are not intended to forecast the possible future
performance of Kemper common stock.

Comparison of Cumulative Five Year Total Return

$225

$200

$175

$150

$125

$100

$75

$50

12/31/18

12/31/19

12/31/20

12/31/21

12/31/22

12/31/23

Kemper Corporation

S&P MidCap 400 Index

S&P Supeu rcomposite Insurance Index

Company / Index
Kemper Corporation.................................................... $ 100.00
S&P MidCap 400 Index..............................................
100.00
S&P Supeu rcomposite Insurance Index........................
100.00

2018

2019
$ 118.29
126.20
128.53

2020
$ 119.29
143.44
126.87

2021
92.92
178.95
164.76

2022
79.73
155.58
180.12

2023
80.96
181.15
198.03

Item 6.

Selected Financial Data.

[Reserved]

MDA Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Index to
Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Summary of Results ...............................................................................................................................................................
Catastrophes ...........................................................................................................................................................................
Loss and LAE Reserve Development.....................................................................................................................................
Non-GAAP Financial Measures.............................................................................................................................................
Specialty Property & Casualty Insurance...............................................................................................................................
fe Insurance.........................................................................................................................................................................
Investment Results..................................................................................................................................................................
Investment Quality and Concentrations .................................................................................................................................
Investments in Limited Liability Companies and Limited Partnerships ................................................................................
Insurance, Interest and Other Expenses..................................................................................................................................
Income Taxes..........................................................................................................................................................................
Suppl
emental Financial Information ......................................................................................................................................
u
Liquidity and Capia tal Resources ............................................................................................................................................
Contractuat
l Obligations..........................................................................................................................................................
Critical Accounting Estimates ................................................................................................................................................
Recently Issued Accounting Pronouncements .......................................................................................................................

31
33
34
35
37
42
47
50
53
54
55
56
59
62
63
69

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations

SUMMARY OF RESULTS

As discussed in Note 2, “Summary of Accounting Policies and Accounting Changes”, to the Consolidated Financial Statements
effeff ctive January 1, 2023, the Company adopted Accounting Standards Update No. 2018-12, “Targeted Improvements to the
Accounting for Long-Duration Contracts and related amendments” (“LDTI”) under the modified retrospective method. Prior
period amounts in the financial statements have been adjud sted to reflect application of the new guidance. Related financial data
shown in Management's Discussion and Analysis of Financial Condition and Results of Operations also have been adjud sted.

In the third quarter of 2023, the Company announced that it will exit the Preferff
and will actively reduce the business beginning in third quarter 2023, with all policies being non-renewed or canceled in
accordance with applicable state regulations. In connection with the exit, the Company changed its calculation of Adjud sted
red Property and Casualty Insurance business effeff ctive July 1, 2023,
Consolidated Net Loss to exclude the results of the Preferff
since the results are irrelevant to ongoing operations of the Company and do not qualifyff
for discontinued operations under U.S.
GAAP. The results of this business, previously reported as a reportabla e segment, are now reflected as Non-Core Operations and
presented as a reconciling item between Segment Adjud sted Operating Net Loss and Net Loss. Prior period amounts have been
recast to reflect the change in reportabla e segments and the segment measure of performance.

red Property and Casualty Insurance business

Net Loss Attributable to Kemper Corporation was $272.1 million ($(4.25) per unrestricted common share) for the year ended
December 31, 2023, compared to Net Loss Attributable to Kemper Corporation of $286.6 million ($(4.50) per unrestricted
common share) for the year ended December 31, 2022.

A reconciliation of Net Loss Attributable to Kemper Corporation to Adjud sted Consolidated Net Operating Loss (a non-GAAP
financial measure) for the years ended December 31, 2023, 2022 and 2021 is presented below.

LARS IN MILLIONS

Net Loss Attributable to Kemper Corporation ......................... $
Less:

Income (Loss) from Change in Fair Value of Equity and

Convertible Securities ........................................................ $

Net Realized Investment (Losses) Gains...............................
Impairment Losses.................................................................
Acquisition and Disposition Related Transaction,

Integration, Restructurt

ing and Other Costs........................

2023
(272.1) $

2022
(286.6) $

14.5

Change
from 2022
to 2023

Change
from 2021
to 2022

(162.9)

2021
(123.7) $

3.7
(14.7)
(0.9)

(63.1) $
3.4
(20.4)

66.8
(18.1)
19.5

90.5
51.2
(8.7)

(153.6)
(47.8)
(11.7)

(95.0)

(61.3)

(33.7)

(34.7)

(26.6)

Debt Extinguishment, Pension Settlement and Other

Charges...............................................................................
Goodwill Impairment Charge................................................
Non-Core Operations.............................................................
Adjud sted Consolidated Net Operating Loss ............................. $

(55.5)
(45.5)
(17.0)
(47.2) $

(2.9)
—
(25.9)
(116.4) $

(52.6)
(45.5)
8.9
69.2

Components of Adjud sted Consolidated Net Operating Loss:

Segment Adjud sted Net Operating (Loss) Income:.................

Specialty Property & Casualty Insurance ......................... $
Life Insurance....................................................................
Total Segment Adjud sted Net Operating Loss...........................
Corporate and Other Adjud sted Net Operating Loss .................
Less: Net Loss Attributable to Noncontrolling Interest ...........
Adjud sted Consolidated Net Operating Loss ............................. $

(57.1) $
51.8
(5.3)
(42.1)
(0.2)
(47.2) $

(147.4) $
68.8
(78.6)
(37.8)
—
(116.4) $

90.3
(17.0)
73.3
(4.3)
(0.2)
69.2

—
—
(12.5)
(209.5) $

(2.9)
—
(13.4)
93.1

(196.1) $
25.0
(171.1)
(38.4)
—
(209.5) $

48.7
43.8
92.5
0.6
—
93.1

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SUMMARY OF RESULTS (Continued)

Net Loss attrtt

ell
ibutabl
tt

to Kemper Corporatiott n

2023 Compared withii

2022

Net Loss attributable to Kemper Corporation decreased by $14.5 million in 2023, compared to 2022, due primarily to lower
Adjud sted Consolidated Net Operating Losses and favorable changes in the Change in Fair Value of Equity and Convertible
Securities. These improvements were partially offsff et by a $55.5 million afteff
Company’s pension obligations, a $45.5 million afteff
the Preferff
Integration, Restructurt

r-tax noncash charge related to the settlement of the
r-tax charge from the impairment of the goodwill asset related to the exit of

red Property & Casualty Insurance business and increased Acquisition and Disposition Related Transaction,

ing and Other Costs incurred in connection with the multi-year cost structurt e optimization initiatives.

Adjud sted Consolidated Net Operating Loss decreased by $69.2 million in 2023, compared to 2022, due primarily to an
improvement in the Specialty Property & Casualty Segment mostly due to personal automobile insurance driven by higher
average earned premiums per exposure resulting from rate increases and lower underlying claim frequency that was partially
offsff et by unfavff orable prior year loss and LAE development. The Life Insurance Segment also contributed to the decrease in
Adjud sted Consolidated Net Operating Loss due primarily to a decrease in net investment income driven by lower returns from
equity method limited liabia lity investments.

See MD&A, “Specialty Property & Casualty Insurance” and “Lifeff
results. Corporate and Other Adjud sted Net Operating Loss increased in 2023, compared to 2022, due primarily to a decrease in
Net Investment Income. The loss from Non-Core Operations decreased by $8.9 million in 2023, compared to 2022, mostly due
to improvements from Homeowners Insurance that were impacted by higher average earned premium per exposure resulting
from rate increases and lower underlying claim frequency.

Insurance,” for discussion of each respective segment’s

2022 Compared withii

2021

Net Loss attributable to Kemper Corporation increased by $162.9 million in 2022, compared to 2021, due primarily to
increased losses from Change in Fair Value of Equity and Convertible Securities, decreased Net Realized Investment Gains,
and increased Acquisition and Disposition Related Transaction, Integration, Restructurt
lower Adjud sted Consolidated Net Operating Losses.

ing and Other Costs, partially offsff et by

Adjud sted Consolidated Net Operating Loss decreased by $93.1 million in 2022, compared to 2021, due primarily to lower
Specialty Property & Casualty Segment Insurance Net Operating Loss and higher Life Insurance Segment Net Operating
Income, partially offsff et by higher Non-Core Operations Net Operating Losses.

See MD&A, “Specialty Property & Casualty Insurance” and “Lifeff
results. Corporate and Other Net Operating Loss decreased due primarily to increased Net Investment Income. The loss from
Non-Core Operations increased by $13.4 million due primarily to higher underlying losses and LAE as a percentage of earned
premiums and lower net investment income, partially offsff et by lower catastrophe losses and lower levels of adverse prior year
reserve development.

Insurance,” for discussion of each respective segment’s

Revenues

2023 Compared withii

2022

Earned Premiums were $4,529.4 million in 2023, compared to $5,213.4 million in 2022, a decrease of $684.0 million. Earned
Premiums in the Specialty Property & Casualty Insurance segment decreased by $413.9 million for the year ended
December 31, 2023. Earned Premiums in the Life segment decreased by $183.9 million for the year ended December 31, 2023.
Earned Premiums from Non-Core operations decreased by $86.2 million due primarily to lower volumes resulting from the
decision to exit and run-offff the business in third quarter 2023 as well as ongoing profitff
improvement actions. See MD&A,
“Specialty Property & Casualty Insurance” and “Lifeff
premiums.

Insurance” for discussion of the changes in each segment’s earned

Net Investment Income decreased by $2.9 million in 2023 due primarily to lower returns on Equity Method Limited Liabia lity
Investments and Equity Securities offsff et by higher rate earned on Fixed Income Securities.

Income related to Changes in Value of Alternative Energy Partnership Investments was $2.9 million for the year ended
December 31, 2023, compared to a net loss of $19.9 million for the same period in 2022. Tax expense related to the Alternative

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SUMMARY OF RESULTS (Continued)

Energy Partnership Investments were $0.5 million, compared to tax benefit of $8.0 million for the year ended December 31,
2023 and 2022, respectively. This resulted in a net income of $2.4 million and a net loss of $11.9 million attributable to
Alternative Energy Partnership Investments for the year ended December 31, 2023 and 2022, respectively.

Revenues for 2023 included $3.7 million of Income from Change in Fair Value of Equity and Convertible Securities compared
to a loss of $63.1 million from Change in Fair Value of Equity and Convertible Securities in 2022. The improvement was due
primarily to the absence of unrealized losses from equity securities.

Net Realized Investment Losses were $18.6 million in 2023, compared to Net Realized Investment Gains of $4.3 million for the
same period in 2022 primarily due to fair value changes on derivative transactions.

Impairment Losses were $1.1 million in 2023, compared to Impairment Losses of $25.8 million for the same period in 2022.

See MD&A, “Investment Results,” under the sub-u capta ions capta ions “Net Investment Income”, “Income (Loss) from Change in
Fair Value of Equity and Convertible Securities”, “Net Realized (Losses) Gains on Sales of Investments” and “Impairment
Losses” for additional discussion. The Company cannot predict if or when similar investment gains or losses may occur in the
future.

2022 Compared withii

2021

Earned Premiums were $5,213.4 million in 2022, compared to $5,179.2 million in 2021, an increase of $34.2 million. Earned
Premiums in the Specialty Property & Casualty Insurance segment increased by $97.9 million for the year ended December 31,
red Property & Casualty Insurance segment decreased by $56.2 million for the year ended
2022. Earned Premiums in the Preferff
December 31, 2022. See MD&A, “Specialty Property & Casualty Insurance” and “Preferred Property & Casualty Insurance”
for discussion of the changes in each segment’s earned premiums.

Net Investment Income decreased by $4.7 million in 2022 due primarily to lower valuations on Equity Method Limited
Liability Investments, lower balances in Equity Securities, and lower rate on Fixed Income Securities, partially offsff et by higher
levels of investments in Fixed Income Securities and Company-Owned Life Insurance.

Loss related to Changes in Value of Alternative Energy Partnership Investments was $19.9 million for the year ended
December 31, 2022, compared to a net loss of $61.2 million for the same period in 2021. Tax benefits related to the Alternative
Energy Partnership Investments were $8.0 million, compared to tax benefits of $79.0 million for the year ended December 31,
2022 and 2021, respectively. This resulted in a net loss of $11.9 million and net income of $17.8 million attributable to
Alternative Energy Partnership Investments for the year ended December 31, 2022 and 2021, respectively.

Other Income increased by $4.4 million for the year ended December 31, 2022, compared to the same period in 2021.

Net Realized Gains on Sales of Investments were $4.3 million in 2022, compared to $64.8 million in 2021.

Impairment Losses were $25.8 million in 2022, compared to $11.0 million for the same period in 2021.

See MD&A, “Investment Results,” under the sub-u capta ions “Net Realized (Losses) Gains on Sales of Investments” and
“Impairment Losses” for additional discussion. The Company cannot predict if or when similar investment gains or losses may
occur in the future.

CATASTROPHES

Catastrophes and natural disasters are inherent risks of the property and casualty insurance business. These catastrophic events
and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and
winter storms. Such events result in insured losses that are, and will continue to be, a material factor in the results of operations
and financial position of the Company’s property and casualty insurance companies. Further, because the level of these insured
losses occurring in any one year cannot be accurately predicted, these losses may contribute to material year-to-year
fluctuations in the results of operations and financial position of these companies. Specificff
likely to occur at certain times within the year than others. This factor adds an element of seasonality to property and casualty
insurance claims. The Company has adopted the industry-r wide catastrophe classifications of storms and other events
promulgated by ISO to track and report losses related to catastrophes. ISO classifies a disaster as a catastrophe when the event
causes $25.0 million or more in direct insured losses to property and affeff cts a significant number of policyholders and insurers.
ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry.rr

types of catastrophic events are more

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CATASTROPHES (Continued)

The number of ISO-classified catastrophic events and catastrophe losses and LAE, net of reinsurance recoveries, (excluding
loss and LAE reserve development) by range of loss and business segment for the years ended December 31, 2023, 2022 and
2021 are presented below.

DOLLARS IN MILLIONS

Range of Losses and LAE Per Event:

Below $5.......................................................

$5 - $10 .........................................................
$10 - $15 .......................................................

$15 - $20 .......................................................

$20 - $25 .......................................................

Greater Than $25 ..........................................
Total..............................................................

Specialty Property & Casualty Insurance........

Life Insurance..................................................

Non-Core Operations ......................................
Total Catastrophe Losses and LAE .................

Catastrott pho

e Reinsurance

Dec 31, 2023

Year Ended

Dec 31, 2022

Dec 31, 2021

Number of
Events

Losses and
LAE

Number of
Events

Losses and
LAE

Number of
Events

Losses and
LAE

3
—

—

—
71

77.7

19.0
—

—

—
96.7

34.5

2.2

60.0
96.7

2
1

—

—
62

54.6

10.2
14.5

—

—
79.3

23.0

1.8

54.5
79.3

2
—

—

—
69

56.1

16.5
—

35.2

—

—
107.8

15.7

13.0

79.1
107.8

The Company primarily manages its exposure to catastrophes and other natural disasters through a combination of geographical
diversificff ation, restrictions on the amount and location of new business production in such regions, modifications of,ff and/or
limitations to coverages and deducd tibles for certain perils in such regions and a catastrophe reinsurance program for the
Company’s Property & Casualty Insurance business. Coverage under the catastrophe reinsurance program is provided in
various contracts and layers. The Company’s Property & Casualty Insurance business also purchase reinsurance from the FHCF
for hurricane losses in Florida at retentions lower than its catastrophe reinsurance program.

The Company had no material recoveries under its catastrophe reinsurance treaties for the years ended December 31, 2023,
2022 and 2021. See the “Reinsurance” subsu ection of the “Property and Casualty Insurance Business” and “Lifeff
Insurance
Business” sections of Item 1(c), “Description of Business,” and Note 25, “Catastrophe Reinsurance,” to the Consolidated
Financial Statements for additional information on the Company’s reinsurance programs.

LOSS AND LAE RESERVE DEVELOPMENT

Increases (decreases) in the Company’s property and casualty loss and LAE reserves for the years ended December 31, 2023,
2022 and 2021 to recognize adverse (favorable) loss and LAE reserve development from prior accident years in continuing
r also referred to as “reserve development” in the discussion of segment results, are presented below.
operations, hereinafteff

DOLLARS IN MILLIONS

2023

2022

2021

Increase (Decrease) in Total Loss and LAE Reserves Related to Prior Years:

Non-catastrophe................................................................................................................. $
Catastrophe........................................................................................................................
Increase (Decrease) in Total Loss and LAE Reserves Related to Prior Years ...................... $

168.9
(9.1)
159.8

(10.5) $
(4.1)
(14.6) $

112.1
(5.4)
106.7

See MD&A, “Specialty Property & Casualty Insurance,” MD&A, “Lifeff
Insurance Reserves,” to the Consolidated Financial Statements for additional information on the Company’s reserve
development. See MD&A, “Critical Accounting Estimates,” of this 2023 Annual Report for additional information pertaining to
the Company’s process of estimating property and casualty insurance reserves for losses and LAE, and the estimated variability

Insurance,” and Note 6, “Property and Casualty

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LOSS AND LAE RESERVE DEVELOPMENT (Continued)

thereof, development of property and casualty insurance losses and LAE, and a discussion of some of the variables that may
impact them.

NON-GAAP FINANCIAL MEASURES

Pursuant to the rules and regulations of the SEC, the Company is required to file consolidated financial statements prepared in
accordance with the accounting principles generally accepted in the United States (“GAAP”). The Company is permitted to
include non-GAAP financial measures in its filings provided that they are defined along with an explanation of their usefulff ness
to investors, are no more prominent than the comparable GAAP financial measures and are reconciled to such GAAP financial
measures.

These non-GAAP financial measures should not be considered a subsu titute for the comparable GAAP financial measures, as
they do not fully recognize the overall profitff ability of the Company’s businesses.

Underlyill ngii

Losses and LAE and Underlyill ngii Combined Ratio

The following discussion of segment results uses the non-GAAP financial measures of (i) Underlying Losses and LAE and (ii)
Underlying Combined Ratio. Underlying Losses and LAE (also referred to in the discussion as “Current Year Non-catastrophe
Losses and LAE”) exclude the impact of catastrophe losses and loss and LAE reserve development from prior years from the
Company’s Incurred Losses and LAE, which is the most directly comparable GAAP financial measure.

The Underlying Combined Ratio is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the
Insurance Expense Ratio. The most directly comparable GAAP financial measure is the Combined Ratio, which is computed by
adding Total Incurred Losses and LAE Ratio, including the impact of catastrophe losses and loss and LAE reserve development
from prior years, with the Insurance Expense Ratio.

The Company believes Underlying Losses and LAE and the Underlying Combined Ratio are usefulff
financial measures to reveal the trends in the Company’s Property & Casualty Insurance segment that may be obscured by
catastrophe losses and prior-year reserve development. These catastrophe losses may cause the Company’s loss trends to vary
significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on
incurred losses and LAE and the Combined Ratio. Prior-year reserve developments are caused by unexpected loss development
on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing
on the performance of the Company’s insurance products in the current period. The Company believes it is usefulff
for investors
to evaluate these components separately and in the aggregate when reviewing the Company’s underwriting performance.

to investors and uses these

Adjudd stedtt Consolidll atdd edtt Net Operatintt g Loss

Adjud sted Consolidated Net Operating Loss is an afteff
Net Loss attributable to Kemper Corporation the afteff

r-tax, non-GAAP financial measure and is computed by excluding from
r-tax impact of:ff

(i) Income (Loss) from Change in Fair Value of Equity and Convertible Securities;

(ii) Net Realized Investment (Losses) Gains;

(iii) Impairment Losses;

(iv) Acquisition and Disposition Related Transaction, Integration, Restructurt

ing and Other Costs;

(v) Debt Extinguishment, Pension Settlement and Other Charges;

(vi) Goodwill Impairment Charges;

(vii) Non-Core Operations; and

(viii) Significant non-recurring or infrequent items that may not be indicative of ongoing operations

Significff ant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonabla y unlikely to
recur within two years, and (b) there has been no similar charge or gain within the prior two years. The most directly
comparable GAAP financial measure is Net Loss attributable to Kemper Corporation. There were no applicable significff ant non-

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

NON-GAAP FINANCIAL MEASURES (Continued)

recurring items that the Company excluded from the calculation of Adjud sted Consolidated Net Operating Loss for the years
ended December 31, 2023, 2022 or 2021.

The Company believes that Adjud sted Consolidated Net Operating Loss provides investors with a valuable measure of its
ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the
items were not excluded. Income (Loss) from Change in Fair Value of Equity and Convertible Securities, Net Realized
Investment (Losses) Gains and Impairment Losses related to investments included in the Company’s results may vary
significantly between periods and are generally driven by business decisions and external economic developments such as
capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the
insurance underwriting process. Acquisition and Disposition Related Transaction Costs, Integration Costs, and Restructurt
and Other Costs may vary significantly between periods and are generally driven by the timing of acquisitions and business
decisions which are unrelated to the insurance underwriting process. Debt Extinguishment, Pension Settlement and Other
Charges relate to (i) loss from early extinguishment of debt, which is driven by the Company’s financing and refinancing
decisions and capia tal needs, as well as external economic developments such as debt market conditions, the timing of which is
unrelated to the insurance underwriting process; (ii) settlement of pension plan obligations which are business decisions made
by the Company, the timing of which is unrelated to the underwriting process; and (iii) other charges that are non-standard, not
part of the ordinary course of business, and unrelated to the insurance underwriting process. Goodwill impairment charges are
excluded because they are infrequent and non-recurring charges. Non-Core Operations includes the results of our Preferff
Insurance business which we expect to fully exit. These results are excluded because they are irrelevant to our ongoing
operations and do not qualify for Discontinued Operations under Generally Accepted Accounting Principles ("GAAP").
Significff ant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or
economic trends.

ing

red

The preceding non-GAAP financial measures should not be considered a subsu titute for the comparable GAAP financial
measures, as they do not fully recognize the overall profitff ability of the Company’s businesses.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SPECIALTY PROPERTY & CASUALTY INSURANCE

Selected financial information for the Specialty Property & Casualty Insurance segment is presented below.

LARS IN MILLIONS

2023

2022

2021

Net Premiums Written...................................................................................................... $3,305.4

$3,934.4

$4,057.3

Earned Premiums ............................................................................................................. $3,632.5

$4,046.4

$3,948.5

Net Investment Income ....................................................................................................

168.3

140.7

Change in Value of Alternative Energy Partnership Investments....................................

Other Income....................................................................................................................

1.6

4.5

(9.9)

6.0

152.5

(29.0)

4.1

Total Revenues.................................................................................................................
Incurred Losses and LAE related to:

3,806.9

4,183.2

4,076.1

Current Year:

Non-catastrophe Losses and LAE ..........................................................................
Catastrophe Losses and LAE .................................................................................

2,974.5
34.5

3,569.2
23.0

3,480.3
15.7

Prior Years:

Non-catastrophe Losses and LAE ..........................................................................

135.2

Catastrophe Losses and LAE .................................................................................

(2.3)

(14.6)

0.6

97.4

0.3

Total Incurred Losses and LAE .......................................................................................

3,141.9

3,578.2

3,593.7

Insurance Expenses ..........................................................................................................
Segment Adjud sted Operating Loss ..................................................................................

Income Tax Benefit..........................................................................................................

741.3
(76.3)

19.2

801.9
(196.9)

49.5

774.5
(292.1)

96.0

Total Segment Adjud sted Net Operating Loss .................................................................. $ (57.1)

$ (147.4)

$ (196.1)

Ratios Based On Earned Premiums

Current Year Non-catastrophe Losses and LAE Ratio ....................................................

82.0 %

88.2 %

88.1 %

Current Year Catastrophe Losses and LAE Ratio............................................................

Prior Years Non-catastrophe Losses and LAE Ratio .......................................................
Prior Years Catastrophe Losses and LAE Ratio ..............................................................

Total Incurred Loss and LAE Ratio .................................................................................

Insurance Expense Ratio ..................................................................................................

0.9

3.7
(0.1)

86.5

20.4

0.6

(0.4)
—

88.4

19.8

0.4

2.5
—

91.0

19.6

Combined Ratio ...............................................................................................................

106.9 %

108.2 %

110.6 %

Underlying Combined Ratio

Current Year Non-catastrophe Losses and LAE Ratio ....................................................
Insurance Expense Ratio ..................................................................................................

82.0 %
20.4

88.2 %
19.8

88.1 %
19.6

Underlying Combined Ratio ............................................................................................
Non-GAAP Measure Reconciliation
Combined Ratio ...............................................................................................................
Less:

102.4 %

108.0 %

107.7 %

106.9 %

108.2 %

110.6 %

Current Year Catastrophe Losses and LAE Ratio .......................................................

Prior Years Non-catastrophe Losses and LAE Ratio ..................................................
Prior Years Catastrophe Losses and LAE Ratio..........................................................

0.9

3.7
(0.1)

0.6

(0.4)
—

0.4

2.5
—

Underlying Combined Ratio ............................................................................................

102.4 %

108.0 %

107.7 %

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SPECIALTY PROPERTY & CASUALTY INSURANCE (Continued)

INSURANCE RESERVES

DOLLARS IN MILLIONS

Insurance Reserves:

Dec 31,
2023

Dec 31,
2022

Personal Automobile........................................................................................................................... $ 1,711.9
596.8
Commercial Automobile.....................................................................................................................

$ 1,875.8
445.3

Total Insurance Reserves ....................................................................................................................... $ 2,308.7

$ 2,321.1

Insurance Reserves:

Loss and Allocated LAE Reserves:

Case and Allocated LAE..................................................................................................................... $

999.9

$ 1,099.9

Incurred But Not Reported..................................................................................................................

Total Loss and LAE Reserves.........................................................................................................

Unallocated LAE Reserves .................................................................................................................

1,132.8

2,132.7

176.0

1,041.2

2,141.1

180.0

Total Insurance Reserves ....................................................................................................................... $ 2,308.7

$ 2,321.1

See MD&A, “Critical Accounting Estimates,” under the caption “Property and Casualty Insurance Reserves for Losses and
Loss Adjud stment Expenses” for additional information pertaining to the Company’s process of estimating property and casualty
insurance reserves for losses and LAE, development of property and casualty insurance losses and LAE from prior accident
years, also referred to as “reserve development” in the discussion of segment results, estimated variability of property and
casualty insurance reserves for losses and LAE, and a discussion of some of the variables that may impact development of
property and casualty insurance losses and LAE and the estimated variability of property and casualty insurance reserves for
losses and LAE.

Overallll

2023 Compared withii

2022

The Specialty Property & Casualty Insurance segment reported Total Segment Adjud sted Net Operating Loss of $57.1 million
for the year ended December 31, 2023, compared to Total Segment Adjud sted Net Operating Loss of $147.4 million in 2022.
Total Segment Adjud sted Net Operating Loss improved by $90.3 million mostly driven by a $104.4 million improvement from
personal automobile insurance due primarily to higher average earned premiums per exposure resulting from rate increases and
lower underlying claim frequency that was partially offsff et by unfavff orable prior year loss and LAE development. The
improvement in segment adjud sted net operating loss was partially offsff et by a $14.1 million decrease from the commercial
automobile insurance business due primarily to an increase in the underlying loss ratio from higher claim average severity and
unfavff orable prior year development.

Earned Premiums in the Specialty Property & Casualty Insurance segment decreased by $413.9 million in 2023, compared to
2022 due to a decrease in new business resulting from targeted actions to improve profitff ability, partially offsff et by higher
average earned premium per exposure resulting from rate increases.

Net Investment Income in the Specialty Property & Casualty Insurance segment increased by $27.6 million in 2023, compared
to 2022, due primarily to higher rates on Fixed Income Securities and Short Term Investments partially offsff et by lower returns
on Equity Securities.

Income related to Changes in Value of Alternative Energy Partnership Investments was $1.6 million for the year ended
December 31, 2023, compared to a loss of $9.9 million for the same period in 2022. Tax expenses related to the Alternative
Energy Partnership Investments were $0.0 million and tax benefits of $4.1 million for the year ended December 31, 2023 and
2022, respectively. This resulted in net income of $1.6 million and a net loss of $5.8 million attributable to Alternative Energy
Partnership Investments for the year ended December 31, 2023 and 2022, respectively.

Underlying losses and LAE as a percentage of earned premiums were 82.0% in 2023, an improvement of 6.2 percentage points,
compared to 2022, driven by higher average earned premium per exposure resulting from rate increases and lower underlying
claims frequency, partially offsff et by higher claims average severity from rising inflation and supplu

y chain constraints.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SPECIALTY PROPERTY & CASUALTY INSURANCE (Continued)

Underlying losses and LAE exclude the impact of catastrophes and loss and LAE reserve development. Adverse loss and LAE
reserve development (including catastrophe reserve development) was $132.9 million for 2023 compared to favorable
development of $14.0 million for 2022 due primarily to higher than expected emergence in loss patterns related to third and
fourth accident quarters of 2022 within the bodily injun ry and physical damage coverages as well as an increase in Florida
personal injun ry protection driven by higher than expected frequency and severity resulting from an increase in litigated claim
activity, mainly from policy years 2020 through 2022. Catastrophe losses and LAE (excluding reserve development) were
$34.5 million for 2023 compared to $23.0 million for 2022, an increase of $11.5 million.

Insurance Expenses were $741.3 million, or 20.4 percent of earned premiums, in 2023 a deterioration of 0.6 percent compared
to 2022. The $60.6 million decrease is primarily due to a reduction in new business, as discussed above.

The Specialty Property & Casualty Insurance segment’s 2023 effeff ctive income tax rate was 25.3% compared to 25.1% in 2022.
income tax rate due primarily to investments
The effeff ctive income tax rate for 2023 and 2022 differs from the federal statutt oryrr
in Company-Owned Life Insurance, tax-exempt investment income and dividends received deductions.

2022 Compared withii

2021

The Specialty Property & Casualty Insurance segment reported Segment Net Operating Loss of $147.4 million for the year
ended December 31, 2022, compared to Net Operating Loss of $196.1 million in 2021. Segment net operating losses decreased
by $48.7 million due primarily to favorable prior year loss and LAE reserve development in 2022 of $14.6 million compared to
adverse development in 2021 of $97.4 million.

Earned Premiums in the Specialty Property & Casualty Insurance segment increased by $97.9 million in 2022, compared to
2021 driven by the acquisition of American Access Casualty Company (“AAC”) and higher average earned premium per
exposure resulting from rate increases. Policies-in-force were lower in Private Passenger Auto as a result of lower levels of new
business due to ongoing profitff

improvement actions.

Net Investment Income in the Specialty Property & Casualty Insurance segment decreased by $11.8 million in 2022, compared
to 2021, due primarily to lower returns from Alternative Investments and Equity Securities, partially offsff et by higher yields and
levels of investments in fixed income securities.

Loss related to Changes in Value of Alternative Energy Partnership Investments was $9.9 million for the year ended December
31, 2022, compared to a loss of $29.0 million for the same period in 2021. Tax benefits related to the Alternative Energy
Partnership Investments were $4.1 million and tax benefits of $37.4 million for the year ended December 31, 2022 and 2021,
respectively. This resulted in a net loss of $5.8 million and a net income of $8.4 million attributable to Alternative Energy
Partnership Investments for the year ended December 31, 2022 and 2021, respectively.

Underlying losses and LAE as a percentage of earned premiums were 88.2% in 2022, a deterioration of 0.1 percentage points,
compared to 2021, due primarily to higher severity trends partially offsff et by earned rate increases and lower claim frequency.
Severity trends increased due to rising inflation and supplu
catastrophes and loss and LAE reserve development. Favorable loss and LAE reserve development (including catastrophe
reserve development) was $14.0 million in 2022, compared to adverse reserve development of $97.7 million in 2021.

y chain constraints. Underlying losses and LAE exclude the impact of

Catastrophe losses and LAE (excluding reserve development) were $23.0 million in 2022, compared to $15.7 million for the
same period in 2021, a deterioration of $7.3 million. Insurance Expenses were $801.9 million, or 19.8% of earned premiums,
for the year ended December 31, 2022, a deterioration of 0.2 percentage point compared to the same period in 2021.

The Specialty Property & Casualty Insurance segment’s 2022 effeff ctive income tax rate was 25.1% compared to 32.9% in 2021.
income tax rate due primarily to investments
The effeff ctive income tax rate for 2022 and 2021 differs from the federal statutt oryrr
in Company-Owned Life Insurance, tax-exempt investment income and dividends received deductions. The change in the
effeff ctive tax rate between 2022 and 2021 is largely due to fewer investment tax credits generated during 2022 as compared to
2021.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SPECIALTY PROPERTY & CASUALTY INSURANCE (Continued)

Speciali

tyll Personal Automobileii

Insurance

Selected financial information for the specialty personal automobile insurance product line for the years ended December 31,
2023, 2022, and 2021 is presented below.

DOLLARS IN MILLIONS

2023

2022

2021

Net Premiums Written........................................................................................................ $ 2,677.5

$3,305.1

$3,587.2

Earned Premiums ............................................................................................................... $ 2,977.8

$3,496.7

$3,533.7

Incurred Losses and LAE related to:..................................................................................

Current Year:

Non-catastrophe Losses and LAE.................................................................................. $ 2,464.0

$3,153.9

$3,173.9

Catastrophe Losses and LAE.........................................................................................

29.6

20.7

14.4

Prior Years:

Non-catastrophe Losses and LAE..................................................................................

111.0

Catastrophe Losses and LAE.........................................................................................

(2.3)

(18.1)

0.5

85.0

0.3

Total Incurred Losses and LAE.......................................................................................... $ 2,602.3

$3,157.0

$3,273.6

Ratios Based On Earned Premiums

Current Year Non-catastrophe Losses and LAE Ratio ......................................................
Current Year Catastrophe Losses and LAE Ratio..............................................................

Prior Years Non-catastrophe Losses and LAE Ratio .........................................................

Prior Years Catastrophe Losses and LAE Ratio ................................................................
Total Incurred Loss and LAE Ratio ...................................................................................

82.8
1.0

3.7

(0.1)
87.4

0.2
0.6

(0.5)

—
0.3

9.8 %
0.4

2.4

—
2.6 %

2023 Compared withii

2022

Earned Premiums on personal automobile insurance decreased by $518.9 million in 2023, compared to 2022, due to a decrease
in new business driven by targeted underwriting actions to improve profitff ability, partially offsff et by higher average earned
premium per exposure resulting from rate increases. Incurred losses and LAE were $2,602.3 million, or 87.4% of earned
premiums, in 2023, compared to $3,157.0 million, or 90.3% of earned premiums, in 2022. Incurred losses and LAE as a
percentage of earned premiums decreased driven by higher average earned premiums per exposure resulting from rate increases
and a lower frequency of claims, partially offsff et by adverse prior year loss and LAE development. Underlying losses and LAE
as a percentage of related earned premiums were 82.8% in 2023, compared to 90.2% in 2022, an improvement of 7.4 points.
Adverse loss and LAE reserve development was $108.7 million in 2023, compared to favorable loss and LAE reserve
developments of $17.6 million in 2022. The adverse loss and LAE reserve development was primarily driven by higher than
expected emergence in loss patterns related to third and fourth accident quarters of 2022 within the bodily injun ry and physical
damage coverages as well as an increase in Florida personal injun ry protection driven by higher than expected frequency and
severity resulting from an increase in litigated claim activity, mainly from policy years 2020 through 2022. Catastrophe losses
and LAE (excluding reserve development) were $29.6 million in 2023 compared to $20.7 million in 2022.

2022 Compared withii

2021

Earned Premiums on specialty personal automobile insurance decreased by $37.0 million in 2022, compared to 2021, due
primarily to the decrease in new business driven by targeted underwriting actions to improve profitff ability partially offsff et by the
acquisition of AAC and higher average earned premium per exposure resulting from rate increases. Incurred losses and LAE
were $3,157.0 million, or 90.3% of earned premiums, in 2022, compared to $3,273.6 million, or 92.6% of earned premiums, in
2021. Incurred losses and LAE as a percentage of earned premiums improved primarily due to a favorable change in prior year
loss and LAE reserve development, partially offsff et by deterioration in underlying losses and LAE as a percentage of earned
premium. 2021’s adverse prior year loss and LAE reserve development was primarily driven by legal developments and
increased severity in personal injun ry protection coverages in Florida and liabia lity coverages. Underlying losses and LAE as a
percentage of related earned premiums were 90.2% in 2022, compared to 89.8% in 2021, a deterioration of 0.4 points due to
higher claim severity trends partially offsff et by earned premium per exposure increases and lower claim frequency. Severity
trends increased due to rising inflation and supplu

y chain constraints. Favorable loss and LAE reserve development was $17.6

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SPECIALTY PROPERTY & CASUALTY INSURANCE (Continued)

million in 2022, compared to adverse loss and LAE reserve developments of $85.3 million in 2021, Catastrophe losses and
LAE (excluding reserve development) were $20.7 million in 2022, compared to $14.4 million in 2021, due primarily to losses
arising from Hurricane Ian.

Commercial Automobileii

Insurance

Selected financial information for the commercial automobile insurance product line is presented below.

DOLLARS IN MILLIONS

2023

2022

2021

Net Premiums Written...................................................................................................... $ 627.9

Earned Premiums ............................................................................................................. $ 654.7

$ 629.3

$ 549.7

$ 470.1

$ 414.8

Incurred Losses and LAE related to:

Current Year:

Non-catastrophe Losses and LAE ............................................................................... $ 510.5

$ 415.3

$ 306.4

Catastrophe Losses and LAE.......................................................................................

4.9

Prior Years:

Non-catastrophe Losses and LAE ...............................................................................
Catastrophe Losses and LAE.......................................................................................

24.2
—

2.3

3.5
0.1

1.3

12.4
—

Total Incurred Losses and LAE ....................................................................................... $ 539.6

$ 421.2

$ 320.1

Ratios Based On Earned Premiums

Current Year Non-catastrophe Losses and LAE Ratio ....................................................

78.0 %

75.6 %

73.9 %

Current Year Catastrophe Losses and LAE Ratio............................................................
Prior Years Non-catastrophe Losses and LAE Ratio .......................................................

Prior Years Catastrophe Losses and LAE Ratio ..............................................................
Total Incurred Loss and LAE Ratio .................................................................................

0.7
3.7

—
82.4 %

0.4
0.6

—
76.6 %

0.3
3.0

—
77.2 %

2023 Compared withii

2022

Earned premiums from commercial automobile insurance increased by $105.0 million in 2023, compared to 2022, due
primarily to higher volume and higher average earned premium per exposure resulting from rate increases. Incurred losses and
LAE were $539.6 million, or 82.4% of earned premiums, in 2023, compared to $421.2 million, or 76.6% of earned premiums,
in 2022. Incurred losses and LAE as a percentage of earned premiums increased due to both a deterioration in underlying losses
and LAE as a percentage of earned premiums, as well as higher levels of adverse loss and LAE reserve development.
Underlying losses and LAE as a percentage of earned premiums were 78.0% in 2023, compared to 75.6% in 2022, a
deterioration of 2.4 percentage points due primarily to higher severity trends from rising inflation and supplu
Adverse loss and LAE reserve development was $24.2 million in 2023, compared to $3.6 million in 2022 due primarily to
higher than expected emergence in loss patterns related to policy years 2021 and 2022 bodily injun ry coverages.

y chain constraints.

2022 Compared withii

2021

Earned premiums in commercial automobile insurance increased by $134.9 million in 2022, compared to 2021, due primarily to
higher volume and higher average earned premium per exposure. Incurred losses and LAE were $421.2 million, or 76.6% of
earned premiums, in 2022, compared to $320.1 million, or 77.2% of earned premiums, in 2021. Incurred losses and LAE as a
percentage of earned premiums improved due primarily to lower levels of adverse prior year development on prior year claims
offsff et by an increase in underlying losses and LAE as a percentage of earned premiums. Underlying losses and LAE as a
percentage of earned premiums were 75.6% in 2022, compared to 73.9% in 2021, a deterioration of 1.7 percentage points due
primarily to higher claim severity trends. Severity trends increased due to rising inflation and supplu
loss and LAE reserve development was $3.6 million in 2022, compared to adverse reserve development of $12.4 million in
2021.

y chain constraints. Adverse

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE INSURANCE

Selected financial information for the Life Insurance segment is presented below.

DOLLARS IN MILLIONS
Earned Premiums ................................................................................................................... $
Net Investment Income ..........................................................................................................
Change in Value of Alternative Energy Partnership Investments .........................................
Other Loss .............................................................................................................................
Total Revenues.......................................................................................................................
Policyholders’ Benefits and Incurred Losses and LAE .........................................................
Insurance Expenses................................................................................................................
Segment Adjud sted Operating Income ....................................................................................
Income Tax (Expense) Benefit .............................................................................................
Total Segment Adjud sted Net Operating Income.................................................................... $

2023
387.6
193.4
0.7
(0.2)
581.5
243.4
275.8
62.3
(10.5)
51.8

2022
571.5
216.5
(5.3)
(0.6)
782.1
360.8
343.3
78.0
(9.2)
68.8

2021
579.0
202.7
(15.8)
(1.3)
764.6
388.5
369.6
6.5
18.5
25.0

DOLLARS IN MILLIONS
Insurance Reserves:

INSURANCE RESERVES

Dec 31,
2023

Dec 31,
2022

Future Policyholder Benefits ................................................................................................................ $ 3,375.6
Incurred Losses and LAE Reserves:

Life ..................................................................................................................................................
Accident and Health ........................................................................................................................
Property ...........................................................................................................................................
Total Incurred Losses and LAE Reserves.............................................................................................

42.1
4.7
2.9
49.7
Total Insurance Reserves........................................................................................................................... $ 3,425.3

$ 3,218.5

53.3
4.3
2.3
59.9
$ 3,278.4

See Note 2 “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial Statements under the
sub-u caption “Insurance Reserves” for additional discussion.

2023 Compared withii

2022

Total Segment Adjud sted Net Operating Income in the Life Insurance segment was $51.8 million in 2023, compared to $68.8
million in 2022.

Earned Premiums in the Life Insurance segment decreased by $183.9 million for the year ended December 31, 2023, compared
to 2022 due primarily to the disposition of Reserve National in December 2022 ($146.2 million) and changes in assumptions as
part of the annual assumption update for Deferred Profitff Liability in 2023 ($15.0 million reduction in earned premium) as
compared to 2022 ($12.7 million increase in earned premium). Excluding these impacts, Earned Premiums decreased by $10.0
million due primarily to lower volume on accident & health and property insurance products.

Net Investment Income decreased by $23.1 million in 2023, compared to 2022, due primarily to lower returns from equity
method limited liability investments.

Income related to Changes in Value of Alternative Energy Partnership Investments was $0.7 million for the year ended
December 31, 2023 compared to a loss of $5.3 million for the same period in 2022. Tax expense related to the Alternative
Energy Partnership Investments were $0.0 million and tax benefits of $2.1 million for the year ended December 31, 2023 and
2022, respectively. This resulted in net income of $0.7 million and a net loss of $3.2 million attributable to Alternative Energy
Partnership Investment for the year ended December 31, 2023 and 2022, respectively.

Policyholders’ Benefits and Incurred Losses and LAE decreased by $117.4 million in 2023, compared to 2022, due primarily to
the disposition of Reserve National in December 2022 ($76.5 million) and changes resulting from the annual assumption update
in 2023 ($23.3 million reduction) compared to 2022 ($8.7 million increase). Excluding these impacts, Policyholders’ Benefits

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE INSURANCE (Continued)

and Incurred Losses and LAE decreased by $8.9 million primarily driven by changes in mortality experience and lower current
year property non-catastrophe losses and LAE.

Insurance Expenses in the Life Insurance segment decreased by $67.5 million in 2023, compared to 2022, due primarily to the
disposition of Reserve National in December 2022.

The Life Insurance segment’s 2023 effeff ctive income tax rate was 16.9% compared to 11.8% in 2022. The effeff ctive income tax
income tax rate due primarily to investments in Company-Owned Life
rate for 2023 and 2022 differs from the federal statutt oryr
Insurance, tax-exempt investment income and dividends received deductions. The increase in the effeff ctive tax rate from 2022 is
primarily due to less tax-exempt investment income in 2023 and compared to 2022.

2022 Compared withii

2021

The financial information for the Life Insurance Segment includes the results of Reserve National through December 1, 2022,
the date it was sold.

Earned Premiums in the Life Insurance segment decreased by $7.5 million for the year ended December 31, 2022, compared to
2021. Excluding the impact of changes resulting from the annual assumption update for Deferred Profitff Liability in 2022 ($12.7
million increase) compared to 2021 ($4.6 million increase), Earned Premiums decreased by $15.6 million, due primarily to
lower volume on accident and health insurance products and property insurance products, partially offsff et by increased average
premium rate on life insurance products.

Net Investment Income increased by $13.8 million in 2022, compared to 2021, due primarily to higher levels of investments in
Fixed Income Securities, higher returns from Alternative Investments and higher levels of investments and rate on Company-
Owned Life Insurance, partially offsff et by lower yields on Fixed Income Securities and lower levels of investments and yields
on Equity Securities.

Loss related to Changes in Value of Alternative Energy Partnership Investments was $5.3 million for the year ended December
31, 2022 compared to a loss of $15.8 million for the same period in 2021. Tax benefits related to the Alternative Energy
Partnership Investments were $2.1 million and $20.4 million for the year ended December 31, 2022 and 2021, respectively.
This resulted in a net loss of $3.2 million and a net income of $4.6 million attributable to Alternative Energy Partnership
Investment for the year ended December 31, 2022 and 2021, respectively.

Policyholders’ Benefits and Incurred Losses and LAE decreased by $27.7 million in 2022, compared to 2021. Excluding the
impact from the annual assumption updates for Insurance Reserves in 2022 ($8.7 million increase) compared to 2021 ($5.7
million increase), Policyholders’ Benefits and Incurred Losses and LAE decreased by $30.7 million. This was due primarily to
lower mortality for lifeff

insurance and lower frequency of accident and health insurance claims.

Insurance Expenses in the Life Insurance segment decreased by $26.3 million in 2022, compared to 2021, due primarily to
lower commission expense and a reduction in expenses due to lower volume of accident and health insurance products and
property insurance products.

The Life Insurance segment’s 2022 effeff ctive income tax rate was 11.8% compared to 284.6% in 2021. The effeff ctive income tax
rate for 2022 and 2021 differs from the federal statutt oryr
income tax rate due primarily to investments in Company-Owned Life
Insurance, tax-exempt investment income and dividends received deductions and investment tax credits. The change in the
effeff ctive tax rate between 2022 and 2021 is largely due to increased pre-tax income in 2022 as compared to 2021 as well fewer
investment tax credits generated during 2022 than in 2021.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE INSURANCE (Continued)

Lifei

Insurance

Selected financial information for the lifeff

insurance product line is presented below.

DOLLARS IN MILLIONS

2023

2022

2021

Earned Premiums ............................................................................................................. $

319.2

352.8

Net Investment Income ....................................................................................................
Change in Value of Alternative Energy Partnership Investments....................................

Other Loss ........................................................................................................................

Total Revenues.................................................................................................................

Policyholders’ Benefits and Incurred Losses and LAE ...................................................
Insurance Expenses ..........................................................................................................

Adjud sted Operating Income (Loss) ..................................................................................

Income Tax (Expense) Benefit.........................................................................................

191.8

210.0

0.7

(0.4)

511.3

218.7
241.0

51.6

(8.2)

(4.9)

(1.1)

556.8

257.2
237.7

61.9

(6.2)

Total Product Line Adjud sted Net Operating Income ....................................................... $

43.4

55.7

327.2

196.8

(15.0)

(1.6)

507.4

264.1
246.3

(3.0)

19.5

16.5

2023 Compared withii

2022

Earned Premiums from lifeff
from the annual assumption update for Deferred Profitff Liability. Policyholders’ Benefits and Incurred Losses and LAE on life
insurance were $218.7 million in 2023, compared to $257.2 million in 2022, a decrease of $38.5 million. This was due
primarily to changes resulting from the annual assumption update in 2023 ($32.0 million) and changes in mortality experience.

insurance decreased by $33.6 million in 2023, compared to 2022, due primarily to changes resulting

2022 Compared withii

2021

Earned premiums on life insurance increased by $25.6 million in 2022, compared to 2021. Excluding the impact of changes
resulting from the annual assumption updates, Earned Premiums increased by $17.5 million, due primarily to increased average
insurance were $257.2 million in 2022, compared to
premium rate. Policyholders’ benefits and incurred losses and LAE on lifeff
$264.1 million in 2021, a decrease of $6.9 million. Excluding the impact from the annual assumption updates, Policyholders’
Benefits and Incurred Losses and LAE decreased by $9.9 million, due primarily to lower mortality.

Accidei nt and Healthll

Insurance

Selected financial information for the Accident and Health Insurance product line is presented below.

DOLLARS IN MILLIONS

2023

2022

2021

Earned Premiums ............................................................................................................. $

23.1

168.2

189.9

Other Income....................................................................................................................
Total Revenues.................................................................................................................
Policyholders’ Benefits and Incurred Losses and LAE ...................................................
Insurance Expenses ..........................................................................................................
Adjud sted Operating Income .............................................................................................
Income Tax Expense ........................................................................................................
Total Product Line Adjud sted Net Operating Income ....................................................... $

—
—
0.2
23.3
11.5
11.2
0.6
(0.2)
0.4

3.3
(0.1)
0.5
171.9
86.5
79.1
6.3
(1.1)
5.2

3.6
(0.3)
0.3
193.5
96.1
91.6
5.8
(0.9)
4.9

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE INSURANCE (Continued)

2023 Compared withii

2022

The financial information for the Accident and Health Insurance product line includes the results of Reserve National through
December 1, 2022, the date it was sold.

Earned Premiums from accident and health insurance decreased by $145.1 million in 2023, compared to 2022. This is due
primarily to the disposition of Reserve National in December 2022. Policyholders’ Benefits and Incurred Losses and LAE on
accident and health insurance were $11.5 million in 2023, compared to $86.5 million in 2022. This is due primarily to the
disposition of Reserve National in December 2022.

Insurance expenses decreased by $67.9 million in 2023, compared to 2022, due primarily to the disposition of Reserve National
in December 2022.

2022 Compared withii

2021

The financial information for the Accident and Health Insurance product line includes the results of Reserve National through
December 1, 2022, the date it was sold.

Earned premiums on accident and health insurance decreased by $21.7 million in 2022, compared to 2021. This is due primarily
to a lower volume of sales and the disposition of Reserve National. Policyholders’ Benefits and Incurred Losses and LAE on
accident and health insurance were $86.5 million in 2022, compared to $96.1 million in 2021 due primarily to lower frequency
of claims.

Insurance expenses decreased by $12.5 million in 2022, compared to 2021, due primarily to lower volume of accident and
health insurance products.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIFE INSURANCE (Continued)

Propertytt Insurance

Selected financial information for the property insurance product line is presented below.

DOLLARS IN MILLIONS

2023

2022

2021

Earned Premiums ............................................................................................................. $

45.3

50.5

61.9

Total Revenues.................................................................................................................

Incurred Losses and LAE related to:

Current Year:

Non-catastrophe Losses and LAE ..........................................................................

Catastrophe Losses and LAE .................................................................................

Prior Years:

Non-catastrophe Losses and LAE ..........................................................................

Catastrophe Losses and LAE .................................................................................
Total Incurred Losses and LAE .......................................................................................

Insurance Expenses ..........................................................................................................

Adjud sted Operating Income .............................................................................................

Income Tax Expense ........................................................................................................

Total Product Line Adjud sted Net Operating Income ....................................................... $
Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio ....................................................

Current Year Catastrophe Losses and LAE Ratio............................................................

1.6

—

46.9

8.9

2.2

1.3

0.8
13.2

23.6

10.1

(2.1)

8.0

3.2

(0.3)

53.4

12.5

1.8

1.3

1.5
17.1

26.5

9.8

(1.9)

7.9

2.3

(0.5)

63.7

14.2

13.0

1.2

(0.1)
28.3

31.7

3.7

(0.1)

3.6

19.5 %

24.7 %

23.0 %

4.9

2.9
1.8

3.6

2.6
3.0

21.0

1.9
(0.2)

Total Incurred Loss and LAE Ratio .................................................................................

29.1 %

33.9 %

45.7 %

2023 Compared withii

2022

Earned Premiums from property insurance decreased by $5.2 million in 2023, compared to 2022, due primarily to lower
volume of property insurance products. Incurred losses and LAE on property insurance were $13.2 million, or 29.1% of earned
premiums, in 2023, compared to $17.1 million, or 33.9% earned premiums, in 2022. Underlying losses and LAE were $8.9
million, or 19.5% of property insurance earned premiums, in 2023, compared to $12.5 million, or 24.7% of property insurance
earned premiums, in 2022, due primarily to lower claim frequency and severity. Catastrophe losses and LAE (excluding loss
reserve development) were $2.2 million in 2023, compared to $1.8 million in 2022. Catastrophe losses and LAE increased $0.4
million due primarily to higher frequency partially offsff et by lower severity of catastrophe claims. Adverse loss and LAE
reserve development was $2.1 million in 2023, compared to adverse development of $2.8 million in 2022.

2022 Compared withii

2021

Earned premiums from property insurance decreased by $11.4 million in 2022, compared to 2021, due primarily to lower
volume of property insurance products. Incurred losses and LAE on property insurance were $17.1 million, or 33.9% of earned
premiums, in 2022, compared to $28.3 million, or 45.7% earned premiums, in 2021. Underlying losses and LAE were $12.5
million, or 24.7% of property insurance earned premiums, in 2022, compared to $14.2 million, or 23.0% of property insurance
earned premiums, in 2021, an increase of 1.7 percentage points due primarily to higher claim severity. Catastrophe losses and
LAE (excluding loss reserve development) were $1.8 million in 2022, compared to $13.0 million in 2021. Catastrophe losses
and LAE decreased $11.2 million due primarily to both lower frequency of catastrophe claims and lower claim severity.
Adverse loss and LAE reserve development was $2.8 million in 2022, compared to adverse development of $1.1 million in
2021.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS

Net Investment Income

Net Investment Income for the years ended December 31, 2023, 2022 and 2021 is presented below.

LARS IN MILLIONS

Investment Income:

2023

2022

2021

Interest on Fixed Income Securities .................................................................................. $
Dividends on Equity Securities Excluding Alternative Investments ................................
Alternative Investments:

346.0
4.4

300.1
6.3

277.7
15.9

Equity Method Limited Liability Investments.............................................................
Limited Liability Investments Included in Equity Securities ......................................
Total Alternative Investments ...........................................................................................
Short-term Investments .....................................................................................................
Loans to Policyholders ......................................................................................................
Real Estate.........................................................................................................................
Company-Owned Life Insurance ......................................................................................
Other..................................................................................................................................
Total Investment Income .......................................................................................................
Investment Expenses:

Real Estate.........................................................................................................................
Other Investment Expenses ...............................................................................................
Total Investment Expenses ....................................................................................................
Net Investment Income .......................................................................................................... $

10.5
19.0
29.5
18.0
20.9
8.9
29.2
12.9
469.8

8.8
41.3
50.1
419.7

31.3
42.1
73.4
3.7
21.5
10.1
37.9
7.7
460.7

7.9
30.2
38.1
422.6

56.7
46.9
103.6
1.0
21.7
9.3
25.7
6.7
461.6

9.7
24.6
34.3
427.3

2023 Compared withii

2022

Net Investment Income was $419.7 million and $422.6 million for the years ended December 31, 2023 and 2022, respectively.
Net Investment Income decreased by $2.9 million in 2023 due primarily to lower returns on Alternative Investments partially
offsff et by higher rate earned on Fixed Income Securities and Short-term Investments.

Income and distributions on Alternative Investments can fluctuate significantly between periods as they are influenced by
operating performance of the underlying investments, changes in market or economic conditions or the timing of asset sales.

2022 Compared withii

2021

Net Investment Income was $422.6 million and $427.3 million for the years ended December 31, 2022 and 2021, respectively.
Net Investment Income decreased by $4.7 million in 2022 due primarily to lower valuations on Equity Method Limited
Liability Investments, lower balances in Equity Securities, and lower rate on Fixed Income Securities, partially offsff et by higher
levels of investments in Fixed Income Securities and Company-Owned Life Insurance.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS (Continued)

Total Comprehensive Investmett

nt Gains (Losses)

The components of Total Comprehensive Investment Gains (Losses) for the years ended December 31, 2023, 2022 and 2021
are presented below.

DOLLARS IN MILLIONS
Recognized in Consolidated Statements of Loss:

2023

2022

2021

Income (Loss) from Change in Fair Value of Equity and Convertible Securities....... $

Gains on Sales ................................................................................................................
Losses on Sales ..............................................................................................................
(Losses) Gains on Hedging Activity ..............................................................................
Impairment Losses .........................................................................................................
Net (Losses) Gains Recognized in Consolidated Statements of Loss...........................
Recognized in Other Comprehensive Income (Loss) ......................................................
Total Comprehensive Investment Gains (Losses)............................................................ $

4.7
6.7
(13.4)
(11.9)
(1.1)
(15.0)
237.1
222.1

(79.9) $
41.3
(38.7)
1.7
(25.8)
(101.4)
(1,541.2)
$ (1,642.6) $

114.6
68.0
(3.2)
—
(11.0)
168.4
(286.6)
(118.2)

Total Comprehensive Investment Gains were $222.1 million in 2023, compared to Total Comprehensive Investment Losses of
$1,642.6 million in 2022. The increase of $1,864.7 million was primarily due to a decrease in the Company’s unrealized loss
position on the fixed income bond portfolff

io.

Total Comprehensive Investment Losses were $1,624.6 million in 2022, compared to $118.2 million in 2021. The increase in
losses of $1,524.4 million primarily due to a decrease in the fair value of the Company’s fixed income bond portfolff

io.

s
Income (Loss) from Change in Fair Value of Equityii and Convertible Securitieii

The components of Income (Loss) from Change in Fair Value of Equity and Convertible Securities for the years ended
December 31, 2023 and 2022 are presented below.

2023

2022

1.8
—

0.6
2.3

2.9
4.7
—
4.7

(8.9)
(0.4)

(46.5)
(21.2)

(67.7)
(77.0)
(2.9)
(79.9)

red Stocks..................................................................................................................................... $

DOLLARS IN MILLIONS
Preferff
Common Stocks.....................................................................................................................................
Other Equity Interests:

Exchange Traded Funds ....................................................................................................................
Limited Liability Companies and Limited Partnerships ...................................................................

Total Other Equity Interests...................................................................................................................
Income (Loss) from Change in Fair Value of Equity Securities ...........................................................
Income (Loss) from Change in Fair Value of Convertible Securities ...................................................
Income (Loss) from Change in Fair Value of Equity and Convertible Securities................................. $

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS (Continued)

Net Realizll ed (Losses) Gains on Sales of Investmentstt

The components of Net Realized Investment (Losses) Gains for the year ended December 31, 2023, 2022 and 2021 are
presented below.

DOLLARS IN MILLIONS
Fixed Maturities:

2023

2022

2021

Gains on Sales ................................................................................................................... $
Losses on Sales..................................................................................................................
(Losses) Gains on Hedging Activity

5.9
(10.9)
(11.9)

31.6
(31.9)
1.7

Equity Securities:

Gains on Sales ...................................................................................................................
Losses on Sales..................................................................................................................

0.6
(2.5)

9.7
(6.8)

Equity Method Limited Liability Investments:

Gains on Sales ...................................................................................................................

Real Estate:

Other Investments:

—

—
—

Gains on Sales ...................................................................................................................
Net Realized Investment (Losses) Gains ............................................................................... $

0.2
(18.6) $

—

—
—

—
4.3

Gross Gains on Sales ............................................................................................................. $
Gross Losses on Sales............................................................................................................
(Losses) Gains on Hedging Activity......................................................................................
Net Realized Investment (Losses) Gains ............................................................................... $

6.7
(13.4)
(11.9)
(18.6) $

41.3
(38.7)
1.7
4.3

63.4
(2.1)
—

4.1
(0.7)

0.4

0.1
(0.4)

—
64.8

68.0
(3.2)
—
64.8

Fixedii Maturities

Net Realized Gains and Losses on Sale of Fixed Maturities for the year ended December 31, 2023 primarily relate to normal
portfolff

io management.

Net Realized Gains and Losses on Sale of Fixed Maturities for the year ended December 31, 2022 primarily relate to normal
portfolff

io management and to a lesser extent, a repositioning of the portfolff

io for duration extension purpos

es.

Net Realized Gains on Sales of Fixed Maturities for the year ended December 31, 2021 primarily relate to normal portfolff
management and to a lesser extent, a repositioning of the portfolff

io for duration extension purpos

es.

Equity Securities

Net Realized Gains and Losses on Sale of Equity Securities for the year ended December 31, 2023 primarily related to
disposals of equity securities and preferff

red stock.

Net Realized Gains and Losses on Sale of Equity Securities for the year ended December 31, 2022 primarily relate disposals of
equity method limited liabia lity investments and preferff

red stock.

Net Realized Gains on Sales of Equity Securities for the year ended December 31, 2021 primarily relate to transactions
whereby the Company’s interests in Equity Securities at Modified Cost were acquired by other companies.

Impaim rmii

ent Losses

The Company regularly reviews its investment portfolff
occurred from credit or other, non-credit related factors. If the decline in fair value is due to credit factors and the Company
does not expect to receive cash flows sufficient to suppor

io to determine whether a decline in the fair value of an investment has

t the entire amortized cost basis, the credit loss is reported in the

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT RESULTS (Continued)

Consolidated Statements of Loss in the period that the declines are evaluated. Conversely, an increase in the fair value or
disposal of an investment with a previously establa ished credit allowance will result in the reversal of impairment losses reported
in the Consolidated Statements of Loss in the period.

The components of Impairment Losses in the Consolidated Statements of Loss for the year ended December 31, 2023, 2022,
2021 were:

DOLLARS IN MILLIONS

2023

2022

2021

Amount

Number of
Issuers

Amount

Number of
Issuers

Amount

Number of
Issuers

Fixed Maturities ................................................................ $
Equity Securities at Modified Cost....................................
Real Estate.........................................................................
Other..................................................................................
Impairment Losses1 ........................................................... $
I Includes losses from intent-to-sell securities of $(2.0) million, $(23.8) million and $(6.6) million for the years ended December 31, 2023, 2022 and 2021,
respectively.

21 $ (25.8)
—
—
—
$ (25.8)

(6.4)
(4.2)
(0.4)
—
(11.4)

(0.1)
(0.5)
—
(0.5)
(1.1)

57 $
—
—
—

1
—
6

17
13
1
—

Fixedii Maturities

Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2023 related primarily
to investments in Intent-to-Sell securities.

Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2022 related primarily
to investments in Fixed Maturities where the Company establa ished an allowance for expected credit loss.

Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2021 related primarily
to investments in Fixed Maturities where the Company establa ished an allowance for expected credit loss.

Equity Securities

The Company recognized Impairment Losses in the Consolidated Statements of Loss for the year ended December 31, 2023
primarily related to investments in Equity Securities at Modified Cost where the Company has the intent or requirement to sell.

The Company did not recognize any Impairment Losses in the Consolidated Statements of Loss for the year ended
December 31, 2022.

Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2021 primarily related
to investments in Equity Securities at Modified Cost where the Company had the intent or requirement to sell.

Real Estate

The Company did not recognize any Impairment Losses on Real Estate Held for Investment in the Consolidated Statements of
Loss for the years ended December 31, 2023 and 2022.

Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2021 related to
investments in Real Estate held with the intent to sell.

INVESTMENT QUALITY AND CONCENTRATIONS

io is comprised primarily of high-grade corporate, municipal and agency

The Company’s fixed maturity investment portfolff
bonds. At December 31, 2023, approximately 96.2% of the Company’s fixed maturity investment portfolff
investment-grade, which the Company defines as a security issued by a high quality obligor with at least a relatively stable
l payments of principal and interest will timely occur and carry a
credit profileff
rating from the National Association of Insurance Commissioners (“NAIC”) of 1 or 2. Securities with a rating of 1 or 2 from
the NAIC typically are rated by one or more Nationally Recognized Statistical Rating Organizations and either have a rating of
AAA, AA, A or BBB from Standard & Poor’s (“S&P”); a rating of Aaa, Aa, A or Baa from Moody’s Investors Service
(“Moody’s”); or a rating of AAA, AA, A or BBB from Fitch Ratings.

and where it is highly likely that all contractuat

io was rated

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT QUALITY AND CONCENTRATIONS (Continued)

The following tabla e summarizes the credit quality of the Company’s fixed maturity investment portfolff
and 2022.

io at December 31, 2023

NAIC
Rating
1
2
3-4
5-6

Fair Value
Rating
in Millions
AAA, AA, A ............................................................................... $ 4,962.0
1,657.3
BBB ............................................................................................
204.4
BB, B ..........................................................................................
58.2
CCC or Lower.............................................................................
Total Investments in Fixed Maturities........................................................ $ 6,881.9

Percentage
of Total

Fair Value
in Millions
72.1 % $ 4,896.4
1,687.4
24.1
239.7
3.0
71.3
0.8
100.0 % $ 6,894.8

Percentage
of Total

71.0 %
24.5
3.5
1.0
100.0 %

Dec 31, 2023

Dec 31, 2022

Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $25.5 million and
$32.8 million at December 31, 2023 and 2022, respectively.

The following tabla e summarizes the fair value of the Company’s investments in governmental fixed maturities at December 31,
2023 and 2022.

DOLLARS IN MILLIONS

Dec 31, 2023

Dec 31, 2022

Fair Value

Percentage
of Total
Investments

Fair Value

Percentage
of Total
Investments

U.S. Government and Government Agencies and Authorities................... $
States and Political Subdiu

visions:

511.5

5.7 % $

528.0

6.0 %

Revenue Bonds........................................................................................

1,235.2

States .......................................................................................................
visions ..............................................................................
Political Subdi

99.8
66.9

13.9

1.1
0.8

1,324.3

143.8
100.8

3.8
Foreign Governments .................................................................................
Total Investments in Governmental Fixed Maturities ................................ $ 1,917.2

—

4.1
21.5 % $ 2,101.0

15.1

1.6
1.1

—
23.8 %

The following tabla e summarizes the fair value of the Company’s investments in non-governmental fixed maturities by industryr
at December 31, 2023 and 2022.

DOLLARS IN MILLIONS

Dec 31, 2023

Dec 31, 2022

Fair Value

Percentage
of Total
Investments

Fair Value

Percentage
of Total
Investments

urt

Finance, Insurance and Real Estate............................................................ $ 2,070.5
1,077.6
Manufact
ing ............................................................................................
807.3
Transportation, Communication and Utilities ............................................
639.4
Services ......................................................................................................

23.3 % $ 2,007.5
1,085.9
12.1
733.7
9.1
602.4
7.2

Mining ........................................................................................................
Retail Trade ................................................................................................
tion ...............................................................................................
Construcrr
Other...........................................................................................................

174.3
156.0
4.4
35.2

2.0
1.8
—
0.4

173.3
165.1
11.7
14.2

22.8 %
12.4
8.3
6.9

2.0
1.9
0.1
0.2

Total Investments in Non-governmental Fixed Maturities ........................ $ 4,964.7

55.9 % $ 4,793.8

54.6 %

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENT QUALITY AND CONCENTRATIONS (Continued)

The following tabla e summarizes the fair value of the Company’s investments in non-governmental fixed maturities by range of
amount invested at December 31, 2023.

DOLLARS IN MILLIONS

Below $5................................................................................................................................................

$5 -$10...................................................................................................................................................

$10 - $20................................................................................................................................................

$20 - $30................................................................................................................................................
Greater Than $30...................................................................................................................................

Number of
Issuers

Aggregate
Fair Value

669

192

110

20
6

$ 1,361.7

1,424.2

1,491.7

476.1
211.0

Total.......................................................................................................................................................

997

$ 4,964.7

The Company’s short-term investments primarily consist of money market funds and short term bonds. At December 31, 2023,
the Company had $219.5 million invested in money market funds which primarily invest in U.S. Treasury securities and $301.4
million invested in U.S. Treasuryr bills and short-term bonds.

The following tabla e summarizes the fair value of the Company’s ten largest investment exposures in a single issuer, excluding
investments in U.S. Government and Government Agencies and Authorities and Short-term Investment, at December 31, 2023.

DOLLARS IN MILLIONS
Fixed Maturities:

States including their Political Subdiu

visions:

Fair
Value

Percentage
of Total
Investments

Califorff nia .........................
Texas.............................................................................................................................................

Michigan ..........................
New York......................................................................................................................................
Georgia..........................................................................................................................................

Louisiana ......................................................................................................................................
Pennsylvania .................................................................................................................................
Florida...........................................................................................................................................
Colorado........................................................................................................................................
Missouri ........................................................................................................................................
Total........................................................................................................................................................ $

137.4
116.6
83.7
76.5
73.7
62.4
57.9
57.6
49.1
42.1
757.0

1.5 %
1.3
0.9
0.9
0.8
0.7
0.7
0.6
0.6
0.5
8.5 %

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INVESTMENTS IN LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS

The Company owns investments in various limited liability investment companies and limited partnerships that primarily invest
in mezzanine debt, distressed debt, real estate and senior debt. The Company’s investments in these limited liability investment
companies and limited partnerships are reported either as Equity Method Limited Liability Investments, Other Equity Interests
and included in Equity Securities at Fair Value, or Equity Securities at Modified Cost, depending on the accounting method
used to report the investment. Additional information pertaining to these investments at December 31, 2023 and 2022 is
presented below.

Reported as Equity Method Limited Liability Investments:

Asset Class

Unfunded
Commitment
in Millions

Dec 31,
2023

Reported Value in Millions

Dec 31,
2023

Dec 31,
2022

Mezzanine Debt ............................................................................................... $
Real Estate .......................................................................................................
Senior Debt ......................................................................................................
Leveraged Buyout............................................................................................
Secondary Transactions ...................................................................................
Distressed Debt................................................................................................
Growth Equity .................................................................................................
Hedge Fund......................................................................................................

Other ................................................................................................................
Total Equity Method Limited Liability Investments............................................

Alternative Energy Partnership Investments........................................................

Reported as Other Equity Interests at Fair Value:

Mezzanine Debt ...............................................................................................
Senior Debt ......................................................................................................

Leveraged Buyout............................................................................................
Distressed Debt................................................................................................
Growth Equity .................................................................................................
Secondary Transactions ...................................................................................
Hedge Funds ....................................................................................................
Real Estate .......................................................................................................
Other ................................................................................................................
Total Reported as Other Equity Interests at Fair Value .......................................
Reported as Equity Securities at Modified Cost:

Other ................................................................................................................
Total Reported as Equity Securities at Modified Cost.........................................

43.1
—
39.9
0.6
1.7
—
—
—
—
85.3

—

67.0
10.6
10.0
13.0
6.5
3.1
—
0.2
—
110.4

—
—

125.4
41.9
19.0
8.6
7.9
7.9
1.2
0.1
9.7
221.7

17.3

124.0
24.8
19.0
12.4
6.4
2.8
1.9
0.1
—
191.4

4.8
4.8

114.3
43.3
21.6
8.9
9.3
9.4
1.2
0.5
8.5
217.0

16.3

106.0
21.9
21.6
12.5
5.4
3.5
18.1
—
0.1
189.1

8.3
8.3

Total Investments in Limited Liability Companies and Limited Partnerships .... $

195.7

435.2

430.7

The Company expects that it will be required to fund its commitments over the next several years. The Company expects that
the proceeds from distributions from these investments will be the primary source of funding of such commitments.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INSURANCE, INTEREST AND OTHER EXPENSES

Expenses for the year ended December 31, 2023, 2022 and 2021 were:

LARS IN MILLIONS

Insurance Expenses:

2023

2022

2021

Commissions ....................................................................................................................... $
General Expenses ................................................................................................................
Taxes, Licenses and Fees ....................................................................................................
Total Costs Incurred ............................................................................................................
Net Policy Acquisition Costs Amortized (Deferff
red) ..........................................................
Amortization of Value of Business Acquired (“VOBA”)...................................................
Insurance Expenses................................................................................................................
Loss from Early Extinguishment of Debt ..............................................................................
Interest and Other Expenses:

584.2
342.8
79.6
1,006.6
43.8
2.0
1,052.4
—

724.8
358.4
99.5
1,182.7
14.2
4.1
1,201.0
3.7

817.6
339.5
104.3
1,261.4
(77.5)
45.0
1,228.9
—

Interest Expense ................................................................................................................
Other Expenses:

56.1

54.7

43.6

Acquisition and Disposition Related Transaction, Integration, Restructurt
Other Costs.....................................................................................................................
Pension Settlement Expense...........................................................................................
Other...............................................................................................................................

120.3
70.2
122.7
313.2
Interest and Other Expenses...................................................................................................
369.3
Goodwill Impairment.............................................................................................................
49.6
Total Expenses ....................................................................................................................... $ 1,471.3

Other Expenses

ing and

62.9
—
140.0
202.9
257.6
—
$ 1,462.3

43.9
—
131.9
175.8
219.4
—
$ 1,448.3

Insurance Expenses

Insurance Expenses were $1,052.4 million in 2023 compared to $1,201.0 million in 2022. Insurance Expenses decreased by
$148.6 million in 2023 due primarily to lower expenses from less business being written.

Insurance Expenses were $1,201.0 million in 2022 compared to $1,228.9 million in 2021. Insurance Expenses decreased by
$27.9 million for the year ended December 31, 2022, compared to 2021, due primarily to net amortization of policy acquisition
costs as the acquisition of AAC led to higher deferrals in 2021. This was partially offsff et by a corresponding decrease in the
amortization of VOBA from the acquisition of AAC and lower commissions as premium growth had slowed due to ongoing
profitff

improvement actions.

Loss from Early Extinguishment of Debt

Loss from Early Extinguishment of Debt for 2022 was due to the redemption of the 2022 Senior Notes.

Interest and Other Expenses

Interest expense increased by $1.4 million in 2023, compared to 2022, primarily due to the addition of the 2032 Senior Notes
and the 2062 Junior Debenturt es. Interest expense increased by $11.1 million for the year ended December 31, 2022, compared
to 2021, due primarily to the addition of the 2032 Senior Notes and the 2062 Junior Debenturt es in 2022.

Other Expenses increased by $110.3 million in 2023, compared to 2022, and included a $70.2 million noncash charge related to
the settlement of the Company’s pension obligations. The increase in Acquisition and Disposition Related Transaction,
Integration, Restructurt
ing and Other Costs included $28.6 million of higher integration related expenses due to continued
investments in information technology, $14.8 million of real estate exit costs related to the impairment of the Company’s
corporate offiff ce lease in Chicago, Illinois, and $6.4 million of accruer d severance expenses, mostly associated with the decision
to run-offff and exit the Preferff

red Insurance business.

Other Expenses increased by $27.1 million in 2022, compared to 2021, due primarily to higher restructurt
loss on the sale of Reserve National.

ing expenses and the

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

INSURANCE, INTEREST AND OTHER EXPENSES (Continued)

Goodwill Impairment

Goodwill Impairment increased by $49.6 million in 2023, compared to 2022, due to the impairment of goodwill related to the
Preferff
Statements for more information.

red Property & Casualty Insurance segment. See Note 14 “Goodwill and Intangibles,” to the Consolidated Financial

INCOME TAXES

income tax rate was 21% for the year ended December 31, 2023, 2022 and 2021. The

The federal corporate statutt oryr
Company’s effeff ctive income tax rate, which was 21.6%, 22.7% and 50.9% for 2023, 2022, and 2021 respectively, differs from
the federal corporate income tax rate due primarily to (1) the effeff cts of tax-exempt investment income, (2) nontaxable income
associated with the change in cash surrender value on Company-Owned Life Insurance, (3) Alternative Energy Partnership
Investment and general business tax credits, (4) a permanent differff ence between the amount of long-term equity-based
compensation expense recognized under GAAP and the amount deductible in the computation of Federal taxabla e income (5) a
permanent difference associated with nondeductible executive compensation, (6) an impairment of non-tax deductible goodwill,
(7) impact of tax legislation in foreign jurisdictions, and (8) a change in valuation allowance.

On December 27, 2023, legislation implementing a corporate income tax (“CIT”) in Bermuda was enacted into law. The CIT
imposes a 15% income tax that applies to Bermuda businesses which are part of multinational enterprise groups with annual
revenue of €750 million or more and will be effeff ctive for fiscal years beginning on or afteff
r January 1, 2025, with a five-year
deferred effeff ctive date for certain groups with a limited international footprt
tax provision, the estimated impact of the Bermuda CIT on its Bermuda based reinsurance company at the effeff ctive date. The
Company will continue to monitor guidance as it is released from the Government of Bermuda.

int. Kemper has recorded, as part of its total income

The Inflation Reduction Act (the "Law") was signed into law on August 16, 2022 and became generally effeff ctive on January 1,
2023. Included in the provisions of the Law are various changes to the tax code, including the establa ishment of a Corporate
Alternative Minimum Tax (“CAMT”). The Company, at this time, is not subju ect to the CAMT.

Tax-exempt investment income and dividends received deductions were $22.7 million in 2023, compared to $25.1 million in
2022, and $21.8 million in 2021.

The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $29.2 million in 2023, compared to
$37.9 million in 2022, and $25.7 million in 2021.

The Company realized investment tax credits and other federal income tax credits of $3.1 million in 2023, compared to realized
investment tax credits and other federal tax credits of $6.5 million for the same period in 2022, and $66.1 million in 2021.

The amount of expense recognized for long-term equity-based compensation expense under GAAP was $1.4 million higher
than the amount that would be deductible under the IRC in 2023, compared to $6.3 million higher in 2022 and $1.3 million
lower in 2021.

The amount of nondeductible executive compensation was $8.5 million in 2023, compared to $7.3 million in 2022, and $13.0
million in 2021.

The total impairment of non-tax-deductible goodwill was $30.0 million in 2023, compared to none in 2022 and 2021.

No tax expense was recognized related to sold and availabla e for sale subsu idiaries in 2023, compared to $11.5 million in 2022
and none in 2021.

As a result of recently enacted tax legislation in jurisdictions in which the Company operates, a tax benefit of $27.4 million was
recorded. No tax expense or benefit was recorded in 2022 or 2021 as a result of enacted tax legislation.

The Company recorded a change in valuation allowance of $27.4 million in 2023 for those foreign deferred tax assets it
determined were not more-likely-than-not to be realized. No valuation allowance was recorded in 2022 or 2021.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SUPPLEMENTAL FINANCIAL INFORMATION

The below tabla e provides the Consolidated Statements of Income (Loss) results under LDTI for 2023.

STT

AMOUNT

,SS EXCEPT PEREE SHAREHH

DOLLARS IN MILLIONS
Revenues:
Earned Premiums.................................................................................... $ 1,063.8
104.6
0.6
1.9

Net Investment Income ......................................................................
Change in Value of Alternative Energy Partnership Investments......
Other Income......................................................................................
Income (Loss) from Change in Fair Value of Equity and

Dec 31, 2023

Quarter Ended

Sep 30, 2023

Jun 30, 2023 Mar 31, 2023

$ 1,117.8
107.0
0.8
2.4

$ 1,166.9
106.3
0.8
1.7

$ 1,180.9
101.8
0.7
1.2

Convertible Securities...................................................................
Net Realized Investment (Losses) Gains ...........................................
Impairment Losses .............................................................................
Total Revenues .......................................................................................
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjud stment

Expenses ............................................................................................
Insurance Expenses ............................................................................
Loss from Early Extinguishment of Debt ..........................................
Interest and Other Expenses...............................................................
Goodwill Impairment ........................................................................
Total Expenses........................................................................................
Income (Loss) before Income Taxes ......................................................
Income Tax (Expense) Benefit ...............................................................
Net Income (Loss) ..................................................................................
Less: Net Loss attributable to Noncontrolling Interest...........................
Net Income (Loss) attributable to Kemper Corporation......................... $
Net Income (Loss) attributable to Kemper Corporation Per

Unrestricted Share:
Basic................................................................................................... $
Diluted................................................................................................ $

(2.2)
19.7
(1.2)
1,187.2

808.1
258.0
—
57.6
—
1,123.7
63.5
(12.2)
51.3
(0.1)
51.4

0.80
0.80

$
$

2.8
(30.3)
(1.1)
1,199.4

2.4
(14.4)
(0.9)
1,262.8

975.2
259.0
—
156.0
—
1,390.2
(190.8)
44.4
(146.4)
(0.1)
(146.3) $

984.7
266.1
—
78.3
49.6
1,378.7
(115.9)
18.8
(97.1)
—
(97.1) $

1.7
6.4
2.1
1,294.8

1,052.0
269.3
—
77.4
—
1,398.7
(103.9)
23.8
(80.1)
—
(80.1)

(2.28) $
(2.28) $

(1.52) $
(1.52) $

(1.25)
(1.25)

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SUPPLEMENTAL FINANCIAL INFORMATION (Continued)

The below tabla e provides the Consolidated Statements of Comprehensive Income (Loss) results under LDTI for 2023.

arter Ended

DOLLARS IN MILLIONS
Net Loss ..................................................................................................... $

Dec 31, 2023

Sep 30, 2023

51.3 $

(146.4) $

Jun 30, 2023 Mar 31, 2023
(80.1)

(97.1) $

Other Comprehensive Income (Loss) Before Income Taxes

Changes in Net Unrealized Holding Gains (Losses) on Investment
Securities with:

No Credit Losses Recognized in Consolidated Statements of
Income (Loss) .....................................................................................
Credit Losses Recognized in Consolidated Statements of Income
(Loss) ..................................................................................................
Change in Net Unrecognized Postretirement Benefit Costs ...................

Loss on Cash Flow Hedges.....................................................................

Change in Discount Rate on Future Life Policyholder Benefits.............
Other Comprehensive Income (Loss) Before Income Taxes.....................

Other Comprehensive Income Tax (Expense) Benefit ..............................

Other Comprehensive Income (Loss), Net of Taxes .................................
Total Comprehensive Income (Loss).........................................................

Less: Net Loss attributable to Noncontrolling Interest .............................
Less: Other Comprehensive Loss attributable to Noncontrolling Interest
Less: Total Comprehensive Loss attributable to Noncontrolling Interest .

462.7

(327.9)

(83.2)

187.2

1.1
(1.1)

(0.1)

(319.3)
143.3

(30.7)

112.6
163.9

(0.1)
—
(0.1)

(1.5)
61.4

—

276.8
8.8

(1.4)

7.4
(139.0)

(0.1)
—
(0.1)

(0.1)
(0.6)

(0.1)

50.6
(33.4)

7.3

(26.1)
(123.2)

—
—
—

—
(0.5)

—

(109.8)
76.9

(16.7)

60.2
(19.9)

—
—
—

Comprehensive Income (Loss) attributable to Kemper Corporation......... $

164.0 $

(138.9) $

(123.2) $

(19.9)

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SUPPLEMENTAL FINANCIAL INFORMATION (Continued)

The below tabla e provides the Consolidated Statements of Loss results under LDTI for 2022.

STT

AMOUNT

,SS EXCEPT PEREE SHAREHH

DOLLARS IN MILLIONS
Revenues:
Earned Premiums.................................................................................... $ 1,264.9
106.3
1.3
1.9

Net Investment Income ......................................................................
Change in Value of Alternative Energy Partnership Investments......
Other Income......................................................................................
Loss from Change in Fair Value of Equity and Convertible

Dec 31, 2022

Quarter to Date Ended

Sep 30, 2022

Jun 30, 2022 Mar 31, 2022

$ 1,290.9
97.8
0.4
4.0

$ 1,337.6
118.5
(4.9)
0.9

$ 1,320.0
100.0
(16.7)
2.4

Securities.......................................................................................
Net Realized Investment Gains (Losses) ..........................................
Impairment Losses .............................................................................
Total Revenues .......................................................................................
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjud stment

Expenses ............................................................................................
Insurance Expenses ............................................................................
Loss from Early Extinguishment of Debt ..........................................
Interest and Other Expenses...............................................................
Goodwill Impairment ........................................................................
Total Expenses........................................................................................
Loss before Income Taxes ......................................................................
Income Tax Benefit ................................................................................
Net Loss ..................................................................................................
Less: Net Loss attributable to Noncontrolling Interest...........................
Net Loss attributable to Kemper Corporation ........................................ $
Net Loss attributable to Kemper Corporation Per Unrestricted Share:

—
3.9
(3.7)
1,374.6

(11.2)
(12.1)
(8.3)
1,361.5

(40.5)
11.0
(4.9)
1,417.7

1,073.0
288.0
—
86.5
—
1,447.5
(72.9)
19.6
(53.3)
—
(53.3) $

1,085.3
300.5
—
63.5
—
1,449.3
(87.8)
13.0
(74.8)
—
(74.8) $

1,151.1
307.7
—
53.5
—
1,512.3
(94.6)
22.4
(72.2)
—
(72.2) $

(28.2)
1.5
(8.9)
1,370.1

1,123.2
304.8
3.7
54.1
—
1,485.8
(115.7)
29.4
(86.3)
—
(86.3)

Basic................................................................................................... $
Diluted................................................................................................ $

(0.84) $
(0.84) $

(1.17) $
(1.17) $

(1.13) $
(1.13) $

(1.36)
(1.36)

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

SUPPLEMENTAL FINANCIAL INFORMATION (Continued)

The below tabla e provides the Consolidated Statements of Comprehensive Income (Loss) results under LDTI for 2022.

arter Ended

DOLLARS IN MILLIONS
Net Loss ..................................................................................................... $

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022 Mar 31, 2022
(86.3)

(72.2) $

(74.8) $

Other Comprehensive Income (Loss) Before Income Taxes

Changes in Net Unrealized Holding Gains (Losses) on Investment
Securities with:

No Credit Losses Recognized in Consolidated Statements of Loss ...
Credit Losses Recognized in Consolidated Statements of Loss .........
Change in Net Unrecognized Postretirement Benefit Costs ...................
(Loss) Gain on Cash Flow Hedges .........................................................
Change in Discount Rate on Future Life Policyholder Benefits.............
Other Comprehensive Income (Loss) Before Income Taxes.....................
Other Comprehensive Income Tax (Expense) Benefit ..............................
Other Comprehensive Income (Loss), Net of Taxes .................................
Total Comprehensive Income (Loss).........................................................

(53.3) $

92.1
3.2
19.2
—
(40.2)
74.3
(15.4)
58.9
5.6

—
—
—

(411.5)
(0.8)
(0.2)
—
330.9
(81.6)
17.2
(64.4)
(139.2)

—
—
—

(587.1)
6.9
—
(0.2)
527.7
(52.7)
11.1
(41.6)
(113.8)

—
—
—

(644.6)
(7.4)
(0.1)
6.1
562.3
(83.7)
17.5
(66.2)
(152.5)

—
—
—

Comprehensive Loss attributable to Kemper Corporation ........................ $

5.6 $

(139.2) $

(113.8) $

(152.5)

LIQUIDITY AND CAPITAL RESOURCES

Shelf Regie stii rat

tion Statement

The Company filed a universal shelf registration statement with the Securities and Exchange Commission in the first quarter of
2023. Under this shelf registration, the Company may issue an undetermined amount of securities including common stock,
preferff
terms of any securities issued under this registration will be included in each applicable prospectust

red stock, depositoryrr shares, debt securities, warrants, subsu cription rights, purchase contracts, and purchase units. Specificff

ement.

supplu

Amended and Extendeddd Credit Agreg ement

On March 15, 2022, the Company entered into an amended and extended credit agreement. The amended and extended credit
agreement increased the borrowing capacity of the existing unsecured credit agreement to $600.0 million and extended the
maturity date to March 15, 2027. Furthermore, the amended and extended credit agreement provides for an accordion featurt e
whereby the Company can increase the revolving credit borrowing capaa
maximum capacity of $800.0 million. Financial covenants within the agreement limit the Company from accessing the
maximum capacity. The amount availabla e as of December 31, 2023 was $393.0 million. There were no outstanding borrowings
under the credit agreement on either December 31, 2023 or December 31, 2022.

city by an additional $200.0 million for a total of

Common Stock Offeff ring

Kemper is authorized to issue 20 million shares of $0.10 par value preferff
common stock. No preferff
and 63,912,762 shares of common stock outstanding at December 31, 2023 and 2022, respectively.

red shares were issued or outstanding at December 31, 2023 and 2022. There were 64,111,555 shares

red stock and 100 million shares of $0.10 par value

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

Long-term Debt

The Company designates debt obligations as either short-term or long-term based on maturity date at issuance. Total amortized
cost of Long-term Debt outstanding at December 31, 2023 and December 31, 2022 was:

(Dollars in Millions)

Dec 31,
2023

Dec 31,
2022

Senior Notes .............................................................................................................................................

4.350% Senior Notes due Februar

ry 15, 2025...................................................................................... $

449.6

2.400% Senior Notes due September 30, 2030...................................................................................

3.800% Senior Notes due Februar
5.875% Fixed-Rate Reset Junior Suboru

ry 23, 2032......................................................................................
dinated Debenturt es due 2062.....................................................

397.0

396.0
146.6

449.3

396.6

395.5
145.5

Total Long-term Debt Outstanding .......................................................................................................... $ 1,389.2

$ 1,386.9

See Note 23, “Debt,” to the Consolidated Financial Statements for more information regarding the Company’s long-term debt.

Federal Home Loan Bank Agreg ements

Kemper’s subsu idiaries, United Insurance Company of America (“United Insurance”), Trinity Universal Insurance Company
(“Trinity”), and AAC are members of the Federal Home Loan Banks (“FHLBs”) of Chicago, Dallas and Chicago, respectively.
Alliance United Insurance Company (“Alliance”) was a member of the FHLB of San Francisco until it surrendered all
Califorff nia licenses on January 30, 2023, and ceased to exist as an insurance company. AAC became a member of the FHLB of
Chicago in May 2022. United Insurance and Trinity became members of the FHLBs of Chicago and Dallas, respectively, in
2013. Under their memberships, United Insurance, Trinity and AAC may borrow through the advance program of their
respective FHLB. As a requirement of membership in the FHLB, United Insurance, Trinity and AAC must maintain certain
levels of investment in FHLB common stock and additional amounts based on the level of outstanding borrowings. The
Company’s investments in FHLB common stock are reported at cost and included in Other Investments. The carrying value of
FHLB of Chicago common stock was $16.6 million and $17.5 million at December 31, 2023 and December 31, 2022,
respectively. The carrying value of FHLB of Dallas common stock was $3.6 million and $3.4 million at December 31, 2023 and
December 31, 2022, respectively. The carrying value of FHLB of San Francisco common stock was $0.0 million and $1.4
million at December 31, 2023 and December 31, 2022, respectively. The Company periodically uses short-term FHLB
borrowings for a combination of cash management and risk management purpos
for spread lending purposes.

es, in addition to long-term FHLB borrowings

During 2023, United Insurance received advances of $122.5 million from the FHLB of Chicago and made repayments of
$166.1 million. United Insurance had outstanding advances from the FHLB of Chicago totaling $557.4 million at December 31,
2023. These advances were made in connection with the Company’s spread lending program. The proceeds related to these
advances were used to purchase fixed maturt

ity securities to earn incremental net investment income.

For these advances, United Insurance held pledged securities in a custodial account with the FHLB of Chicago with a fair value
of $629.3 million at December 31, 2023. The fair value of the collateral pledged must be maintained at certain specified levels
above the borrowed amount, which can vary depending on the assets pledged. If the fair value of the collateral declines below
these specified levels of the amount borrowed, United Insurance would be required to pledge additional collateral or repay
outstanding borrowings. See Note 22, “Policyholder Obligations,” to the Consolidated Financial Statements for additional
information about the United Insurance advances and related funding agreements.

Common Stock Repur

chases

On May 6, 2020, Kemper’s Board of Directors authorized the repurchase of up to an additional $200.0 million of Kemper
common stock, in addition to the $133.3 million remaining under the previous authorization. The Company did not repurchase
any of its common stock in 2023 or 2022, respectively. The Company repurchased approximately $161.7 million of stock at an
average cost per share of $77.58 in 2021. As of December 31, 2023, the remaining share repurchase authorization was
$171.6 million under the repurchase program. The amount and timing of any future share repurchases under the authorization
will depend on various factors, including market conditions, the Company’s financial condition, results of operations, availabla e
liquidity, particular circumstances and other considerations.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

Dividends to Shareholdell

Kemper paid a quarterly dividend of $0.31 per common share for each quarter of 2023 and $0.31 per common share for each
quarter of 2022, respectively. Dividends and dividend equivalents paid were $80.1 million, $79.7 million and $80.6 million for
the years ended December 31, 2023, 2022 and 2021, respectively.

Subsidiary Dividends and Capia tal Contrit butions

Various insurance laws restrict the ability of Kemper’s insurance subsu idiaries to pay dividends without regulatoryr approval.
Such insurance laws applicable to the Company’s US based subsu idiaries generally restrict the amount of dividends paid in an
annual period to the greater of statutt oryr net income from the previous year or 10% of statutt oryr capia tal and surplus. Kemper’s
insurance subsu idiaries collectively paid $640.9 million, $311.7 million and $347.0 million in dividends to Kemper in 2023,
2022 and 2021, respectively. In 2024, Kemper’s US based insurance subsu idiaries capaa
prior regulatoryr approval is estimated to be zero as of the filing date.

city to pay dividends to Kemper without

Kemper made capia tal contributions to insurance subsu idiaries of $489.1 million, $270.0 million and $126.0 million during 2023,
2022 and 2021, respectively.

Sources and Uses of Funds

The Company directly held cash and investments totaling $464.5 million at December 31, 2023, compared to $417.6 million at
December 31, 2022.

The primary sources of funds availabla e for repayment of Kemper’s indebtedness, repurchases of common stock, future
shareholder dividend payments, and the payment of interest on Kemper’s senior notes, include cash and investments directly
held by Kemper, receipt of dividends from Kemper’s insurance subsu idiaries and borrowings under the credit agreement and
from subsu idiaries.

The primary sources of funds for Kemper’s insurance subsu idiaries are premiums, investment income, proceeds from the sales
and maturity of investments, advances from the FHLBs of Chicago and Dallas, and capital contributions from Kemper. The
primary uses of funds are the payment of policyholder benefits under life insurance contracts, claims under property and
casualty insurance contracts and accident and health insurance contracts, the payment of commissions and general expenses, the
purchase of investments and repayments of advances from the FHLBs of Chicago and Dallas.

Generally, there is a time lag between when premiums are collected and when policyholder benefits and insurance claims are
paid. During periods of growth, property and casualty insurance companies typically experience positive operating cash flows
and can invest a portion of their operating cash flows to fund future policyholder benefits and claims. During periods in which
premium revenues decline, insurance companies may experience negative cash flows from operations and may need to sell
investments to fund payments to policyholders and claimants. In addition, if the Company’s property and casualty insurance
subsu idiaries experience several significant catastrophic events over a relatively short period of time, investments may be sold to
fund payments, which could result in investment gains or losses. Management believes that its property and casualty insurance
subsu idiaries maintain adequate levels of liquidity in the event that they were to experience several future catastrophic events
over a relatively short period of time.

Information about the Company’s cash flows for the years ended December 31, 2023, 2022 and 2021 is presented below.

DOLLARS IN MILLIONS
Net Cash (Used in) Provided by Operating Activities ..................................................... $
Net Cash Provided by (Used in) Investing Activities ......................................................
Net Cash (Used in) Provided by Financing Activities .....................................................

2023
(134.2) $
107.9
(122.0)

2022
(210.3) $
(108.4)
382.9

2021

350.7
(118.2)
(290.4)

Cash availabla e for investment activities is dependent on cash flow from Operating Activities and Financing Activities and the
level of cash the Company elects to maintain.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

Net Cash (UseUU d in)n Provideddd

by Operating Activities

Net cash used in Operating Activities was $134.2 million in 2023, compared to $210.3 million used in 2022, a decrease of
$76.1 million. The improvement in cash used in Operating Activities was primarily due to a $124.7 million federal income tax
refund that was received in first quarter 2023, partially offsff et by the timing of paid claims and a decrease in new business
written from our Property and Casualty operations.

Net cash used by Operating Activities was $210.3 million in 2022, compared to $350.7 million generated in 2021, a decrease of
$561.0 million. Cash from operating activities decreased primarily due to higher paid losses within the P&C business in 2022
due to an increase in frequency and rising loss costs from increased severity trends caused by rising inflation and supplu
y chain
constraints.

Net Cash Provideddd

by (UseUU d in)n Investing Activities

Net cash provided by Investing Activities was $107.9 million in 2023, compared to $108.4 million used in 2022, a year over
year increase of $216.3 million. The decrease in cash used in Investing Activities was primarily driven by the ongoing
management of our investment portfolff
explained above.

io that was impacted by a decrease in cash from our Property and Casualty operations, as

Net cash used in Investing Activities was $108.4 million in 2022, compared to $118.2 million used in 2021, a year over year
increase of $9.8 million. This was primarily due to lower net sales of short term investments. Net sales of short term
investments in 2021 were primarily used to fund the purchase of AAC and the repurchase of Kemper common stock. Proceeds
from the sale of equity securities increased as the Company shifteff d its investment portfolff
This was partially offsff et by proceeds from the sale of Reserve National and Infinity Security.

io more heavily to fixed maturities.

Net Cash (UseUU d in)n Provideddd

by Financing Activities

Net cash used in Financing Activities was $122.0 million in 2023, compared to cash generated by financing activities of $382.9
million in 2022, a year over year decrease of $504.9 million. This was primarily due to a decrease in debt raising activities in
2023 and a decrease in the advances from the Company’s borrowing arrangement with the FHLB used for spread lending
rr
purpos

es.

Net cash provided by Financing Activities was $382.9 million in 2022, compared to cash used by Financing Activities of
$290.4 million in 2021, a year over year increase of $673.3 million. This was primarily due to the issuance of the 2032 Senior
Notes and 2062 Junior Debenturt es, share repurchases in 2021, and increased net advances under the FHLB spread-lending
program due to a more attractive interest rate environment in 2022. These were partially of offsff et by the redemption of the 2022
Senior Notes.

CONTRACTUAL OBLIGATIONS

Estimated cash disbursements pertaining to the Company’s contractuat

l obligations at December 31, 2023 are presented below.

DOLLARS IN MILLIONS
Long Term Debt Obligations...................................... $
Life and Health Insurance Policy Benefits .................
Property and Casualty Insurance Reserves.................
Total Contractuat

l Obligations .................................... $

Jan 1, 2024 to
Dec 31, 2024

— $

250.3
1,493.5
1,743.8

Jan 1, 2025 to
Dec 31, 2026
449.6
487.7
894.1
1,831.4

Jan 1, 2027 to
Dec 31, 2028
$

— $

470.9
246.0
716.9

Afteff r Dec 31,
2028

939.6
8,370.1
46.9
9,356.6

Total
1,389.2
9,579.0
2,680.5
$ 13,648.7

Amounts included in Life and Health Insurance Policy Benefits within the contractuat
estimated cash payments to be made to policyholders and beneficiaries. Such cash outflows are based on the Company’s current
assumptions for mortality, morbidity and policy lapsa
force for the policyholder or beneficiaryr
to receive the benefit under the policy. Depending on the terms of a particular policy,
future premiums from the policyholder may be required for the policy to remain in force. The Company estimates that future
cash inflows would total $4.5 billion using the same assumptions used to estimate the cash outflows. The Company’s Life
Insurance Reserves in the Company’s Consolidated Balance Sheets are generally based on the historical assumptions for

e, but are undiscounted with respect to interest. Policies must remain in

l obligations tabla e above represent the

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CONTRACTUAL OBLIGATIONS (Continued)

mortality and policy lapsa e rates and are on a discounted basis. Accordingly, the sum of the amounts presented above for Life
and Health Insurance Policy Benefits significantly exceeds the amount of Life and Health Insurance Reserves reported on the
Company’s Consolidated Balance Sheets at December 31, 2023.

In addition to the contractuat
million at December 31, 2023. The funding of such investment commitments is dependent on a number of factors, the timing of
which is indeterminate. The Company cannot make a reasonabla y reliabla e estimate of the amount and period of related future
payments, if any, for such liabia lity.

l obligations included above, the Company had certain investment commitments totaling $195.7

CRITICAL ACCOUNTING ESTIMATES

Kemper’s subsu idiaries conduct their operations in two industries: property and casualty insurance and lifeff
Accordingly, the Company is subju ect to several industry-rr
financial statements in accordance with GAAP requires the use of estimates and assumptions that affeff ct the reported amounts of
assets and liabia lities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The process of estimation is inherently uncertain. Accordingly,
l results could ultimately differ materially from the estimated amounts reported in a company’s financial statements.
actuat
Different assumptions are likely to result in different estimates of reported amounts.

accounting principles under GAAP. The preparation of

insurance.

specificff

The Company’s critical accounting policies most sensitive to estimates include the valuation of investments, the valuation of
lifeff
recoverabia lity of goodwill, and the recoverabia lity of deferred tax assets.

insurance reserves, the valuation of reserves for property and casualty insurance incurred losses and LAE, the assessment of

Valuation of Investments

The reported value of the Company’s investments was $8,904.2 million at December 31, 2023, of which $7,122.4 million, or
80%, was reported at fair value, $239.0 million, or 3%, was reported under the equity method of accounting, $381.0 million, or
4%, was reported at unpaid principal balance and $1,161.8 million, or 13%, was reported at cost, modified cost or depreciated
cost. Investments, in general, are exposed to various risks, such as interest rate risk, credit risk and overall market volatility risk.
Accordingly, it is reasonabla y possible that changes in the fair values of the Company’s investments reported at fair value will
occur in the near term and such changes could materially affeff ct the amounts reported in the financial statements. Also, it is
reasonabla y possible that changes in the carrying values of the Company’s Equity Method Limited Liability Investments will
occur in the near term and such changes could materially affeff ct the amounts reported in the financial statements because these
issuers follow specialized industryr accounting principles which require that they report all of their investments at fair value (See
Item 1A., “Risk Factors” under the title “The Company’s investment portfolff
negatively impact net investment income and cause realized and unrealized losses”).

io is exposed to a variety of risks that may

As more fully described under the heading, “Fair Value Measurements,” in Note 2, “Summary of Accounting Policies and
Accounting Changes,” to the Consolidated Financial Statements, the Company uses a hierarchical framework which prioritizes
and ranks the market observabia lity used in fair value measurements.

The fair value of the Company’s investments measured and reported at fair value was $7,122.4 million at December 31, 2023,
of which $6,738.7 million, or 94%, were investments that were based on quoted market prices or significant fair value inputs
that are observabla e, $192.3 million, or 3%, were investments where at least one significant fair value inputs was unobservabla e
and $191.4 million or 3% were investments for which fair value is measured using the net asset value (“NAV”) per share
practical expedient. Fair value measurements based on readily availabla e, active, quoted market prices or for which fair value
can be measured from actively quoted prices generally are deemed to have a higher degree of market price observabia lity and a
lesser degree of judgment, compared to fair value measurements based on significant unobservabla e inputs used in measuring
fair value. The prices that the Company might realize from actuat
l sales of investments are likely to vary from their respective
estimated fair values at December 31, 2023 due to changing market conditions and limitations inherent in the estimation
process.

The classification of a company’s investment in a financial instrument may affeff ct its reported results. Under GAAP, a company
may elect to use the fair value option method of accounting for some or all of its investments in financial instruments. Under
the fair value option method of accounting, a company is required to recognize changes in fair values into income for the period
reported. The Company has elected the fair value option for investments in fixed maturities with equity conversion featurt es. As
of December 31, 2023, the Company no longer holds any investments with equity conversion featurt es. For investments in

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

fixed maturities classified as held to maturity, a company is required to carryrr
amortization occurring during the period recognized into income. None of the Company’s investments in fixed maturities were
classified as held to maturity at December 31, 2023. Changes in the fair value of investments in fixed maturities classified as
availabla e for sale are not recognized in income during the period, but rather are recognized as a separate component of
Accumulated Other Comprehensive Loss (“AOCI”) until realized. Both the reported and fair values of the Company’s
investments in fixed maturt

ities classified as availabla e for sale were $6,881.9 million at December 31, 2023.

the investment at amortized cost, with only

Equity securities with readily determinable fair values are recorded as Equity Securities at Fair Value with changes in fair
values recognized into income for the period reported. Accordingly, both the reported and fair values of the Company’s
investments in Equity Securities at Fair Value were $225.8 million at December 31, 2023. The Company holds certain equity
investments without readily determinable fair values at cost, less impairment, if any, plus or minus changes resulting from
observabla e price changes in orderly transactions for identical or similar investments from the same issuer. Changes in the
carrying value of Equity Securities at Modified Cost due to observabla e price changes are recorded into income for the period
reported.

The Company’s portfolff
io also includes investments in Alternative Energy Partnerships that are accounted for under the
Hypothetical Liquidation at Book Value (“HLBV”) method. Under the HLBV method, the amounts of income and loss
attributed to investors reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date
under the liquidation provisions of the contractuat
l agreements of these funds. Attributing income and loss under the HLBV
method requires the use of significant assumptions and forecasts to calculate the amounts that fund investors would receive
upon a hypothetical liquidation. See Note 1 “Basis of Presentation and Significant Estimates” to the Consolidated Financial
Statements for additional information.

Had the Company elected the fair value option for all of its investments in financial instruments, the Company’s reported net
loss for the year ended December 31, 2023, would have increased by $1,030.2 million.

The Company regularly reviews its fixed maturt
factors that may indicate a decline in the fair value of an investment below its amortized cost or modified cost basis. Such
reviews are inherently uncertain in that the value of the investment may not fully recover or may decline further in future
periods. Some factors considered in evaluating whether or not a decline in fair value of an investment exist include, but are not
limited to, the following:

io and holdings in Equity Securities at Modified Cost for

ity investment portfolff

Fixedii Maturity Securities

•
•
•
•

The financial condition, credit rating and prospects of the issuer;
The magnitude
The ability of the issuer to make scheduled principal and interest payments;
The volatility of the investment;

of the unrealized loss;

Equity Securities at Modifii ed Cost

•
•
•
•
•

Opinions of the Company’s external investment managers;
The financial condition and prospects of the issuer;
Current market conditions;
Changes in credit ratings; and
Changes in the regulatoryrr environment.

Changes in these factors from their December 31, 2023 evaluation date could result in the Company determining that a decline
in the fair value exists for an investment held and evaluated at December 31, 2023. Such determination would result in an
impairment loss in the period such determination is made.

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

Lifei

Insurance Reserves

Company’s Life Insurance Reserves are reported using the Company’s estimate of its liabia lity for future policyholder benefits.

Life Insurance Reserves by business segment at December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS
Business Segments:
Life Insurance:

2023

2022

$ 3,271.9
4.3
$ 3,276.2

ries use a variety of generally accepted actuarial methodologies, in
e assumptions. These assumptions are

These assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapsa es, and
discount rates (both accretion and current). Kemper groups together policies with similar types of business for its cohorts,
which typically vary by issue year. The Company’s actuat
accordance with Actuarial Standards of Practice, in determining the mortality and lapsa
based on judgments that consider the Company’s historical experience, industryrr data, and other relevant factors. The Company
reviews and updates its estimate of cash flows expected over the lifetime of a group of contracts using actual historical
experience quarterly and current future cash flow assumptions at least annually to calculate its revised net premium ratio. The
revised net premium ratios are then used to calculate an updated liabia lity for future policyholder benefits for the current
reporting period, discounted at the original contract issuance discount rate. The Company has elected to use expense
assumptions that are locked in at contract inception and are not subsu equently reviewed or updated. Resulting changes in the
liabia lity due to differences in actual versus expected experience, changes in current cash flow assumptions, and prefundi
ng and
payout of benefits compared to the carrying amount of the liability as of that same date are recorded as a separate component of
benefit expense in the Consolidated Statements of Loss. The current discount rate assumption is an equivalent spot rate curve of
annually compounded rates at monthly increments that is derived based on A-credit rated fixed-income instruments reflecting
the duration characteristics of the liability. The discount rate assumption is updated quarterly and used to remeasure the liabia lity
at the reporting date, with the resulting change reflected in Accumulated Other Comprehensive Loss on the Consolidated
Balance Sheets.

In estimating the Company’s Life Insurance Reserves, the Company’s actuat
sional judgment and must
consider, and are influenced by, many variables that are difficult to quantifyff and are estimating losses many years into the
future. Accordingly, the process of estimating and establa ishing the Company’s Life Insurance Reserves is inherently uncertain.
Experience may develop adversely such that additional reserves must be establa ished. Adverse experience could arise out of a
number of factors, including, but not limited to, severe short-term events, such as a pandemic or changes to policyholder
behavior during stressed economic periods, or due to misestimation of long-term assumptions such as mortality, interest rates
and lapsa
impact on reserves.

e assumptions. Certain variables, such as policyholder behavior, are difficult to estimate and can have a significff ant

ries exercise profesff

Propertytt and Casualty Insurance Reserves for Losses and Loss Adjudd stmett

nt Expex nses

imillillion of gross loss and LAE reserves at December 31, 2023 and 2022,

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

Property and Casualty Insurance Reserves for the Company’s business segments at December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS
Business Segments:

2023

2022

Specialty Property & Casualty Insurance........................................................................................... $ 2,308.7
Life Insurance.....................................................................................................................................
2.9
Total Business Segments...........................................................................................................................
2,311.6
Non-Core Operations ................................................................................................................................
356.4
Unallocated Reserves ................................................................................................................................
12.5
Total Property and Casualty Insurance Reserves ...................................................................................... $ 2,680.5

$ 2,321.1
2.3
2,323.4
419.1
14.4
$ 2,756.9

In estimating the Company’s Property and Casualty Insurance Reserves, the Company’s actuat
judgment and must consider, many variables that are difficult to quantify.ff Accordingly, the process of estimating and
establa ishing the Company’s Property and Casualty Insurance Reserves is inherently uncertain, and the actual ultimate cost of
known and unknown claims may vary materially from the estimated amounts reserved.

ries exercise profesff

sional

The Company’s actuat
variety of methodologies in accordance with Actuarial Standards of Practice. A reasonabla e range of unpaid loss estimates is
derived from, but not limited to, the following methodologies:

ries conduct a comprehensive quarterly loss reserve review for each product line of business based on a

•
•
•
•
•

Incurred Loss Development Methodology;
Paid Loss Development Methodology;
Bornhuetter-Ferguson Incurred Loss Methodology;
Bornhuetter-Ferguson Paid Loss Methodology; and
Frequency and Severity Methodology.

The actuat
rial best estimate for each product line of business for ultimate losses and LAE represents an expected value
considering a range of reasonabla e outcomes. The actuarial best estimate includes an offsff et for expected salvage and subru ogation
recoveries.

The ultimate impact of a single change in a business process is difficult to quantifyff and detect, and even more difficult if several
changes to business processes occur over several years. Initially afteff
compared to the historical data, for the Company’s actuat
actuat
ries cannot be certain that observed differences from the historical data trends are a result of the change in business
process or merely a random fluctuation in the data. As the Company’s actuaries observe more data points following the change
in business process, the Company’s actuat
the development pattern. The challenge for the Company’s actuat
based on the older historical data and how much weight to place on the development patterns based on more recent data.

ries can gain more confidff ence in whether the change in business process is affeff cting
ries is how much weight to place on the development patterns

ries to analyze. With fewer data points to analyze, the Company’s

r a change is implemented, there are fewer data points, as

For each accident quarter or year, the point estimate selected by the Company’s actuaries is not necessarily one of the points
ries,
produced by any particular one of the methodologies utilized, but ofteff n is another point selected by the Company’s actuat
using their profesff
sional judgment, that takes into consideration each of the points produced by the several loss reserving
estimation methodologies used. In some cases, for a particular product, the current accident quarter or year may not have
enough paid claims data to rely upon, leading the Company’s actuaries to conclude that the incurred loss development
methodology provides a better estimate than the paid loss development methodology. Thereforff e, the Company’s actuaries may
give more weight to the incurred loss development methodology for that particular accident quarter or year. As an accident
quarter or year ages for that same product, the actuat
ry may gain more confidff ence in the paid loss development methodology
and begin to give more weight to the paid loss development methodology. The Company’s actuaries’ quarterly selections are
summed by product and/or coverage levels to create the actuat

rial indication of the ultimate losses. More ofteff n than not, the

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

rial indication for a particular product line and accident quarter or year is most heavily weighted toward the incurred loss

actuat
development methodology, particularly for short-tail lines such as personal automobile insurance. Historically, the incurred loss
development methodology has been more reliabla e in predicting ultimate losses for short-tail lines, especially in the more recent
accident quarters or years, compared with the paid loss development methodology. However, in some circumstances changes
can occur which impact numerous variables, including, but not limited to, those variables identified below that are difficult to
quantifyff and/or impact the predictive value of prior development patterns relied upon in the incurred loss development
methodology and paid loss development methodology. In those circumstances, the Company’s actuaries must make adjud stments
to these loss reserving estimation methodologies or use additional generally accepted actuat
those circumstances, the Company’s actuaries, using their profesff
reserving estimation methodologies or other generally accepted actuat
rial estimation methodologies until the newer development
patterns fully emerge and the Company’s actuaries can fully rely on the unadjusted loss reserving estimation methodologies. In
the event of a wide variation among results generated by the differff ent projection methodologies, the Company’s actuaries
further analyze the data using additional techniques.

sional judgment, may place more weight on the adjud sted loss

rial estimation methodologies. In

Subru ogation & salvage recoveries, which predominately impact the material damage coverages, are independently evaluated
each quarter using generally accepted actuat
recoveries the methodologies use paid/rdd ecovered amounts. Once this is completed, it is combined with the ultimate gross loss
and LAE analyses.

rial methodologies. Since claim adjud sters do not establa ish case reserves for potential

In estimating reserves, the Company’s actuat
variables that are difficult to quantify,ff

such as:

ries exercise profesff

sional judgment and must consider, and are influenced by, many

•
•

•

Changes in the level of minimum case reserves, and the automatic aging of those minimum case reserves;
Changes to claims practices, including, but not limited to, changes in the reporting and impact of large losses, timing
of reported claims, changes in claims closing and re-opening patterns, adequacy of case reserves.
Implementation of new systems for handling claims, turnover of claims department staffsff
audit review of claims handling procedurd es;
Changes in the mix of business by state, class and policy limit within product line;
Growth in new lines of business;
Changes in the attachment points of the Company’s reinsurance programs;

•
•
•
• Medical costs, including, but not limited to, the ability to assess the extent of injun ries and the impact of inflation;
•
•

Repair costs, including, but not limited to, the impact of inflation and the availabia lity of labor
Changes in the judicial environment, including, but not limited to, the interpretation of policy provisions, the impact of
jury awards and changes in case law; and
requirements.
Changes in state regulatoryrr

, timing and depth of the

and materials;

•

A change in any one or more of the foregoing factors is likely to result in a projected ultimate net loss and LAE that is different
from the previously estimated reserve and/or previous frequency and severity trends. Such changes in estimates may be
material. For example, the Company’s actuaries review frequency (number of claims per policy or exposure), severity (dollars
of loss per claim) and average premium (dollars of premium per exposure). Actual frequency and severity experienced will vary
depending on changes in mix by class of insured risk. Similarly, the actual frequency and rate of recovery from reinsurance will
vary depending on changes in the attachment point for reinsurance. In particular, in periods of high growth or expansion into
new markets, there may be additional uncertainty in estimating the ultimate losses and LAE. The contributing factors of this
potential risk are changes in the Company’s mix by policy limit and mix of business by state or jurisdiction.

Actuaries use historical experience and trends as predictors of how losses and LAE will emerge over time. However, historical
experience may not necessarily be indicative of how actual losses and LAE will emerge. Changes in case reserve adequacy,
changes in minimum case reserves and changes in internal claims handling procedurd es could impact the timing and recognition
of incurred claims and produce an estimate that is either too high or too low if not adjud sted for by the actuary.r For example, if,ff
due to changes in claims handling procedurd es, actuat
estimate produced by the paid loss development methodology would tend to be overstated if the actuaryrr did not identifyff and
adjud st for the impact of the changes in claims handling procedurd es. Similarly, if,ff due to changes in claims handling procedurd es,
l claim reserves are set at levels higher than past experience, the estimate produced by the incurred loss development
actuat
methodology would tend to be overstated if the actuat
ry did not identifyff and adjud st for the impact of the changes in claims
handling procedurd es.

l claims are settled more rapia dly than they were settled historically, the

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

The final step in the quarterly loss and LAE reserving process involves a comprehensive review of the actuarial indications by
the Company’s chief reserving actuaryrr and corporate management who apply their collective judgment and determine the
appropriate estimated level of reserves to record. Numerous factors are considered in this determination process, including, but
not limited to, the assessed reliability of key loss trends and assumptions that may be significantly influencing the current
actuat
patterns, changes in the mix of business, the maturt
ity of the accident quarter or year, pertinent trends observed over the recent
past, the level of volatility within a particular line of business, the improvement or deterioration of actuarial indications in the
current period as compared to prior periods, and the amount of reserves related to third party pools for which the Company does
not have access to the underlying data and, accordingly, relies on calculations provided by such pools.

rial indications, changes in claim handling practices or other changes that affeff ct the timing of payment or development

The Company’s goal is to ensure that its total reserves for property and casualty insurance losses and LAE are adequate to
cover all costs, while sustaining minimal variation from the time reserves for losses and LAE are initially estimated until losses
and LAE are fully paid. Changes in the Company’s estimates of these losses and LAE over time, also referred to as
“development,” will occur and may be material. Favorable development is recognized and reported in the Consolidated
Financial Statements when the Company decreases its previous estimate of ultimate losses and LAE and results in an increase
in net income in the period recognized, whereas adverse development is recognized and reported in the Consolidated Financial
Statements when the Company increases its previous estimate of ultimate losses and LAE and results in a decrease in net
income.

Although development will emerge in all of the Company’s product lines, development in the Company’s specialty personal
automobile insurance product line could have the most significant impact due to the relative size of its loss and LAE reserves.
To further illustrate the sensitivity of the Company’s reserves for specialty personal automobile insurance losses and LAE, the
Company measures the standard deviation of the mean reserve estimate using a bootstrappi
ng methodology. The Company
believes that one standard deviation of variability is a reasonabla y likely scenario to measure variability for its loss and LAE
reserves for specialty personal automobile insurance. The Company estimates that its specialty personal automobile insurance
loss and LAE reserves could have varied by $57.9 million in either direction at December 31, 2023 for all accident years
combined under this scenario. In addition to the factors described above, other factors may also impact loss reserve
development in future periods. These factors include governmental actions, including court decisions interpreting existing laws,
regulations or policy provisions, developments related to insurance policy claims and coverage issues, adverse or favorable
outcomes in pending claims litigation, the number and severity of insurance claims, the impact of inflation on insurance claims
and the impact of required participation in windpools and joint underwriting associations and residual market assessments.

ries do not make specificff numerical assumptions about these factors, changes in these factors

Although the Company’s actuat
from past patterns will impact historical loss development factors and, in turn, future loss reserve development. Significff ant
favorable changes in one or more factors will lead to favorable future loss reserve development, which could result in the actual
loss developing closer to, or even below, the lower end of the Company’s estimated reserve variability. Significant unfavff orable
changes in one or more factors will lead to unfavff orable loss reserve development, which could result in the actual loss
developing closer to, or even above, the higher end of the Company’s estimated reserve variability. Accordingly, due to these
factors and the other factors enumerated throughout the MD&A and the inherent limitations of the loss reserving estimation
methodologies, the estimated and illustrated reserve variability may not necessarily be indicative of the Company’s future
reserve variability, which could ultimately be greater than the estimated and illustrated variability. In addition, as previously
noted, development will emerge in all of the Company’s product lines over time. Accordingly, the Company’s future reserve
variability could ultimately be greater than the illustrated variability. Additional information pertaining to the estimation of,ff and
development of,ff the Company’s Property and Casualty Insurance Reserves is contained in Item 1 of Part I of this 2023 Annual
Report under the heading “Property and Casualty Loss and Loss Adjud stment Expense Reserves.”

Goodwill Recoverability

red

Kemper Corporation and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)

CRITICAL ACCOUNTING ESTIMATES (Continued)

charge of $49.6 million and an afteff
information.

r-tax impairment charge of $45.5 million. See Note 14, “Goodwill and Intangibles,” for more

The Company performed a qualitative goodwill impairment assessment for all remaining reporting units with goodwill as of
October 1, 2023. The qualitative assessment takes into consideration changes in the macroeconomic conditions, industryr and
market considerations, cost factors, overall financial performance, changes in management or key personnel, changes in
strategy, events impacting reporting units, and changes in Kemper’s stock price since the last quantitative assessment, which
was performed on October 1, 2022.

Recoverability of Defee rred Taxaa Assets

The evaluation of the recoverabia lity of deferred tax assets and the need for a valuation allowance requires the Company to
weigh all positive and negative evidence to reach a conclusion whether it is more likely than not that all or some portion of the
deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be
objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is
u
to suppor

t a conclusion that a valuation allowance is not needed.

When making such determination, the Company considers various factors, including:

•
•
•
•
•
•
•

the nature, frequency, and amount of cumulative financial reporting income and losses in recent years;
the jurisdiction in which the deferred tax asset was generated;
the length of time that carryforward can be utilized in the relevant taxing jurisdictions;
futff urt e taxabla e income exclusive of reversing temporaryr differences and carryforwards;
futff urt e reversals of existing taxabla e temporaryrr differences;
taxable income in prior carryback years; and
availabia lity of tax planning strategies.

As a result of the analysis, the Company determined that a valuation allowance was required as of December 31, 2023 against
certain foreign deferred tax assets which had been recorded during 2023.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of
grandfatff hered standards, the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is
the sole source of authoritative GAAP recognized by the FASB that is applicable to the Company. The FASB issues
Accounting Standards Updates (“ASUs”) to amend the authoritative literature in the FASB ASC.

The Company has adopted all recently issued accounting pronouncements with effeff ctive dates prior to January 1, 2024. See
Note 2, “Summary of Accounting Policies and Accounting Changes” to the Consolidated Financial Statements for discussion
on adoption of these ASUs and impacts to the Company’s financial statements. For all recently issued accounting
pronouncements with effeff ctive dates afteff
on its financial statements.

r December 31, 2023, the Company is currently evaluating the impact of this guidance

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

Quantitative Infon rmation About Marketkk Riskii

The Company’s consolidated balance sheets include three types of financial instruments subju ect to the material market risk
disclosures required by the SEC:

Investments in Fixed Maturities;
Investments in Equity Securities at Fair Value; and

1.
2.
3. Debt.

Investments in Fixed Maturities and Debt are subju ect to material interest rate risk. The Company’s Investments in Equity
Securities include common and preferff
interest rate risk.

red stocks and hedge funds and, accordingly, are subju ect to material equity price risk and

es of this disclosure, market risk sensitive financial instruments are divided into two categories: financial instruments

For purpos
acquired for trading purpos
rr
sensitive financial instruments are generally classified as held for purpos
holdings of financial instruments acquired for trading purpos
notional amount of derivatives holdings.

es and financial instruments acquired for purpos

es other than trading. The Company’s market risk
es other than trading. The Company has no significant

es. As of December 31, 2023, the Company had $149.7 million

The Company measures its sensitivity to market risk by evaluating the change in its financial assets and liabia lities relative to
fluctuations in interest rates and equity prices. The evaluation is made using instantaneous changes in interest rates and equity
prices on a static balance sheet to determine the effeff ct such changes would have on the Company’s market value at risk and the
resulting pre-tax effeff ct on Shareholders’ Equity. The changes chosen represent the Company’s view of adverse changes which
are reasonabla y possible over a one-year period. The selection of the changes chosen should not be construer d as the Company’s
prediction of future market events, but rather an illustration of the impact of such possible events.

l maturity. All other variables were held constant. For preferff

For the interest rate sensitivity analysis presented below, the Company assumed an adverse and instantaneous increase of 100
basis points in the yield curve at both December 31, 2023 and 2022 for Investments in Fixed Maturities. Such 100 basis point
increase in the yield curve may not necessarily result in a corresponding 100 basis point increase in the interest rate for all
investments in fixed maturt
ities. For example, a 100 basis point increase in the yield curve for risk-freff e, taxabla e investments in
fixed maturities may not result in a 100 basis point increase for tax-exempt investments in fixed maturities. For Investments in
Fixed Maturities, the Company also anticipated changes in cash flows due to changes in the likelihood that investments would
be called or prepaid prior to their contractuat
securities, the Company assumed an adverse and instantaneous increase of 100 basis points in market interest rates from their
levels at both December 31, 2023 and 2022. All other variables were held constant. For Debt, the Company assumed an adverse
and instantaneous decrease of 100 basis points in market interest rates from their levels at December 31, 2023 and 2022. All
other variables were held constant. The Company measured equity price sensitivity assuming an adverse and instantaneous 30%
decrease in the Standard and Poor’s Stock Index (the “S&P 500”) from its level at December 31, 2023 and 2022, with all other
variables held constant. The Company’s investments in common stock equity securities were correlated with the S&P 500 using
the portfolff
relative volatility in relation to the rest of the stock market, with the S&P 500 having a beta coeffiff cient of 1.00. The Equity
Securities at Fair Value portfolff
io’s weighted-average beta was calculated using each security’s assumed forward looking betas
based on underlying investment characteristics weighted by the fair value of such securities as of December 31, 2023 and 2022.
For equity securities without observabla e market inputs, the Company assumed a beta of 1.00 at December 31, 2023 and 2022.

io’s weighted-average beta of 0.35 and 0.41 at December 31, 2023 and 2022, respectively. Beta measures a stock’s

red stock equity

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk. (Continued)

The estimated adverse effeff cts on the fair value of the Company’s financial instruments at December 31, 2023 using these
assumptions were:

DOLLARS IN MILLIONS
ASSETS
Investments in Fixed Maturities ................................................................. $ 6,883.6
Investments in Equity Securities ................................................................
225.8
LIABILITIES
Debt ............................................................................................................ $ 1,213.4

Fair Value

Pro Forma Increase (Decrease)

Interest
Rate Risk

Equity
Price Risk

Total
Market Risk

(513.5) $
(0.6)

— $

(21.5)

(513.5)
(22.1)

50.6

— $

50.6

The estimated adverse effeff cts on the fair value of the Company’s financial instruments at December 31, 2022 using these
assumptions were:

DOLLARS IN MILLIONS
ASSETS
Investments in Fixed Maturities ................................................................. $ 6,894.8
Investments in Equity Securities ................................................................
243.2
LIABILITIES
Debt ............................................................................................................ $ 1,195.1

Fair Value

Pro Forma Increase (Decrease)

Interest
Rate Risk

Equity
Price Risk

Total
Market Risk

(503.3) $
(1.2)

— $

(24.7)

(503.3)
(25.9)

58.7

— $

58.7

The market risk sensitivity analysis assumes that the composition of the Company’s interest rate sensitive assets and liabilities,
including, but not limited to, credit quality, and the equity price sensitive assets existing at the beginning of the period remains
constant over the period being measured. It also assumes that a particular change in interest rates is uniform across the yield
curve regardless of the time to maturity. Interest rates on certain types of assets and liabia lities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag behind changes in market interest rates. Also, any
future correlation, either in the near term or the long term, between the Company’s common stock equity securities and fair
value option portfolff
ios and the S&P 500 may differ from the historical correlation as represented by the weighted-average
historical beta of the common stock equity securities and fair value option portfolff
analysis may not be indicative of,ff is not intended to provide, and does not provide, a precise forecast of the effeff ct of changes of
market rates on the Company’s income or shareholders’ equity. Further, the computations do not contemplate any actions the
Company may undertake in response to changes in interest rates or equity prices.

ios. Accordingly, the market risk sensitivity

To the extent that any adverse 100 basis point change occurs in increments over a period of time instead of instantaneously, the
adverse impact on fair values would be partially mitigated because some of the underlying financial instruments would have
matured. For example, proceeds from any maturt
then current interest rates.

ing assets could be reinvested and any new liabilities would be incurred at the

Qualitative Infon rmation About Marketkk Riskii

Market risk is a broad term related to economic losses due to adverse changes in the fair value of a financial instrument and is
inherent to all financial instruments. SEC disclosure rules focus on only one element of market risk—pr
relates to changes in the level of prices due to changes in interest rates, equity prices, foreign exchange rates or other factors
that relate to market volatility of the rate, index, or price underlying the financial instrument. The Company’s primary market
risk exposures are to changes in interest rates and equity prices.

ice risk. Price risk

The Company manages its interest rate exposures with respect to Investments in Fixed Maturities by investing primarily in
investment-grade securities of moderate effeff ctive duration.

Item 8.

Financial Statements and Supplementary Data.

Index to the Consolidated Financial Statements of
Kemper Corporation and Subsidiaries

Consolidated Statements of Loss for the Years Ended December 31, 2023, 2022 and 2021..............................................

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2023, 2022 and 2021....................

Consolidated Balance Sheets at December 31, 2023 and 2022 ...........................................................................................

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021...................................

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2023, 2022 and 2021....................

Notes to the Consolidated Financial Statements

Note 1—Basis of Presentation and Significant Estimates ............................................................................................

Note 2—Summary of Accounting Policies and Accounting Changes .........................................................................

Note 3—Net Loss per Unrestricted Share ....................................................................................................................

Note 4—Dispositions....................................................................................................................................................

Note 5—Business Segments .........................................................................................................................................

Note 6—Property and Casualty Insurance Reserves ....................................................................................................

Note 7—Liabia lity for Future Policyholder Benefits .....................................................................................................

Note 8—Deferff

red Policy Acquisition Costs.................................................................................................................

Note 9—Insurance Expenses ........................................................................................................................................

Note 10—Investments ..................................................................................................................................................

Note 11—Income from Investments.............................................................................................................................

Note 12—Derivatives ...................................................................................................................................................

Note 13—Fair Value Measurements ............................................................................................................................

Note 14—Goodwill and Intangibles .............................................................................................................................

Note 15—Variabla e Interest Entities..............................................................................................................................

Note 16—Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss.................................

Note 17—Shareholders’ Equity....................................................................................................................................

Note 18—Statutory Information and Dividend Limitations.........................................................................................

Note 19—Pension Benefits...........................................................................................................................................

Note 20—Postretirement Benefits Other Than Pensions..............................................................................................

Note 21—Long-term Equity-based Compensation ......................................................................................................

Note 22—Policyholder Obligations..............................................................................................................................

Note 23—Debt ..............................................................................................................................................................

Note 24—Leases...........................................................................................................................................................

Note 25—Catastrophe Reinsurance..............................................................................................................................

Note 26—Other Reinsurance........................................................................................................................................

Note 27—Income Taxes ...............................................................................................................................................

Note 28—Contingencies...............................................................................................................................................

Note 29—Related Parties..............................................................................................................................................

Report of Independent Registered Publu ic Accounting Firm (Deloitte & Touche LLP: PCAOB Firm ID - 34)................

105

108

109

114

115

117

124

125

127

128

130

133

135

139

140

141

143

145

146

148

149

KEMPER CORPORATRR ION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(Dollars in millions, except per share amounts)

DOLLARS IN MILLIONS

,SS EXCEPT PEREE SHAREHH

AMOUNT

STT

For the Year Ended December 31,
20211
20221

2023

Revenues:

Earned Premiums (Changes in Deferred Profitff Liability: 2023 - $84.2, 2022 - $60.2 and
2021 -$80.7)........................................................................................................................... $ 4,529.4

$ 5,213.4

$ 5,179.2

Net Investment Income .....................................................................................................

419.7

Change in Value of Alternative Energy Partnership Investments.....................................

Other Income.....................................................................................................................
Income (Loss) from Change in Fair Value of Equity and Convertible Securities ............

Net Realized Investment (Losses) Gains...........................................................................

Impairment Losses ............................................................................................................

2.9

7.2
4.7

(18.6)

(1.1)

422.6

(19.9)

9.2
(79.9)

4.3

(25.8)

427.3

(61.2)

4.8
114.6

64.8

(11.0)

Total Revenues.......................................................................................................................

4,944.2

5,523.9

5,718.5

Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjud stment Expenses
(Changes in Liability for Future Policyholder Benefits: 2023 - $33.5, 2022 - $12.0 and

2021 - $30.2) .....................................................................................................................
Insurance Expenses ...........................................................................................................

3,820.0
1,052.4

Loss from Early Extinguishment of Debt..........................................................................

Interest and Other Expenses ..............................................................................................

Goodwill Impairment .......................................................................................................

—

369.3

49.6

4,432.6
1,201.0

3.7

257.6

—

4,519.6
1,228.8

—

219.4

—

Total Expenses .......................................................................................................................
Loss before Income Taxes .....................................................................................................

5,291.3
(347.1)

5,894.9
(371.0)

5,967.8
(249.3)

Income Tax Benefit................................................................................................................

74.8

84.4

125.6

Net Loss .................................................................................................................................

(272.3)

(286.6)

(123.7)

Less: Net Loss attributable to Noncontrolling Interest ..........................................................

(0.2)

—

Net Loss attributable to Kemper Corporation........................................................................ $ (272.1) $ (286.6) $ (123.7)
Net Loss attributable to Kemper Corporation Per Unrestricted Share:

Basic .................................................................................................................................. $

(4.25) $

(4.50) $

Diluted ............................................................................................................................... $

(4.25) $

(4.50) $

(1.92)

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

The Notes to the Consolidatdd ed Financial Statements are an integre al part of these financial statements.

KEMPER CORPORATRR ION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Dollars in millions)

DOLLARS IN MILLIONS

For The Years Ended December 31,

2023

2022

2021

Net Loss ................................................................................................................................. $ (272.3) $ (286.6) $ (123.7)

Other Comprehensive Income (Loss) Before Income Taxes

Changes in Net Unrealized Holding Gains (Losses) on Investment Securities with:

No Credit Losses Recognized in Consolidated Statements of Loss ...............................

238.8

(1,551.1)

(284.5)

Credit Losses Recognized in Consolidated Statements of Loss .....................................

Change in Net Unrecognized Postretirement Benefit Costs ...............................................

(Loss) Gain on Cash Flow Hedges......................................................................................

Change in Discount Rate on Future Life Policyholder Benefits.........................................
Other Comprehensive Income (Loss) Before Income Taxes.................................................

Other Comprehensive Income Tax (Expense) Benefit ..........................................................

Other Comprehensive Income (Loss), Net of Taxes .............................................................

(0.5)

59.2

(0.2)

(101.7)
195.6

(41.5)

154.1

Total Comprehensive Loss ....................................................................................................

(118.2)

1.9

18.9

5.9

1,380.7
(143.7)

30.4

(113.3)

(399.9)

(2.0)

(8.8)

0.5

228.5
(66.3)

14.5

(51.8)

(175.5)

Less: Total Comprehensive Loss attributable to Noncontrolling Interest .............................

(0.2)

—

Comprehensive Loss attributable to Kemper Corporation .................................................... $ (118.0) $ (399.9) $ (175.5)

The Notes to the Consolidatdd ed Financial Statements are an integre al part of these financial statements.

KEMPER CORPORATRR ION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share amounts)

,SS EXCEPT PEREE SHAREHH

DOLLARS IN MILLIONS
Assets:
Investments:
Fixed Maturities at Fair Value (Amortized Cost: 2023 - $7,565.8; 2022 - $7,811.8

AMOUNT

STT

Allowance for Credit Losses: 2023 - $8.2; 2022 - $9.6) ............................................................. $

Equity Securities at Fair Value (Cost: 2023 - $209.3; 2022 - $247.6) ...........................................
Equity Method Limited Liability Investments ...........................................................................
Alternative Energy Partnership Investments ..............................................................................
Short-term Investments at Cost which Approximates Fair Value..............................................
Company-Owned Life Insurance ...............................................................................................
Loans to Policyholders ..............................................................................................................
Other Investments.......................................................................................................................
Total Investments............................................................................................................................
Cash.................................................................................................................................................
Receivabla es from Policyholders (Allowance for Credit Losses: 2023 - $13.9; 2022 - $13.1) .......
Other Receivabla es ...........................................................................................................................
Deferred Policy Acquisition Costs..................................................................................................
Goodwill .........................................................................................................................................
Current Income Tax Assets.............................................................................................................
Deferred Income Tax Assets...........................................................................................................
Other Assets ....................................................................................................................................
Assets of Consolidated Variable Interest Entity:

December 31,

2023

20221

6,881.9
225.8
221.7
17.3
520.9
513.5
281.2
241.9
8,904.2
64.1
959.5
200.5
591.6
1,250.7
64.5
210.4
492.6

6,894.8
243.2
217.0
16.3
278.4
586.5
283.4
269.9
8,789.5
212.4
1,286.6
262.6
635.6
1,300.3
167.6
129.0
530.0

Fixed Maturities at Fair Value (Amortized Cost 2023 - $1.7; 2022 - $—

Allowance for Credit Losses 2023 - $—; 2022 - $—)............................................................
Short-term Investments at Cost which Approximates Fair Value .............................................
Receivabla es from Policyholders.................................................................................................
Deferred Policy Acquisition Costs.............................................................................................
Deferred Income Tax Assets......................................................................................................
Total Assets..................................................................................................................................... $

1.7
2.0
0.7
0.1
0.1
12,742.7

—
—
—
—
—
13,313.6

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

The Notes to the Consolidatdd ed Financial Statements are an integre al part of these financial statements.

KEMPER CORPORATRR ION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in millions, except per share amounts)

,SS EXCEPT PEREE SHAREHH

DOLLARS IN MILLIONS
II
Liabilities and Shareholders’ Equity:
Insurance Reserves:

AMOUNT

STT

Life and Health........................................................................................................................... $
Property and Casualty ................................................................................................................
Total Insurance Reserves ................................................................................................................
Unearned Premiums........................................................................................................................
Policyholder Obligations ................................................................................................................
Deferred Income Tax Liabilities.....................................................................................................
Accruerr d Expenses and Other Liabilities.........................................................................................
Long-term Debt, Current and Non-current, at Amortized Cost (Fair Value: 2023 - $1,213.4;
2022 - $1,195.1)..............................................................................................................................
Liabilities of Consolidated Variable Interest Entity:

Unearned Premiums ...................................................................................................................
Accruerr d Expenses and Other Liabilities ....................................................................................
Total Liabilities...............................................................................................................................
Kemper Corporation Shareholders’ Equity:
Common Stock, $0.10 Par Value, 100,000,000 Shares Authorized; 64,111,555 Shares Issued
and Outstanding at December 31, 2023 and 63,912,762 Shares Issued and Outstanding at
December 31, 2022 .........................................................................................................................
Paid-in Capia tal............................................................................................................................
Retained Earnings.......................................................................................................................
Accumulated Other Comprehensive Loss ..................................................................................
Total Kemper Corporation Shareholders’ Equity ...........................................................................
Noncontrolling Interest.................................................................................................................
Total Shareholders’ Equity .............................................................................................................
Total Liabilities and Shareholders’ Equity ..................................................................................... $

December 31,

2023

20221

3,422.4
2,680.5
6,102.9
1,300.8
655.7
50.6
737.7

3,276.2
2,756.9
6,033.1
1,704.4
701.3
—
817.3

1,389.2

1,386.9

0.5
0.3
10,237.7

—
—
10,643.0

6.4
1,845.3
1,014.3
(360.8)
2,505.2
(0.2)
2,505.0
12,742.7

6.4
1,812.7
1,366.4
(514.9)
2,670.6
—
2,670.6
13,313.6

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

The Notes to the Consolidatdd ed Financial Statements are an integre al part of these financial statements.

KEMPER CORPORATRR ION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)

For The Years Ended December 31,
20211
20221

2023

IN MILLIONS

DOLLOO ARS
LL
Cash Flows from Operating Activities:
Net Loss................................................................................................................................... $ (272.3) $ (286.6) $ (123.7)
Adjud stments to Reconcile Net Loss to Net Cash (Used in) Provided by Operating
Activities: ................................................................................................................................
Net Realized Investment Losses (Gains) ..............................................................................
Impairment Losses ................................................................................................................
Depreciation and Amortization of Property, Equipment and Software ................................
Amortization of Intangible Assets Acquired ........................................................................
Settlement Costs Related to Defined Benefit Pension Plan..................................................
Loss from Early Extinguishment of Debt .............................................................................
Change in Accumulated Undistributed Earnings of Equity Method Limited Liability
Investments ...........................................................................................................................
(Income) Loss from Change in Value of Alternative Energy Partnership Investments .......
(Increase) Decrease in Value of Equity and Convertible Securities .....................................
Goodwill Impairment
Changes in:

(64.8)
11.0
46.3
53.5
—
—

(4.3)
25.8
50.5
20.4
—
3.7

(33.5)
61.2
(114.6)
—

18.6
1.1
44.4
14.2
70.2
—

(1.1)
(2.9)
(4.7)
49.6

(9.5)
19.9
79.9
—

Receivabla es from Policyholders .........................................................................................
Reinsurance Recoverabla es..................................................................................................
Deferred Policy Acquisition Costs .....................................................................................
Insurance Reserves .............................................................................................................
Unearned Premiums ...........................................................................................................
Income Taxes......................................................................................................................
Other Assets and Liabilities................................................................................................
Net Cash (Used in) Provided by Operating Activities ..............................................................
Cash Flows from Investing Activities:

Proceeds from the Sales, Calls and Maturities of Fixed Maturities ........................................
Proceeds from the Sales or Paydowns of Investments:

Equity Securities.................................................................................................................
Real Estate Investments......................................................................................................
Mortgage Loans..................................................................................................................
Other Investments...............................................................................................................

Purchases of Investments:

Fixed Maturities..................................................................................................................
Equity Securities.................................................................................................................
Real Estate Investments......................................................................................................
Corporate-Owned Life Insurance .......................................................................................
Mortgage Loans..................................................................................................................
Other Investments...............................................................................................................
Net (Purchases) Sales of Short-term Investments...................................................................
Acquisition of Business, Net of Cash Acquired......................................................................
Sales of Businesses, Net of Cash Disposed.............................................................................
Acquisition of Software and Long-lived Assets......................................................................
Settlement Proceeds from Company-Owned Life Insurance ..................................................
Other........................................................................................................................................
Net Cash Provided by (Used in) Investing Activities................................................................

326.4
12.1
43.9
(30.8)
(403.1)
33.2
(33.0)
(134.2)

129.4
(1.9)
14.2
26.5
(183.5)
(83.6)
(11.2)
(210.3)

(75.2)
20.6
(77.6)
616.4
105.9
(163.9)
89.1
350.7

673.0

1,295.5

1,388.9

149.0
—
95.2
18.3

(447.4)
(44.4)
(1.0)
—
(104.1)
(19.8)
(238.4)
—
—
(53.8)
102.2
(20.9)
107.9

536.0
—
91.3
52.1

(1,815.8)
(58.9)
(3.1)
(110.0)
(81.1)
(13.0)
6.1
—
14.8
(30.8)
—
8.5
(108.4)

316.6
8.0
70.8
47.5

(1,825.4)
(124.3)
(5.1)
(100.0)
(119.9)
(104.9)
687.2
(316.6)
—
(57.8)
—
16.8
(118.2)

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
addidd tional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

The Notes to the Consolidatdd ed Financial Statements are an integre al part of these financial statements.

KEMPER CORPORATRR ION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Dollars in Millions)

IN MILLIONS

DOLLOO ARS
LL
Net Cash Provided by (Used in) Investing Activities (Carryforward from page 77)
Cash Flows from Financing Activities:

Repayment of Long-term Debt ...............................................................................................
Proceeds from Issuance of 3.800% Senior Notes due Februar
ry 23, 2032..............................
ry 23, 2032 .............................................
Issuance Fees on 3.800% Senior Notes due Februar
Proceeds from Issuance of 5.875% Fixed-Rate Reset Junior Suboru
dinated Debenturt es Due
2062 ........................................................................................................................................
Issuance Fees on 5.875% Fixed-Rate Reset Junior Suboru
dinated Debenturt es Due 2062 ......
Proceeds from Policyholder Contract Obligations .................................................................
Repayment of Policyholder Contract Obligations ..................................................................
Proceeds from Shares Issued under Employee Stock Purchase Plan .....................................
Common Stock Repurchases ..................................................................................................
Dividends Paid........................................................................................................................
Other .......................................................................................................................................
Net Cash (Used in) Provided by Financing Activities ..............................................................

r The Years Ended December 31,
20211
20221
(118.2)
(108.4)

2023
107.9

—
—
—

—
—
123.3
(169.0)
4.3
—
(80.1)
(0.5)
(122.0)

(280.0)
396.3
(1.2)

145.6
(0.9)
335.5
(138.2)
4.9
—
(79.7)
0.6
382.9

(50.0)
—
—

—
—
386.8
(394.0)
5.4
(161.7)
(80.6)
3.7
(290.4)

Net (decrease) increase in cash..................................................................................................
Cash, Beginning of Year ...........................................................................................................
Cash, End of Year...................................................................................................................... $

(148.3)
212.4
64.1

64.2
148.2
212.4

(57.9)
206.1
148.2

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
addidd tional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

The Notes to the Consolidatdd ed Financial Statements are an integre al part of these financial statements.

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
(Dollars in Millions)

DOLLARS IN MILLIONS
Cash (paid) received during the year for:

For The Years Ended December 31,
2022

2021

2023

Interest .................................................................................................................................... $
Taxes.......................................................................................................................................
Operating Leases.....................................................................................................................

(54.5) $
106.7
(25.4)

(51.5) $
(0.7)
(24.0)

(43.9)
(38.0)
(23.6)

Non-Cash Activities:

Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities................. $

13.8

9.7

15.5

KEMPER CORPORATRR ION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Year Ended December 31, 2023, 2022 and 2021

Paid-in
Capital
$ 1,805.2
—

Retained
Earnings
$ 2,046.1
(123.7)

Accumulated
Other
Comprehensive
Loss

Noncontrolling
Interest

Total
Shareholders’
Equity

(349.8) $
—

— $
—

Number
of
Shares
65.4
—

—

Common
Stock

6.5
—

—

(51.8)

—

(81.0)

(2.1)

(0.2)

(57.8)

(103.7)

—

$ 1,790.7
—

$ 1,734.2
(286.6)

(401.6) $
—

— $
—

—

(113.3)

5.4

37.0

0.9

—

(3.5)

—

4.9

17.7

(80.4)

—

(0.6)

(0.8)

0.1

—

0.3

63.7
—

—

0.1

—

0.1

63.9
—

—

0.1

—

0.1

—

0.1

6.4
—

—

6.4
—

—

$ 1,812.7
—

$ 1,366.4
(272.1)

(514.9) $
—

— $

(0.2)

—

4.3

29.0

(0.7)

—

154.1

(80.1)

—

0.1

—

3,508.0
(123.7)

(51.8)

(81.0)

(161.7)

5.4

37.0

(2.5)

3,129.7
(286.6)

(113.3)

(80.4)

4.9

17.7

(1.4)

2,670.6
(272.3)

154.1

(80.1)

4.3

29.0

(0.6)

STT

DOLLARS ANDNN SHARES
MILLIONS
,SS
II
EXCEPT PEREE SHAREHH
AMOUNT
BALANCE, JANUARY 1, 20211.
Net Loss..........................................
Other Comprehensive Loss, Net of
Taxes (Note 16)..............................
Cash Dividends and Dividend
Equivalents to Shareholders
($1.24 per share).............................
Repurchases of Common Stock
(Note 17) ........................................
Shares Issued Under Employee
Stock Purchase Plan (Note 17).......
Equity-based Compensation Cost
(Note 21) ........................................
Equity-based Awards, Net of

Shares Exchanged (Note 21) ....

BALANCE, DECEMBER 31,
20211...............................................
Net Loss..........................................
Other Comprehensive Loss, Net of
Taxes (Note 16)..............................
Cash Dividends and Dividend

Equivalents to Shareholders
($1.24 per share).......................

Shares Issued Under Employee
Stock Purchase Plan (Note 17).......
Equity-based Compensation Cost
(Note 21) ........................................
Equity-based Awards, Net of

Shares Exchanged (Note 21) ....

BALANCE, DECEMBER 31,
20221...............................................
Net Loss..........................................
Other Comprehensive Income, Net
of Taxes (Note 16)..........................
Cash Dividends and Dividend

Equivalents to Shareholders
($1.24 per share).......................

Shares Issued Under Employee
Stock Purchase Plan (Note 17).......
Equity-based Compensation Cost
(Note 21) ........................................
Equity-based Awards, Net of

Shares Exchanged (Note 21) ....

BALANCE, DECEMBER 31,
2023................................................

64.1

6.4

$ 1,845.3

$ 1,014.3

(360.8) $

(0.2) $

2,505.0

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

The Notes to the Consolidatdd ed Financial Statements are an integre al part of these financial statements.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ESTIMATES

The Consolidated Financial Statements include the accounts of Kemper Corporation (“Kemper”) and its subsu idiaries which
include property and casualty insurance subsu idiaries, life insurance subsu idiaries, a health insurance subsu idiary through the date
of its sale of December 1, 2022 (collectively referred to herein as the “Company”), and a variable interest entity (“VIE”) in
which the Company is considered the primaryrr beneficiary.r The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany accounts and
transactions have been eliminated. Prior period amounts in the financial statements have been recasted to reflect the Company’s
adoption of Accounting Standards Update (“ASU”) 2018-12, Financial Services - Insurance (Topic 944): Targeted
Improvements to Accounting for Long-Duration Contracts (“ASU 2018-12”) on January 1, 2023 (See Note 2, “Summary of
Accounting Policies and Accounting Changes”).

Periodically, Kemper may acquire an additional company which then becomes one of the various subsu idiaries of Kemper.
When an acquisition occurs, Kemper will include the results of the acquired company in the consolidated financial results from
the date of its acquisition and forward. When a disposition occurs, Kemper will include the results of the disposed subsu idiary in
the consolidated financial results up to the date of sale.

Use of Estimates

The preparation of financial statements in conforff mity with GAAP requires the use of estimates and assumptions that affeff ct the
reported amounts of assets and liabia lities, the disclosure of contingent assets and liabia lities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Many of these estimates and assumptions are
common in the insurance and financial services industries; others are specificff
results could differ materially from those estimates and assumptions.

to the Company’s business and operations. Actual

The fair values of the Company’s Investments in Fixed Maturities, Investments in Convertible Securities at Fair Value,
Investments in Equity Securities at Fair Value and Debt are estimated using a hierarchical framework which prioritizes and
ranks market price observabia lity of inputs used in fair value measurements. The carryir ng amounts reported in the Consolidated
Balance Sheets approximate fair value for Cash, Short-term Investments and certain other assets and other liabilities because of
their short-term nature. The actuat
may differ from estimated fair values depending on a number of factors, including, but not limited to, current and future
economic conditions, the quantity sold or settled, the presence of an active market and the availabia lity of a willing buyer or
seller.

l value at which financial instruments could be sold or settled with a willing buyer or seller

The process of estimating and establa ishing reserves for losses and loss adjud stment expenses (“LAE”) for property and casualty
insurance is inherently uncertain, and the actual ultimate net cost of known and unknown claims may vary materially from the
estimated amounts reserved. The reserving process is particularly imprecise for claims involving long-tailed exposures, which
r the insurance policy period has ended. Management considers a variety of
may not be discovered or reported until years afteff
factors, including, but not limited to, past claims experience, current claim trends and relevant legal, economic and social
conditions, in estimating reserves. A change in any one or more factors is likely to result in the ultimate net claim costs
differing from the estimated reserve. Changes in such estimates may be material and would be recognized in the Consolidated
Financial Statements when such estimates change.

The process of determining whether an asset is impaired or recoverabla e relies on projections of future cash flows, operating
results and market conditions. Projections are inherently uncertain, and, accordingly, actual future cash flows and operating
results may differ materially from those projected. As a result, the Company’s assessment of the impairment of long-lived
assets and recoverabia lity of deferred tax assets is susceptible to the risk inherent in making such projections.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES

Investmentstt

Investments in Fixed Maturities include bonds, notes and redeemable preferff
classified as availabla e for sale and reported at fair value. Net Investment Income, including amortization of purchased premiums
and accretion of market discounts, on Investments in Fixed Maturities is recognized as interest over the period that it is earned
using the effeff ctive yield method. Unrealized appreciation or depreciation, net of applicable deferred income taxes, on fixed
maturities classified as availabla e for sale is reported in Accumulated Other Comprehensive (Loss) Income (“AOCI”) included
in Shareholders’ Equity.

red stocks. Investments in Fixed Maturities are

Equity investments include common stocks, non-redeemable preferff
funds and limited liability companies, and investment partnerships in which the Company’s interests are deemed minor. Equity
investments with readily determinable fair values are recorded as Equity Securities at Fair Value on the Consolidated Balance
Sheets. The changes in the fair value of such equity securities are reported in the Consolidated Statements of (Loss) Income.
Dividend income on investments in common and non-redeemable preferff

red stocks, exchange traded funds, money market mutual

red stocks is recognized on the ex-dividend date.

Equity Method Limited Liability Investments include investments in limited liabia lity investment companies and limited
partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of
accounting whereby changes in net asset values (“NAV”) are recorded in Net Investment Income in the Consolidated
Statements of (Loss) Income. Partnerships for which results are not availabla e on a timely basis are reported on a lag.

Investments in Alternative Energy Partnerships are measured using the HLBV method of equity method accounting whereby
changes in the estimated amount the Company would receive upon the liquidation and distribution of the equity investment’s
net assets are recorded in Net Investment Income. Tax credits allocated from investments in Alternative Energy Partnerships are
recognized using the flow-through method, where credits are recorded as a reduction to tax expense in the period earned.
Differences in the basis calculated under tax law and GAAP are recognized using the income statement approach, where basis
differences are recorded to Income Tax Benefit (Expense) immediately, rather than deferred as adjud stments to the carrying
value of the asset. Partnerships for which results are not availabla e on a timely basis are reported on a lag.

Short-term Investments include certificff ates of deposit and other fixed maturities that mature within one year from the date of
purchase, U.S. Treasury bills, money market mutual funds and overnight interest-bearing accounts. Short-term Investments are
reported at cost, which approximates fair value.

Company-Owned Life Insurance (“COLI”) is reported at cash surrender value with changes due to cost of insurance and
investment experience reported in Net Investment Income in the Consolidated Statements of (Loss) Income.

Loans to Policyholders are carried at unpaid principal balance.

Other Investments primarily include Equity Securities at Modified Cost, Convertible Securities at Fair Value, Real Estate and
Mortgage Loans. Equity Securities at Modified Cost do not have readily determinable fair values and are held at cost, less
impairment, if any, plus or minus changes resulting from observabla e price changes in orderly transactions for the identical or
similar investment of the same issuer. Investments in Convertible Securities include fixed maturities with equity conversion
featurt es. The Company has elected the fair value option method of accounting for investments in Convertible Securities and
records Convertible Securities at fair value on the Consolidated Balance Sheets. Real Estate is carried at cost, net of
accumulated depreciation. Real Estate is depreciated over the estimated usefulff
depreciation. Real Estate is evaluated for impairment when events or circumstances indicate the carrying value may not be
recoverabla e. An impairment loss on real estate is recognized when the carryirr ng value exceeds the sum of undiscounted
projected future cash flows as well as the fair value, or, in the case of a property classified as held for sale, when the carrying
value exceeds the fair value, net of costs to sell. Mortgage Loans are carried at amortized cost, net of a reserve for expected
credit losses as appl

life of the asset using the straight-line method of

icable.

Investments in Fixeii d Maturities - Impaim rment Losses

For fixed maturity investments that the Company intends to sell or for which it is more likely than not that the Company will be
required to sell before an anticipated recovery of value, the full amount of the impairment is reported in Impairment
Losses. The Company writes down the investment’s amortized cost to its fair value, and will not adjud st for any subsu equent
recoveries.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

For fixed maturity investments that the Company does not intend to sell or for which it is more likely than not that the
Company will not be required to sell before an anticipated recovery of value, the Company will evaluate whether a decline in
fair value below the amortized cost basis has occurred from a credit loss or other factors (non-credit related). Considerations in
the credit loss assessment include (1) extent to which the fair value has been less than amortized cost, (2) conditions related to
the security, an industry,rr
or a geographic area, (3) payment structurt e of the investment and the likelihood of the issuer's ability
to make contractuat
assigned by a rating agency and (6) other credit enhancements that affeff ct the investment’s expected performance.

l cash flows, (4) defaults or other collectability concerns related to the issuer, (5) changes in the ratings

Any increase or decrease in the expected allowance for credit losses related to investments is recognized in Impairment Losses.
The expected allowance for credit losses is limited by the amount that the fair value is less than the amortized cost basis and is
adjud sted for any additional expected credit losses or subsu equent recoveries. The amortized cost basis of the investment is not
adjud sted for the expected allowance for credit loss. The impairment related to other factors (non-credit related) is reported in
Other Comprehensive Income (Loss), net of income taxes.

The Company reports accruerr d investment income separately for availabla e-for-sale fixed maturity securities and has elected not
to measure an allowance for credit losses on accruer d investment income. Accruer d investment income is written offff through
Impairment Losses at the time the issuer of the bond defaults or is expected to default on interest payments.

Fair Value Measurements

The Company uses a hierarchical framework which prioritizes and ranks the market observabia lity of inputs used in fair value
measurements. Market price observabia lity is affeff cted by a number of factors, including the type of asset or liability and the
characteristics specificff
market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree
of market price observabia lity and a lesser degree of judgment used in measuring fair value. The Company classifies the inputs
used to measure fair value into one of three levels as follows:

to the asset or liability being measured. Assets and liabia lities with readily availabla e, active, quoted

•
•

•

Level 1 — Quoted prices in an active market for identical assets or liabilities;
Level 2 — Observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted
prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose
inputs are observabla e or whose significant value drivers are observabla e; and
Level 3 — Significant unobservabla e inputs for the asset or liabia lity being measured.

Observable inputs are based on market data obtained from independent sources, while unobservabla e inputs are based on the
Company’s market assumptions. Unobservabla e inputs require significff ant management judgment or estimation. In some cases,
the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those cases, the fair
value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level of input that is
significant to the entire measurement. Such determination requires significant management judgment.

Defee rred Policyc Acquisitiott n Coststt

acquisition of business, principally commissions and certain premium taxes and

Costs directly associated with the successfulff
policy issuance costs, are deferred. Costs deferred on property and casualty insurance contracts and short-duration health
insurance
insurance contracts are amortized over the period in which premiums are earned. Deferred costs on traditional lifeff
products and other long duration insurance contracts are grouped by contract type and issue year into cohorts consistent with
the grouping used in estimating the associated liabia lity. These deferred costs are amortized on a constant level basis for grouped
contracts over the expected term of the related contracts to approximate straight-line amortization. The expected term of the
contract used for amortization is determined using mortality and termination assumptions that are based on the Company’s
experience, industryrr data, and other factors and are consistent with those used for the liability for future policyholder benefits. If
those projected assumptions change in future periods, they will be reflected in the straight-line amortization horizon at that
time. Unexpected terminations, dued
period as a reduction of the capitalized balances. Amortization of deferred policy acquisition costs is included in Insurance
Expenses in the Condensed Consolidated Statements of Loss.

to higher mortality and termination experience than expected, are recognized in the current

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Defee rred Profitff Liabi

liii tyii

For limited-payment lifeff products, gross premiums received in excess of net premiums are deferred at initial recognition as a
deferred profitff
measurement of the liability for future policyholder benefits, including discount rate, mortality, lapsa es, and expenses.

liabia lity (“DPL”). Gross premiums are measured using assumptions consistent with those used in the

The DPL is amortized and recognized as premium revenue in proportion to insurance in force for nonparticipating limited-
payment contracts. Interest is accreted on the balance of the DPL using the discount rate determined at contract issuance. The
Company reviews and updates its estimates of cash flows for the DPL at the same time as the estimates of cash flows for the
liabia lity for future policyholder benefits. When cash flows are updated, the updated estimates are used to recalculate the DPL at
contract issuance. The recalculated DPL as of the beginning of the current reporting period is compared to the carryir ng amount
of the DPL as of the beginning of the current reporting period, and any difference is recognized as either an increase or decrease
to Earned Premiums.

Goodwill

The cost of an acquired entity over the fair value of net assets acquired is reported as Goodwill. Goodwill is not amortized, but
rather is tested for recoverabia lity annually or when certain triggering events require testing.

Insurance Reserves

Reserves for losses and LAE on property and casualty insurance coverage and health insurance coverage represent the
estimated claim cost and loss adjud stment expense necessary to cover the ultimate net cost of investigating and settling all losses
incurred and unpaid at the end of any given accounting period. Such estimates are based on individual case estimates for
reported claims and estimates for incurred but not reported (“IBNR”) losses, including expected development on reported
claims. These estimates are adjud sted in the aggregate for ultimate loss expectations based on historical experience patterns and
current economic trends, with any change in the estimated ultimate liabia lities being reported in the Consolidated Statements of
(Loss) Income in the period of change. Changes in such estimates may be material.

es and expenses. These current assumptions are based on judgments that consider the Company’s historical

For lifeff
insurance products, the liabia lity for future policyholder benefits is the present value of estimated future policyholder
benefits to be paid to or on behalf of policyholders and certain related expenses, less the present value of estimated future net
premiums to be collected from policyholders. The liability is estimated using current assumptions that include discount rate,
mortality, lapsa
experience, industryrr data, and other factors. The liability is adjud sted for differences between actuat
The Company reviews and updates its estimate of cash flows expected over the lifetff
historical experience quarterly and current future cash flow assumptions at least annually to calculate its revised net premium
ratio. The revised net premium ratios are then used to calculate an updated liabia lity for future policyholder benefits for the
current reporting period, discounted at the original contract issuance discount rate. The Company has elected to use expense
assumptions that are locked in at contract inception and are not subsu equently reviewed or updated. Resulting changes in the
ng and
liabia lity due to differences in actual versus expected experience, changes in current cash flow assumptions, and prefundi
payout of benefits compared to the carrying amount of the liability as of that same date are recorded as a separate component of
benefit expense in the Consolidated Statements of (Loss) Income.

l and expected experience.
ime of a group of contracts using actual

The current discount rate assumption is an equivalent spot rate curve of annually compounded rates at monthly increments that
is derived based on A-credit rated fixed-income instruments reflecting the duration characteristics of the liabia lity. The Company
utilizes published corporate yield curves from Bloomberg’s BVAL Investment Grade Corporate Sector curve. The discount rate
assumption is updated quarterly and used to remeasure the liabia lity at the reporting date, with the resulting change reflected in
Other Comprehensive Income (Loss). For liability cash flows that are projected beyond the maximum observabla e point on the
yield curve, the yield grades to an ultimate forward rate.

Insurance Reserves for life insurance products are comprised of reserves for future policy benefits plus an estimate of the
Company’s liabia lity for unpaid life insurance claims and claims adjud stment expenses, which includes an estimate for IBNR lifeff
insurance claims. The Company utilizes the databaa
other comparable databaa
se (a “Death master File” or “DMF”) to identifyff potential situations where the Company has yet to be
notifieff d of an insured’s death and, as appropriate, initiating an outreach process to identifyff and contact beneficiaries and settle
claims.

se of reported deaths maintained by the Social Security Administration or

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Policyhc oldell

i
r Obligat

iott ns

Policyholder Obligations include Federal Home Loan Bank (“FHLB”) funding agreements used for spread lending purposes
and universal life-ff

type policyholder contracts and are stated at account balances.

Receivablesll

from Policyholderdd srr - Alloll wance for Expexx ctedtt Creditdd Losses

The allowance for credit losses is a valuation account that is deducted from the receivables from policyholders based on the net
amount expected to be collected on the insurance contract. Receivabla es from policyholders are charged offff against the
allowance when management believes the receivable is uncollectible. Expected recoveries do not exceed the aggregate of
amounts previously charged-offff and expected to be charged-off.ff

Management estimates the allowance using relevant availabla e information, from internal and external sources, related to past
events, current conditions, and reasonabla e and suppor
tabla e forecasts. Historical credit loss experience on the receivabla es from
policyholders provide the basis for the estimation of expected credit losses. Adjud stments to historical loss information are made
for differences in current environmental conditions, primarily unemployment rates that could impact an insured’s ability to pay
premiums.

The following tabla e presents a rollforff ward of changes in the allowance for expected credit losses for the year ended
December 31, 2023.

(Dollars in Millions)
Balance at Beginning of Year ............................................... $
Provision for Expected Credit Losses ................................
Write-offs of Uncollectible Receivabla es from
Policyholders......................................................................
Balance at End of Year ......................................................... $

Specialty

Life

Total
Segments

Non-Core
Operations

12.3 $
39.3

— $
0.5

12.3 $
39.8

0.8 $
1.8

Total
Allowance
for Expected
Credit Losses
13.1
41.6

(38.7)
12.9 $

(0.5)

— $

(39.2)
12.9 $

(1.6)
1.0 $

(40.8)
13.9

Receivabla e Balance at End of Year....................................... $

875.4 $

11.3 $

886.7 $

73.5 $

960.2

The following tabla e presents a rollforff ward of changes in the allowance for expected credit losses for the year ended
December 31, 2022.

(Dollars in Millions)
Balance at Beginning of Year............................................... $
Provision for Expected Credit Losses................................
Write-offs of Uncollectible Receivabla es from
Policyholders......................................................................
Balance at End of Year ......................................................... $

12.8 $
44.4

(44.9)
12.3 $

Specialty

Life

Total
Segments

Non-Core
Operations

— $
1.1

12.8 $
45.5

0.8 $
2.5

Total
Allowance
for Expected
Credit Losses
13.6
48.0

(1.1)

— $

(46.0)
12.3 $

(2.5)
0.8 $

(48.5)
13.1

Receivabla e Balance at End of Year ...................................... $ 1,166.9 $

11.0 $ 1,177.9 $

108.7 $ 1,286.6

Othett

r Receivablesll

Other Receivabla es primarily include reinsurance recoverabla es, accruer d investment income, and receivabla es from limited
liabia lity investments and investments in partnerships. Reinsurance Recoverabla es were $27.8 million and $39.6 million at
December 31, 2023 and 2022, respectively. Accruer d Investment Income was $88.4 million and $94.3 million at December 31,
2023 and 2022, respectively. Receivabla es from limited liability investments and investments in partnerships were $0.0 million
and $35.2 million at December 31, 2023 and 2022, respectively.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Othett

r Assets

Other Assets primarily include property and equipment, internal use software, right-of-use assets, insurance licenses acquired in
business combinations, other intangible assets acquired in a business combination and prepaid expenses. Property and
equipment is depreciated over the usefulff
methods of depreciation depending on the asset involved. Internal use software is amortized over the usefulff
using the straight-line method of amortization and is evaluated for recoverabia lity upon identificff ation of impairment indications.
Insurance licenses acquired in business combinations and other indefinite life intangibles are not amortized, but rather tested
periodically for recoverabia lity.

lives of the assets, generally using the straight-line or double declining balance

lifeff of the asset

The Company accounts for the value of business acquired (“VOBA”) based on actuarial estimates of the present value of future
cash flows embedded in insurance in force as of an acquisition date. VOBA was $13.8 million and $15.4 million at
December 31, 2023 and 2022, respectively. VOBA is amortized over the expected profitff emergence period of the policies in
force as of the acquisition date. The Company evaluates VOBA assets for recoverabia lity annually.

The Company accounts for the future profitff s embedded in customer relationships (“Customer Relationships”) acquired based
on the present value of estimated future cash flows from such relationships. Customer Relationships were $1.7 million and $2.7
million at December 31, 2023 and 2022, respectively, and are amortized on a straight-line basis over the estimated usefulff
life of
the relationship. Customer Relationships are tested for recoverabia lity using undiscounted projections of future cash flows and
are written down to estimated fair value if the carrying value exceeds the sum of such projections of undiscounted cash flows.

The Company accounts for the present value of the future profitff s embedded in broker or agent relationships acquired (“Agent
Relationships”) based on the present value of estimated future cash flows from such acquired relationships or, using the cost
recovery method, which estimates the ultimate cost to build a comparable distribution network. Agent Relationships were $43.4
million and $50.6 million at December 31, 2023 and 2022, respectively, and are amortized on a straight-line basis over the
life of the relationship. Agent Relationships are tested for recoverabia lity using undiscounted projections of
estimated usefulff
future cash flows and are written down to estimated fair value if the carryir ng value exceeds the sum of such projections of
undiscounted cash flows.

Accrued Expexx nses and Othett

s
litie
ii
r Liabi
i

Accruerr d Expenses and Other Liabilities primarily include draftsff payabla e, accruer d salaries and commissions, pension benefits,
postretirement medical benefits, lease liabia lity and accruer d taxes, licenses and fees.

Recogno

itiott n of Earned Premiums and Related Expexx nses

Property and casualty insurance and short-duration health insurance premiums are deferred when written and recognized and
earned ratabla y over the periods to which the premiums relate. Unearned Premiums represent the portion of the premiums
written related to the unexpired portion of policies in force which has been deferred and is reported as a liabia lity. The Company
performs a premium deficiency analysis typically at a business level, namely Specialty Property & Casualty Insurance and Non-
Core Operations, which is consistent with the manner in which the Company acquires and services policies and measures
profitaff bia lity. Anticipated investment income is included in this analysis. A premium deficiency is recognized when the sum of
expected claim costs, claim adjud stment expenses, unamortized deferred policy acquisition costs and maintenance costs exceeds
the related unearned premiums by first reducing related deferred policy acquisition costs to an amount, but not below zero, at
which the premium deficiency would not exist. If a premium deficiency remains afteff
costs, a premium deficiency reserve is establa ished and reported as a liabia lity in the Consolidated Financial Statements.

r first reducing deferred policy acquisition

Traditional lifeff
insurance premiums are recognized as revenue when due. Policyholders’ benefits are associated with related
premiums to result in recognition of profitff s over the periods for which the benefits are provided using the net level premium
method.

Policyholders’ Benefits and Incurred Losses and Loss Adjud stment Expenses include provisions for future policy benefits under
lifeff and certain accident and health insurance contracts and provisions for reported claims, estimates for IBNR claims and loss
adjud stment expenses. Benefit payments in excess of policy account balances are expensed.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

Reinsurance

In the normal course of business, Kemper’s insurance subsu idiaries reinsure certain risks above certain retention levels with
other insurance enterprises. These reinsurance agreements do not relieve Kemper’s insurance subsu idiaries of their legal
obligations to the policyholder. Amounts recoverabla e from reinsurers are included in Other Receivabla es.

Gains related to long-duration reinsurance contracts are deferred and amortized over the life of the underlying reinsured
policies. Losses related to long-durd ation reinsurance contracts are recognized immediately. Any gain or loss associated with
reinsurance agreements for which Kemper’s insurance subsu idiaries have been legally relieved of their obligations to the
policyholder is recognized in the period of relief.

Income Taxeaa s

Deferred income tax assets and liabia lities are recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabia lities and their respective tax bases. Deferred
income tax assets and liabilities are measured using enacted tax rates in effeff ct for the year in which those temporaryr differences
are expected to be recovered or settled. A valuation allowance, if any, is maintained for the portion of deferred income tax
assets that the Company does not expect to recover. Increases, if any, in the valuation allowance for deferred income tax assets
are recognized as Income Tax Benefit (Expense). Decreases, if any, in the valuation allowance for deferred income tax assets
are generally recognized as income tax benefit. The effeff ct on deferred income tax assets and liabia lities of a change in tax law
including a change in tax rates is recognized in income from operations in the period in which the change is enacted.

The Company reports a liability for unrecognized tax benefits, if any, resulting from uncertain tax positions taken, or expected
to be taken, in an income tax return, if any. The Company recognizes interest and penalties, if any, related to unrecognized tax
benefits in Income Tax Benefit (Expense).

Premium Defie ciency

Commencing in 2022, the Company began including anticipated net investment income in the premium deficiency analysis
performed on the Specialty Property & Casualty Insurance Segment and Non-Core Operations business. The Company believes
this accounting principle change is preferff able as it best reflects the ultimate profitff ability of an insurance contract in using all
cash flows from the in-force policies, inclusive of related investment income, and provides improved comparability with
industryrr peers. This accounting principle change had no impact on the results of the premium deficiency analysis in prior
periods presented.

i
Variabl

ell Interest Entitiii es

t or is structurt ed such that equity investors lack the ability to make significant decisions relating to the entity's

A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional suboru
financial suppor
operations through voting rights or do not subsu tantively participate in the gains and losses of the entity. The Company
consolidates VIEs in which the Company is deemed the primary beneficiary.r The primaryrr beneficiaryrr
(1) the power to direct the activities of the VIE that most significantly affeff ct that entity's economic performance and (2) the
obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE.

is the entity that has both

dinated

Noncontrollinll

g Intereststt

Noncontrolling interest is the portion of equity (net assets) not attributable, directly or indirectly, to a parent. The Company has
no ownership interest in Kemper Reciprocal, but consolidates it as the Company is considered the primaryr beneficiary.r

dd
Adopt

iott n of New Accountintt g Guidandd

dd
Guidanc

dd
e Adopt

ed in 2023

The Company adopted ASU 2018-12 for the liability for future policyholder benefits and deferred acquisition costs on a
modified retrospective basis as of January 1, 2023, such that those balances were adjud sted to conforff m to ASU 2018-12 on
January 1, 2021.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

The new standard requires cash flow assumptions used to measure the liability for future policyholder benefits for
nonparticipating traditional and limited pay long-duration contracts to be reviewed at least annually, and if there is a change,
updated with the recognition and remeasurement recorded in net income. It also requires the discount rate used in measuring the
liabia lity to be an upper-medium grade fixed-income instrument yield, which is to be updated at each reporting period, and
recognized in other comprehensive income. ASU 2018-12 simplifies the amortization of deferred acquisition costs to a constant
level basis over the expected term of the contract, requires all market risk benefits to be measured at fair value, and enhances
certain presentation and disclosure requirements, as discussed in Note 7 and Note 8.

As a result of the adoption of ASU 2018-12, beginning retained earnings was reduced by $25.1 million and Accumulated Other
Comprehensive Income (“AOCI”) reduced by $1,030.3 million as of January 1, 2021.

The tabla e below presents the transition adjud stment for the adoption of ASU 2018-12:

Retained Earnings
AOCI

Pre-Adoption Balance
12/31/2020

$
$

2,071.2
680.5

Adjud stments to AOCI
—
(1,030.3)

Adjud stments to Retained
Earnings

Post- Adoption
Balance 1/1/2021

(25.1) $
— $

2,046.1
(349.8)

For the liabia lity for future policyholder benefits, the net transition adjud stment is related to the difference in the historical
discount rates used pre-transition and the discount rate at December 31, 2020. At transition, there were no adjud stments related
to premium deficiencies, as the balance is only applicable to Kemper’s universal life contracts which are stated at account
value.

The effeff cts of adoption of ASU 2018-12 on the Consolidated Statement of Loss for the years ended December 31, 2022 and
2021 were as follows:

2022

2021

Prior to
Adoption

Effeff ct of
Adoption

Post-
Adoption
Balance

Prior to
Adoption

Effeff ct of
Adoption

Post-
Adoption
Balance

Earned Premiums ............................................. $ 5,266.3
Policyholders’ Benefits and Incurred Losses
and Loss Adjud stment Expenses......................... $ 4,504.4
Insurance Expenses ........................................... $ 1,200.6
88.3
Income Tax Benefit........................................... $
(301.2)
Net Loss attributable to Kemper Corporation ... $

(52.9) $ 5,213.4 $ 5,253.7

(74.5) $ 5,179.2

(71.8) $ 4,432.6 $ 4,600.8
0.4 $ 1,201.0 $ 1,218.1
124.8
84.4 $
(3.9) $
(120.5)
(286.6) $
14.6 $

(81.2) $ 4,519.6
10.7 $ 1,228.8
125.6
0.8 $
(123.7)
(3.2) $

Net Loss Per Unrestricted Share attributable to

Kemper Corporation:
Basic ............................................................. $
Diluted .......................................................... $

(4.72) $
(4.72) $

0.22 $
0.22 $

(4.50) $
(4.50) $

(1.87) $
(1.87) $

(0.05) $
(0.05) $

(1.92)
(1.92)

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

The effeff cts of adoption of ASU 2018-12 on the Consolidated Balance Sheet as of December 31, 2022 were as follows:

Deferred Policy Acquisition Costs

Prior to Adoption
625.6
$
189.4
Deferred Income Tax Assets........................................................................... $
13,364.0
Total Assets..................................................................................................... $
3,554.0
Life and Health Insurance Reserves................................................................ $
10,920.8
Total Liabilities ............................................................................................... $
1,380.1
Retained Earnings ........................................................................................... $

Accumulated Other Comprehensive Loss....................................................... $

(756.0)

Total Shareholders’ Equity attributable to Kemper Corporation.................... $

2,443.2

Effeff ct of
Adoption

Post- Adoption
Balance

10.0 $
(60.4) $
(50.4) $
(277.8) $
(277.8) $
(13.7) $

241.1 $

227.4 $

635.6
129.0
13,313.6
3,276.2
10,643.0
1,366.4

(514.9)

2,670.6

The effeff cts of adoption of ASU 2018-12 on the Consolidated Statement of Comprehensive Loss for the years ended
December 31, 2022 and 2021 were as follows:

2022

2021

Prior to
Adoption

Effeff ct of
Adoption

Post-
Adoption
Balance

Prior to
Adoption

Effeff ct of
Adoption

Post-
Adoption
Balance

Change in Discount Rate on Future Life
Policyholder Benefits
Other Comprehensive Loss Before Income
Taxes ................................................................. $ (1,524.4)
Other Comprehensive Income Tax Benefit....... $
320.3
Other Comprehensive Loss, Net of Taxes ........ $ (1,204.1)
Total Comprehensive Loss................................ $ (1,505.3)

—

1,380.7 $ 1,380.7 $

— $

228.5 $

228.5

1,380.7 $
(289.9) $
1,090.8 $
1,105.4 $

(143.7) $
30.4 $
(113.3) $
(399.9) $

(294.8) $
62.4 $
(232.4) $
(352.9) $

228.5 $
(47.9) $
180.6 $
177.4 $

(66.3)
14.5
(51.8)
(175.5)

The effeff cts of adoption of ASU 2018-12 on the Consolidated Statement of Cash Flows for the years ended December 31, 2022
and 2021 were as follows:

2022

2021

Prior to
Adoption

Effeff ct of
Adoption

Post-
Adoption
Balance

Prior to
Adoption

Effeff ct of
Adoption

Post-
Adoption
Balance

Cash Flows from Operating Activities:

Net Loss ......................................................... $
Change in Deferred Policy Acquisition Costs $
Change in Insurance Reserves........................ $
Change in Income Taxes ................................ $
Net Cash Used in Operating Activities............. $

(301.2)
13.8
45.4
(87.5)
(210.3)

14.6 $
0.4 $
(18.9) $
3.9 $
— $

(286.6) $
14.2 $
26.5 $
(83.6) $
(210.3) $

(120.5)
(88.3)
623.1
(163.1)
350.7

(3.2) $
10.7 $
(6.7) $
(0.8) $
— $

(123.7)
(77.6)
616.4
(163.9)
350.7

ing Liabilities from Equity (TopiTT

In July 2023, the FASB issued ASU 2023-03 Presentation of Financial Statements (TopiTT
inguishii
Comprehensive Income (TopTT ic 220), Distii
—StoS ck Compensation (TopTT ic 718), which codifies amendments to certain SEC paragraphs pursuant to SEC Staffff Accounting
Bulletin No. 120, SEC Staffff Announcement at the March 24, 2022 EITF Meeting, and Staffff Accounting Bulletin Topic 6.B,
Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. This
ASU predominately codifies guidance for public companies to consider when entering into share-based payment arrangements
while in possession of material non-public information. As this ASU does not provide any new guidance, there is no transition
or effeff ctive date associated with it. The Company adopted this ASU as of the third quarter of 2023 with no material impact to
the consolidated financial statements.

c 205), Income Statement—Rep— orting
c 505), and Compensation

c 480), Equity (TopiTT

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES AND ACCOUNTING CHANGES (Continued)

dd
Guidanc

e Not Yet Adopt

In March 2023, the FASB issued ASU 2023-02 Accounting for Investments in Taxaa Credit Strutt
ctures Using the Proportional
Amortization Method, which expands the use of the proportional amortization method of accounting to equity investments in
other tax credit structurt es that meet certain criteria. The proportional amortization method results in the tax credit investment
being amortized in proportion to the allocation of tax credits and other tax benefits in each period, and a net presentation within
the income tax line item. ASU 2023-02 is effeff ctive for annual periods beginning afteff
within those annual periods. The Company is currently evaluating the impact of this guidance on its consolidated financial
statements.

r December 15, 2023 and interim periods

losure Imprm ovements: Codifii cation Amendments in Response to the

In October 2023, the FASB issued ASU 2023-06 Discii
SEC’s Discii
losure Update and Simplifici ation Initiative. This ASU amends the disclosure or presentation requirements related to
various subtu opics in the FASB Accounting Standards Codification. For SEC registrants, the effeff ctive date for each amendment
will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K
becomes effeff ctive, with early adoption prohibited. The Company will monitor the removal of various requirements from the
current regulations in order to determine when to adopt the related amendments, but does not anticipate the adoption of the new
guidance will have a material impact on the Company’s Consolidated Financial Statements. The Company will continue to
evaluate the impact of this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07 Imprm ovements to Repor
disclosures about significant segment expenses. The new standard does not change the definition or aggregation of operating
segments but will add required disclosures of significff ant expenses for each reportabla e segment as well as certain other
disclosures to help financial statement users understand how the chief operating decision maker evaluates segment expenses
and operating results. ASU 2023-07 is effeff ctive for annual periods beginning afteff
within fiscal years beginning afteff
consolidated financial statements.

r December 15, 2024. The Company is currently evaluating the impact of this guidance on its

r December 15, 2023 and interim periods

losures, which enhances

table Segme

ent Discii

In December 2023, the FASB issued ASU 2023-09 Imprm ovements to Income Taxaa Discii
of income tax disclosures by requiring companies to use consistent categories and greater disaggregation of information in the
tax rate reconciliation as well as requiring disaggregation of income taxes paid by jurisdiction. ASU 2023-09 is effeff ctive for
annual periods beginning afteff
yet been issued or made availabla e for issuance. The Company is currently evaluating the impact of this guidance on its
consolidated financial statements.

r December 15, 2024, with early adoption permitted for annual financial statements that have not

losures, which improves the transparency

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 3. NET LOSS PER UNRESTRICTED SHARE

A reconciliation of the numerator and denominator used in the calculation of Basic Net Loss Per Unrestricted Share and Diluted
Net Loss Per Unrestricted Share for the years ended December 31, 2023, 2022 and 2021 is presented below.

DOLLARS IN MILLIONS

2023

2022

2021

Net Loss attributable to Kemper Corporation ........................................................................ $ (272.1) $ (286.6) $ (123.7)
HH
SHARES

IN THOUSHH

ANSS DSNN

Weighted-average Unrestricted Shares Outstanding..............................................................

64,025.6

63,825.5

64,264.4

Equity-based Compensation Equivalent Shares.....................................................................
Weighted-average Unrestricted Shares and Equivalent Shares Outstanding Assuming

Dilution...............................................................................................................................

—

64,025.6

63,825.5

64,264.4

Net Loss attributable to Kemper Corporation per Unrestricted Share:
PEREE UNRESR TRICRR TEDEE SHAREHH

IN WHOLHH E DOLLARS

Basic Net Loss Per Unrestricted Share .................................................................................. $

(4.25) $

(4.50) $

Diluted Net Loss Per Unrestricted Share ............................................................................... $

(4.25) $

(4.50) $

(1.92)

The number of shares of Kemper common stock that were excluded from the calculations of Equity-based Compensation
Equivalent Shares and Weighted-average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution because
the effeff ct of inclusion would be anti-dilutive was 3.6 million, 2.4 million, and 2.2 million for the years ended December 31,
2023, 2022, and 2021, respectively.

NOTE 4. DISPOSITIONS

Dispii osition of Reserve National Insurance Company

In July 2022, the Company entered into a definitive agreement to sell Reserve National Insurance Company and its wholly-
owned subsu idiaries (collectively, “Reserve National”) to Medical Mutual of Ohio for approximately $90.0 million in total
consideration. The sale closed on December 1, 2022 and a loss of $1.6 million, net of income tax, was recorded for the year
ended December 31, 2022. The Company reported Reserve National’s results of operations in the Life Insurance segment
through December 1, 2022.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 4. DISPOSITIONS (Continued)

The following tabla e summarizes the assets and liabilities included in the sale on December 1, 2022:

(Dollars in millions)

Assets:

Investments:

Fixed Maturities at Fair Value (Amortized Cost: $43.3)................................................................................ $

Short-term Investments at Cost which Approximates Fair Value..................................................................

Loans to Policyholders ...................................................................................................................................

Total Investments................................................................................................................................................
Cash.....................................................................................................................................................................

Receivabla es from Policyholders..........................................................................................................................

Other Receivabla es ...............................................................................................................................................

Deferred Policy Acquisition Costs......................................................................................................................

Goodwill .............................................................................................................................................................
Other Assets ........................................................................................................................................................

Investment in Subsu idiaries ..................................................................................................................................

Dec 1,
2022

36.7

0.7

38.1
81.0

2.6

1.6

38.7

0.3
3.1

0.2

Total Assets.............................................................................................................................................................. $

165.6

Liabilities:

Insurance Reserves:
Health Insurance Reserves .................................................................................................................................. $

Unearned Premiums............................................................................................................................................

Deferred Income Tax Liabilities .........................................................................................................................

Accruerr d Expenses and Other Liabilities.............................................................................................................

Total Liabilities........................................................................................................................................................ $

48.2

10.8

1.8

13.8

74.6

NOTE 5. BUSINESS SEGMENTS

In the third quarter of 2023, the Company announced that it will exit the Preferff
and will actively reduce the business beginning in third quarter 2023, with all policies being non-renewed or canceled in
accordance with applicable state regulations. In connection with the exit, the Company changed its segment measure of
performance to exclude the results of the Preferff
Operating Loss effeff ctive July 1, 2023, since the results are irrelevant to ongoing operations of the Company and do not qualifyff
for Discontinued Operations under U.S. GAAP. The results of this business, previously reported as a reportabla e segment, are
now reflected as Non-Core Operations and presented as a reconciling item between Segment Adjud sted Operating Net Loss and
Net Loss. Prior period amounts have been reclassified to reflect the change in reportabla e segments and the segment measure of
performance.

red Property and Casualty Insurance business from Segment Adjud sted Net

red Property and Casualty Insurance business

The Company is engaged, through its subsu idiaries, in the property and casualty insurance and lifeff and health insurance
businesses. The Company conducts its operations through two operating segments: Specialty Property & Casualty Insurance,
and Life Insurance.

The Specialty Property & Casualty Insurance segment’s principal products are specialty automobile and commercial
automobile insurance. These products are distributed primarily through independent agents and brokers. The Life Insurance
segment’s (formerly referred to as “Lifeff & Health Insurance”) principal products are individual life,ff
emental
health and property insurance. Career agents employed by the Company distribute these products. Corporate and Other
operations include interest expense, board of director fees, and general corporate expenses incurred by the Company which are
not allocated to other businesses.

accident, supplu

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 5. BUSINESS SEGMENTS (Continued)

Segme

ent Adjudd sted Operating (Loss) Income

hThe Companyy an lalyyzes hthe opera iti gng performance of ea hch seggment usiingg seggment dadjujudd st ded opera itingg (l(los )s) iincome. Seggment
iwi hth
dadjujudd st ded opera itingg (l(los )s) iincome ddoes not equate to l“loss bbefore iincome taxes” or “net lloss” as ddetermiin ded iin acco drdance
U.S. GAAP bbut iis hthe measure of seggment profiitff or lloss us ded byby hthe Companyy’s hChiief Operatiingg De ici ision Makker ((“CODM )”) to
ev laluate seggment performance a dnd lalllocate resources, andd consiistent
pperformance presentedd bbellow. Seggment dadjujudd st ded opera iti gng (l(los )s) iincome iis
iincome taxes for hthe follllo iwi gng iitems:

iwi hth au hthoriita itive guiguiddance, iis hthe measure of seggment

heach seggment’s lloss bbefore

lcalcullatedd byby dadjujudd stiingg

iqui isi ition andd iDisposiitiion Rellatedd Transactiion, Integgratiion, Restructurt

(i) Income (Loss) from Change in Fair Value of Equity and Convertible Securities;
(ii) Net Realized Investment (Losses) Gains;
(iii) Impairment Losses;
(i(i )v) Ac
((v)) Debbt Ex iti gnguiishhment, Pensiion Se lttlement andd Othher hChargges;
((vi)i) Go dodwililll Impaiirment hChargge;
((vii)ii) Non-Core Operatiions; andd
((viii)iii)

iSignignifificant non-recu irri gng or iinfrequent iitems hthat mayy not bbe iindidicatiive of ongoi

iingg andd Othher Costs;

ongoi gng opera itions

dundersta dindi gng of overallll resullts of opera itions. Seggment dadjujudd st ded opera itingg (l(los )s) iincome is not

hThese iitems are iimportant to an
a subsu titute for income determined in accordance wiithh U.S. GAAP, andd hthe Companyy’s ddefifi ini ition of seggment dadjujudd st ded
opera itingg (l(los )s) iincome mayy didifferff
of seggment dadjujudd st ded cons lolididat ded opera itingg (l(los )s) iincome as measured for management purpos
results of operations by highlighting the results from ongoing operations and the underlying profitff ability factors of its
businesses.

from hthat us ded byby othher companiies. hThe Companyy, hhowever, bbelilieves hthat hthe presenta ition

es enhances the understanding of

The Company’s earned premiums are derived in the United States. The accounting policies of the segments are the same as
those described in Note 2, “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial
Statements. Capia tal expenditures for long-lived assets by operating segment are immaterial.

It is the Company’s management practice to allocate certain corporate expenses, primarily compensation costs for corporate
employees and related facility costs, included in Interest and Other Expenses in the Consolidated Statements of (Loss) Income
to its insurance operations. The amount of such allocated corporate expenses was $114.4 million, $127.8 million and $121.9
million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company does not allocate Income (Loss)
from Change in Fair Value of Equity and Convertible Securities, Net Realized Investment (Losses) Gains, Impairment Losses,
Ac
Se lttlement andd Othher hChargge ,s Go dodwililll Impaiirment hChargge, Non-Core Operatiions, andd iSignignifificant non-recu irri gng or iinfrequent
iitems hthat mayy not bbe iindidica itive of ongoi

iqui isi ition andd iDisposi iition Rellatedd Transactiion, Integgratiion, Restructurt

iingg andd Othher Cost ,s Debbt Ex itinguigui hshment, Pensiion

ongoi gng opera itions to its operating segments.

Total Segment, Non-Core Operations, and Corporate and Other assets at December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS
Segment Assets:

2023

2022

Specialty Property & Casualty Insurance............................................................................................ $ 6,145.9
Life Insurance......................................................................................................................................
4,898.1
Total Segment Assets.............................................................................................................................
11,044.0
Corporate and Other...............................................................................................................................
623.7
Non-Core Operations.............................................................................................................................
1,075.0
Total Assets............................................................................................................................................ $ 12,742.7

$ 6,535.3
5,008.0
11,543.3
545.4
1,224.9
$ 13,313.6

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 5. BUSINESS SEGMENTS (Continued)

Earned Premiums by product line for the years ended December 31, 2023, 2022 and 2021 were:

DOLLARS IN MILLIONS
Specialty Property & Casualty Insurance:

2023

2022

2021

Personal Automobile........................................................................................................... $ 2,977.8
Commercial Automobile .....................................................................................................
654.7

$ 3,496.7
549.7

$ 3,533.7
414.8

Life Insurance:

Life ......................................................................................................................................
319.2
Accident and Health ............................................................................................................
23.1
Property ...............................................................................................................................
45.3
Total Segment Earned Premiums...........................................................................................
4,020.1
Non-Core Operations .............................................................................................................
509.3
Total Earned Premiums.......................................................................................................... $ 4,529.4

352.8
168.2
50.5
4,617.9
595.5
$ 5,213.4

327.2
189.9
61.9
4,527.5
651.7
$ 5,179.2

Segment Revenues, including a reconciliation to Total Revenues, for the years ended December 31, 2023, 2022 and 2021 were:

DOLLARS IN MILLIONS
Segment Revenues:
Specialty Property & Casualty Insurance:

2023

2022

2021

Earned Premiums .............................................................................................................. $ 3,632.5
Net Investment Income .....................................................................................................
168.3
Change in Value of Alternative Energy Partnership Investments.....................................
1.6
Other Income.....................................................................................................................
4.5
Total Specialty Property & Casualty Insurance ..................................................................
3,806.9

$ 4,046.4
140.7
(9.9)
6.0
4,183.2

$ 3,948.5
152.5
(29.0)
4.1
4,076.1

Life Insurance:

Earned Premiums ..............................................................................................................
387.6
Net Investment Income .....................................................................................................
193.4
Change in Value of Alternative Energy Partnership Investments.....................................
0.7
Other Income.....................................................................................................................
(0.2)
Total Life Insurance ............................................................................................................
581.5
Total Segment Revenues........................................................................................................
4,388.4
Income (Loss) from Change in Fair Value of Equity and Convertible Securities.................
4.7
Net Realized Investment (Losses) Gains ...............................................................................
(18.6)
Net Impairment Losses Recognized in Earnings ...................................................................
(1.1)
Non-Core Operations .............................................................................................................
558.4
Other ......................................................................................................................................
12.4
Total Revenues....................................................................................................................... $ 4,944.2

571.5
216.5
(5.3)
(0.6)
782.1
4,965.3
(79.9)
4.3
(25.8)
640.5
19.5
$ 5,523.9

579.0
202.7
(15.8)
(1.3)
764.6
4,840.7
114.6
64.8
(11.0)
704.0
5.4
$ 5,718.5

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 5. BUSINESS SEGMENTS (Continued)

Adjud sted Consolidated Operating Loss, including a reconciliation to Loss before Income Taxes attributable to Kemper
Corporation, for the years ended December 31, 2023, 2022 and 2021 was:

DOLLARS IN MILLIONS
Segment Adjud sted Operating (Loss) Income:

Specialty Property & Casualty Insurance............................................................................
Life Insurance......................................................................................................................
Total Segment Adjud sted Operating Loss ...............................................................................
Corporate and Other Adjud sted Operating Loss......................................................................
Less: Loss before Income Taxes attributable to Noncontrolling Interest ..............................
Adjud sted Consolidated Operating Loss .................................................................................
Income (Loss) from Change in Fair Value of Equity and Convertible Securities ............
Net Realized Investment (Losses) Gains ..........................................................................
Impairment Losses ............................................................................................................
Acquisition and Disposition Related Transaction, Integration, Restructurt
ing and Other
Costs..................................................................................................................................
Debt Extinguishment, Pension Settlement, and Other Charges........................................
Goodwill Impairment Charge ...........................................................................................
Non-Core Operations ........................................................................................................

(43.9)
—
—
(39.8)
Loss before Income Taxes attributable to Kemper Corporation............................................ $ (346.8) $ (371.0) $ (249.3)

(120.3)
(70.2)
(49.6)
(22.8)

(62.9)
(3.7)
—
(36.4)

2023

2022

2021

(76.3) $ (196.9) $ (292.1)
6.5
78.0
62.3
(285.6)
(118.9)
(14.0)
(48.4)
(47.7)
(55.2)
—
—
(0.3)
(334.0)
(166.6)
(68.9)
114.6
(79.9)
4.7
64.8
4.3
(18.6)
(11.0)
(25.8)
(1.1)

Adjud sted Consolidated Net Operating Loss, including a reconciliation to Net Loss attributable to Kemper Corporation, for the
years ended December 31, 2023, 2022 and 2021 was:

DOLLARS IN MILLIONS
Segment Adjud sted Net Operating (Loss) Income:

2023

2022

2021

(57.1) $ (147.4) $ (196.1)
25.0
68.8
51.8
(171.1)
(78.6)
(5.3)
(38.4)
(37.8)
(42.1)
—
—
(0.2)
(209.5)
(116.4)
(47.2)

3.7
(14.7)
(0.9)

(63.1)
3.4
(20.4)

90.5
51.2
(8.7)

Change in Fair Value of Equity and Convertible Securities ...............................................
Net Realized Investment (Losses) Gains ............................................................................
Impairment Losses ..............................................................................................................
Acquisition and Disposition Related Transaction, Integration, Restructurt
Costs....................................................................................................................................
Debt Extinguishment, Pension Settlement, and Other Charges ..........................................
Goodwill Impairment Charges ............................................................................................
Non-Core Operations ..........................................................................................................

(34.7)
—
—
(12.5)
Net Loss Attributable to Kemper Corporation....................................................................... $ (272.1) $ (286.6) $ (123.7)

(95.0)
(55.5)
(45.5)
(17.0)

(61.3)
(2.9)
—
(25.9)

ing and Other

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES

The Company’s Property and Casualty Insurance Reserves are reported using the Company’s estimate of its ultimate liability
for losses and LAE for claims that occurred prior to the end of any given accounting period but have not yet been paid. Such
estimates are based on individual case estimates for reported claims and estimates for IBNR losses, including expected
development on reported claims. Property and Casualty Insurance Reserves are recorded net of any expected salvage and
subru ogation recoveries.

The determination of individual case reserves differs by line of business. For personal automobile insurance and commercial
automobile insurance, case reserves are set primarily using statistical reserves that are based on studi
es of historical average
paid amounts by state, coverage and product. However, when such reserves exceed certain thresholds they are set manually by

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

adjud sters. For preferff
the adjud sters’ estimates of the amount for which the claims will ultimately be paid.

red homeowners insurance and other personal insurance, case reserves are set by adjud sters and are based on

ries estimate ultimate losses and LAE and, thereforff e, reserves at least quarterly for most product lines
The Company’s actuat
and/or coverage levels using accident quarters or years spanning 10 or more years, depending on the size of the product line
and/or coverage level or emerging issues relating to them. The Company’s actuaries use a variety of generally accepted
actuat
rial loss reserving estimation methodologies to estimate the ultimate losses and LAE for the current accident quarter or
year and re-estimate the ultimate losses and LAE for previous accident quarters or years to determine if changes in the previous
estimates of the ultimate losses and LAE are indicated by the most recent data.

sional judgment in determining how much weight to

ries make adjud stments to the loss reserving estimation

The key assumption in these estimation methodologies is that patterns observed in prior periods are indicative of how losses
and LAE are expected to develop in the future and that such historical data can be used to predict and estimate ultimate losses
and LAE. However, changes in the Company’s business processes, by their very nature, are likely to affeff ct the development
patterns, which generally results in the historical development factors becoming less reliabla e over time in predicting how losses
and LAE will ultimately develop. The Company’s actuaries use profesff
place on the development patterns based on the older historical data and how much weight to place on the development patterns
based on more recent data. In some cases, the Company’s actuat
methodologies to estimate ultimate losses and LAE. The Company’s actuat
product and/or coverage levels to create the actuarial indication of the ultimate losses and LAE. Paid amounts are then
subtu racted from the ultimates to compute the reserves for property and casualty insurance losses and LAE. These results are
reviewed by the Company’s actuaries and corporate management who apply their collective judgment and determine the
appropriate estimated level of reserves to record. Numerous factors are considered in this determination process, including, but
not limited to, the assessed reliability of key loss trends and assumptions that may be significantly influencing the current
rial indications, changes in claim handling practices or other changes that affeff ct the timing of payment or development
actuat
patterns, changes in the mix of business, the maturt
ity of the accident year, pertinent trends observed over the recent past, the
level of volatility within a particular line of business, the improvement or deterioration of actuarial indications in the current
period as compared to prior periods, and the amount of reserves related to third party pools for which the Company has limited
access to the underlying data and, accordingly, relies on calculations provided by such pools. The Company’s goal is to ensure
that its total reserves for property and casualty insurance losses and LAE are adequate to cover all costs, while sustaining
minimal variation from the time reserves for losses and LAE are initially estimated until losses and LAE are fully developed.
Changes in the Company’s estimates of these losses and LAE over time, also referred to as “development,” will occur and may
be material.

ries’ quarterly or yearly selections are summed by

The following tabla es contain information about incurred and paid claims development as of and for the year ended
December 31, 2023, net of reinsurance and indemnificff ation, as well as cumulative claim frequency and the total of IBNR
liabia lities, including expected development on reported claims included within the net incurred losses and allocated LAE
amounts. The tabla es are grouped by majoa r product line and, if relevant, coverage. The information about incurred and paid
claims development for the years ended December 31, 2019 through 2022 is presented as suppl
ementary information and is
unaudited.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Speciali

tyll Personal Automobileii

Insurance—Li— abi

ilitll ytt 1

DOLLARS IN MILLIONS

,SS EXCEPT CUMUUU

LAUU TIVE INCUNN RRED

CLAILL MSII

As of December 31, 2023

Incurred Losses and Allocated LAE, Net of Reinsurance
For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

Total of IBNR
Liabilities Plus
Expected
Development on
Reported
Claims

1,461.5
2019 ............. $
2020 .......................................

1,494.7
1,401.2

2021.................................................................

1,506.1
1,406.4

1,856.9

2022 ..........................................................................................

1,508.3
1,407.8

1,824.7

1,765.9

2023 ....................................................................................................................

Total....................................................................................................................

1,516.1
1,415.9

1,844.2

1,848.7

1,448.7

8,073.6

20.0
29.9

75.9

169.3

537.1

Cumulative
Number of
Reported
Claims

547,437
475,894

585,665

471,990

282,423

Cumulative Paid Losses and Allocated LAE, Net of Reinsurance

For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

2019 ............. $
567.3
2020 .......................................

1,200.7
555.2

2021.................................................................

1,382.0
1,107.6

657.1

2022 ..........................................................................................

1,452.3
1,287.8

1,429.4

738.2

2023 ....................................................................................................................

Total....................................................................................................................
Outstanding Loss and Allocated LAE Reserves on Accident Years before
2019, Net of Reinsurance ..............................................................................
Loss and Allocated LAE Reserves, Net of Reinsurance .................................... $

1,482.1
1,350.0

1,680.8

1,463.3

580.4

6,556.6

27.9
1,544.9

1 Tabla es retrospectively include American Access Casualty Company’s (“AAC”) historical incurred and paid accident year claim information for all periods
presented.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Speciali

tyll Personal Automobileii

Insurance—Ph— ysh ical Damagea 1

DOLLARS IN MILLIONS

,SS EXCEPT CUMUUU

LAUU TIVE INCUNN RRED

CLAILL MSII

As of December 31, 2023

Incurred Losses and Allocated LAE, Net of Reinsurance
For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

Total of IBNR
Liabilities Plus
Expected
Development on
Reported
Claims

2019 ............. $

624.3

630.3

629.6

629.7

629.5

2020 .......................................

650.5

659.5

958.0
2021.................................................................
2022 ..........................................................................................

659.5

967.5
993.5

2023 ....................................................................................................................

659.0

967.2
989.5

722.6

Total....................................................................................................................

3,967.8

(9.2)

(0.5)

(1.9)
(9.7)

(6.2)

Cumulative
Number of
Reported
Claims

324,516

296,411

361,864
308,705

199,413

Cumulative Paid Losses and Allocated LAE, Net of Reinsurance

For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

2019 ............. $

570.8

634.8

630.6

630.0

2020 .......................................

585.5

663.8

890.1
2021.................................................................
2022 ..........................................................................................

659.7

977.5
921.9

2023 ....................................................................................................................
Total....................................................................................................................
Outstanding Loss and Allocated LAE Reserves on Accident Years before
2019, Net of Reinsurance ..............................................................................
Loss and Allocated LAE Reserves, Net of Reinsurance .................................... $

629.8

658.8

968.3
997.8

699.2
3,953.9

(2.8)

11.1

1 Tabla es retrospectively include AAC’s historical incurred and paid accident year claim information for all periods presented.

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Commercial Automobileii

Insurance—Li— abi

liii tyii

II
DOLLARS IN MILLI

ONS

,SS EXCEPT CUMUUU

LAUU TIVE INCUNN RRED

CLAILL MSII

As of December 31, 2023

Incurred Losses and Allocated LAE, Net of Reinsurance
For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

Total of IBNR
Liabilities Plus
Expected
Development on
Reported
Claims

Cumulative
Number of
Reported
Claims

2019 ............. $

128.4

126.1

126.6

128.1

129.8

2020.......................................

140.5

2021 ................................................................

152.0

225.6

154.0

228.6

2022..........................................................................................
305.1
2023....................................................................................................................

155.6

240.4

309.1
379.9

Total ...................................................................................................................

1,214.8

5.7

7.4

24.8

67.1
201.4

19,641

19,627

27,382

32,102
31,970

Cumulative Paid Losses and Allocated LAE, Net of Reinsurance and Indemnificff ation

For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

2019 ............. $

32.4

75.7

2020.......................................
37.0
2021 ................................................................

99.5

87.6
50.8

113.1

111.7
128.0

2022..........................................................................................
72.2
2023....................................................................................................................

Total ...................................................................................................................
Outstanding Loss and Allocated LAE Reserves on Accident Years before
2019, Net of Reinsurance .............................................................................
Loss and Allocated LAE Reserves, Net of Reinsurance.................................... $

121.9

129.7
168.6

159.0
87.5

666.7

11.4
559.5

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Commercial Automobileii

Insurance—Ph— ysh ical Damagea

II
DOLLARS IN MILLI

ONS

,SS EXCEPT CUMUUU

LAUU TIVE INCUNN RRED

CLAILL MSII

As of December 31, 2023

Incurred Losses and Allocated LAE, Net of Reinsurance
For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

Total of IBNR
Liabilities Plus
Expected
Development on
Reported
Claims

Cumulative
Number of
Reported
Claims

2019 ............. $

26.0

2020.......................................

27.1

31.9

26.9

32.2

52.4
2021 ................................................................
2022..........................................................................................

26.8

32.1

51.9
74.5

2023....................................................................................................................

26.8

32.1

51.6
74.7

90.0

Total ...................................................................................................................

275.2

(0.5)

—

0.2
(0.2)

4.8

9,317

11,044

17,724
21,541

19,056

Cumulative Paid Losses and Allocated LAE, Net of Reinsurance and Indemnificff ation

For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

2019 ............. $

23.0

2020.......................................

26.9

26.2

2021 ................................................................

26.8

31.9

43.3

26.8

32.0

51.9

2022..........................................................................................
66.8
2023....................................................................................................................

26.9

32.0

51.4

74.6
80.6

265.5

—

9.7

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Non-Core Personal Automobileii

Insurance—Li— abi

litii ytt

DOLLARS IN MILLIONS

,SS EXCEPT CUMUUU

LAUU TIVE INCUNN RRED

CLAILL MSII

As of December 31, 2023

Incurred Losses and Allocated LAE, Net of Reinsurance
For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

Total of IBNR
Liabilities Plus
Expected
Development
on Reported
Claims

Cumulative
Number of
Reported
Claims

2019 ............. $
172.2
2020 .......................................

195.5
148.9

2021.................................................................

200.0
153.6

176.9

2022 ..........................................................................................

201.8
151.8

179.8

165.0

2023 ....................................................................................................................

Total....................................................................................................................

204.8
158.8

180.6

172.4

135.0

851.6

1.6
3.1

9.3

19.9

47.1

34,622
24,664

27,173

24,019

15,795

Cumulative Paid Losses and Allocated LAE, Net of Reinsurance

For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

2019 ............. $

62.7

127.9

160.8

181.1

2020 .......................................

44.4

92.8

2021.................................................................
50.3
2022 ..........................................................................................

117.7

106.1
55.0

2023 ....................................................................................................................

Total....................................................................................................................
Outstanding Loss and Allocated LAE Reserves on Accident Years before
2019, Net of Reinsurance..............................................................................
Loss and Allocated LAE Reserves, Net of Reinsurance .................................... $

193.5

141.4

144.1
111.0

43.7

633.7

8.2

226.1

100

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Non-Core Personal Automobileii

Insurance—Ph— ysh ical Damagea

DOLLARS IN MILLIONS

,SS EXCEPT CUMUUU

LAUU TIVE INCUNN RRED

CLAILL MSII

As of December 31, 2023

Incurred Losses and Allocated LAE, Net of Reinsurance
For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

Total of IBNR
Liabilities Plus
Expected
Development
on Reported
Claims

Cumulative
Number of
Reported
Claims

2019 ............. $

126.4

125.8

125.9

125.8

125.4

2020 .......................................

96.1

2021.................................................................

98.0

118.5

2022 ..........................................................................................

97.9

117.9

110.9

2023 ....................................................................................................................

Total....................................................................................................................

97.5

117.1

113.5

86.6

540.1

—

(0.2)

(1.1)

(1.3)

67,108

47,589

53,477

48,108

32,552

Cumulative Paid Losses and Allocated LAE, Net of Reinsurance

For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

2019 ............. $

120.7

126.5

125.6

125.4

2020 .......................................

90.9

2021.................................................................

98.4

113.1

97.6

118.1

108.7
2022 ..........................................................................................
2023 ....................................................................................................................

Total....................................................................................................................
Outstanding Loss and Allocated LAE Reserves on Accident Years before
2019, Net of Reinsurance..............................................................................
Loss and Allocated LAE Reserves, Net of Reinsurance .................................... $

125.4

97.5

117.2

114.6
84.8

539.5

—

0.6

101

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Non-Core Homeownersrr Insurance

DOLLARS IN MILLIONS

,SS EXCEPT CUMUUU

LAUU TIVE INCUNN RRED

CLAILL MSII

As of December 31, 2023

Incurred Losses and Allocated LAE, Net of Reinsurance
For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

Total of IBNR
Liabilities Plus
Expected
Development on
Reported
Claims

Cumulative
Number of
Reported
Claims

2019 ............. $

162.9

161.8

163.1

162.8

161.6

2020 .......................................

157.0

2021.................................................................

149.8

149.9

2022 ..........................................................................................

144.6

149.8

142.7

141.2

143.9

152.7

126.6
726.0

0.4

0.9

1.7

12.8

14,531

14,074

13,620

11,463

8,913

Cumulative Paid Losses and Allocated LAE, Net of Reinsurance

For the Years Ended December 31,

Accident Year

2019

2020

2021

2022

2023

2019 ............. $

111.1

150.4

157.7

159.5

2020 .......................................
94.6
2021.................................................................

130.8
100.6

2022 ..........................................................................................

137.4
132.6

97.0

2023 ....................................................................................................................

Total....................................................................................................................
Outstanding Loss and Allocated LAE Reserves on Accident Years before
2019, Net of Reinsurance..............................................................................
Loss and Allocated LAE Reserves, Net of Reinsurance .................................... $

160.6

139.8
139.7

141.2

84.7

666.0

1.5
61.5

102

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

The claim counts in the preceding tabla es are cumulative reported claim counts as of December 31, 2023 and are equal to the
sum of cumulative open and cumulative closed claims, including claims closed without payment. Certain product lines,
particularly the Company’s specialty personal automobile insurance, tend to have a higher percentage of claims closed without
payment.

The Company's claims associated with automobile insurance are counted at the featurt e level. As such, each claimant and each
coverage is counted separately. For example, if for one occurrence, the Company's policyholder is at fault for damage to his/her
own vehicle, another party's vehicle and three injun red parties, there may be five featurt es—three for bodily injun ry liability, one
for property damage liability and one for first-party collision coverage. There may also be another featurt e for first-party medical
payments.

The following tabla e reconciles the net incurred and paid claims development tabla es presented above to the Company's liability
for Property and Casualty Insurance Reserves included in the Consolidated Balance Sheets at December 31, 2023.

LARS IN MILLIONS

Property and Casualty Insurance Reserves, Net of Reinsurance:

2023

Specialty Personal Automobile Insurance—Liability............................................................................................... $ 1,544.9

Specialty Personal Automobile Insurance—Physical Damage ................................................................................

Commercial Automobile Insurance—Liability ........................................................................................................
Commercial Automobile Insurance—Physical Damage ..........................................................................................

Non-Core Personal Automobile Insurance—Liability .............................................................................................

Non-Core Personal Automobile Insurance—Physical Damage ...............................................................................
Non-Core Homeowners Insurance............................................................................................................................

559.5
9.7

226.1

0.6
61.5

Other .........................................................................................................................................................................

37.4
Total............................................................................................................................................................................... $ 2,450.8

Reinsurance Recoverabla es on Unpaid Losses and Allocated LAE:

Specialty Personal Automobile Insurance—Liability............................................................................................... $

Non-Core Preferff

red Personal Automobile Insurance—Liability..............................................................................

Non-Core Homeowners Insurance............................................................................................................................

Other .........................................................................................................................................................................

Total...............................................................................................................................................................................

6.0

18.7

0.2

2.9

27.8

Unallocated LAE ...........................................................................................................................................................
201.9
Property and Casualty Insurance Reserves, Gross of Reinsurance ............................................................................... $ 2,680.5

The following is supplu

ementary information about average historical claims duration as of December 31, 2023.

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)

Years
Specialty Personal Automobile Insurance—Liability..................................
Specialty Personal Automobile Insurance—Physical Damage....................
Commercial Automobile Insurance—Liability............................................
Commercial Automobile Insurance—Physical Damage .............................
red Personal Automobile Insurance—Liability.................
Non-Core Preferff
Non-Core Preferff
red Personal Automobile Insurance—Physical Damage...
Non-Core Homeowners Insurance...............................................................

2
38.5 % 78.5
100.0
92.3
54.8
23.3
100.0
86.1
61.0
30.1
100.0
96.0
92.6
67.2

103

3
1.1 % 95.6 % 97.8 %

100.0
72.9
100.0
77.5
100.0
97.3

100.0
85.3
100.0
88.7
100.0
98.8

100.0
93.9
100.0
94.5
100.0
99.4

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

Property and Casualty Insurance Reserve activity for the years ended December 31, 2023, 2022 and 2021 was:

DOLLARS IN MILLIONS
Property and Casualty Insurance Reserves:

2023

2022

2021

Gross of Reinsurance at Beginning of Year ...................................................................... $ 2,756.9
Less Reinsurance Recoverabla es at Beginning of Year ......................................................
39.6
Property and Casualty Insurance Reserves, Net of Reinsurance at Beginning of Year.........

Property and Casualty Insurance Reserves Acquired, Net of Reinsurance............................

Incurred Losses and LAE related to:

$ 2,772.7
41.9

$ 1,982.5
50.1

2,730.8
—

1,932.4
211.1

2,717.3
—

Current Year ......................................................................................................................
Prior Years .........................................................................................................................
Total Incurred Losses and LAE .............................................................................................
Paid Losses and LAE related to:

Current Year: .....................................................................................................................
Prior Years .........................................................................................................................
Total Paid Losses and LAE....................................................................................................
Property and Casualty Insurance Reserves, Net of Reinsurance at End of Year...............

Plus Reinsurance Recoverabla es at End of Year.................................................................

3,429.9
159.8
3,589.7

1,965.3
1,689.0
3,654.3
2,652.7
27.8

4,103.3
(14.6)
4,088.7

2,460.5
1,641.7
4,102.2
2,717.3
39.6

4,052.7
106.7
4,159.4

2,303.4
1,268.7
3,572.1
2,730.8
41.9

Property and Casualty Insurance Reserves, Gross of Reinsurance at End of Year ............... $ 2,680.5

$ 2,756.9

$ 2,772.7

Property and Casualty Insurance Reserves are estimated based on historical experience patterns and current economic trends.
Actual loss experience and loss trends are likely to differ from these historical experience patterns and economic conditions.
Loss experience and loss trends emerge over several years from the dates of loss inception. The Company monitors such
emerging loss trends on a quarterly basis. Changes in such estimates are included in the Consolidated Statements of Loss in the
period of change.

In 2023, the Company increased its property and casualty insurance reserves by $159.8 million to recognize adverse
development of loss and LAE reserves from prior accident years. Specialty Personal Automobile insurance loss and LAE
reserves developed adversely by $108.7 million due primarily to higher than expected emergence in loss patterns related to
third and fourth accident quarters of 2022 within the bodily injun ry and physical damage coverages as well as an increase in
Florida personal injun ry protection driven by higher than expected frequency and severity resulting from an increase in litigated
claim activity, mainly from policy years 2020 through 2022. Commercial Automobile insurance loss and LAE reserves
developed adversely by $24.2 million due to higher than expected emergence in loss patterns related to policy years 2021 and
2022 bodily injun ry coverages. Non-Core personal automobile insurance loss and LAE reserves developed adversely by $21.6
million due to higher than expected emergence in loss patterns related to the third and fourth accident quarters of 2022 within
the bodily injun ry and physical damage coverages. Homeowners insurance loss and LAE reserves developed adversely by $1.5
million. Other personal lines loss and LAE reserves developed adversely by $3.8 million.

In 2022, the Company decreased its property and casualty insurance reserves by $14.6 million to recognize favorable
development of loss and LAE reserves from prior accident years. Specialty Personal Automobile insurance loss and LAE
reserves developed favorably by $17.6 million due primarily to the emergence of more favorable loss patterns than expected for
liabia lity and physical damage insurance. Commercial Automobile insurance loss and LAE reserves included adverse
development of $3.6 million due primarily to the emergence of less favorable loss patterns than expected for liability insurance.
Non-Core personal automobile insurance loss and LAE reserves developed adversely by $1.8 million due primarily to the
emergence of less favorable loss patterns than expected for liability insurance. Homeowners insurance loss and LAE reserves
developed favorably by $7.6 million due primarily to the emergence of more favorable loss patterns than expected. Other
personal lines loss and LAE reserves developed adversely by $5.2 million due primarily to the emergence of less favorable loss
patterns than expected for prior accident years.

104

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 6. PROPERTY AND CASUALTY INSURANCE RESERVES (Continued)

In 2021, the Company increased its property and casualty insurance reserves by $106.7 million to recognize adverse
development of loss and LAE reserves from prior accident years. Specialty Personal Automobile insurance loss and LAE
reserves developed adversely by $85.3 million due primarily to legal developments and increased severity in personal injun ry
protection coverage in Florida and other liability coverages. Commercial Automobile insurance loss and LAE reserves included
adversely development of $12.4 million due primarily to the emergence of less favorable loss patterns than expected for liabia lity
insurance. Non-Core personal automobile insurance loss and LAE reserves developed adversely by $12.1 million due primarily
to the emergence of less favorable loss patterns than expected for liability insurance. Homeowners insurance loss and LAE
reserves developed favorably by $6.5 million due primarily to the emergence of less favorable loss patterns than expected for
liabia lity insurance. Other personal lines loss and LAE reserves developed adversely by $3.4 million due primarily to the
emergence of less favorable loss patterns than expected for prior accident years.

The Company cannot predict whether loss and LAE reserves will develop favorably or unfavff orably from the amounts reported
in the Consolidated Financial Statements. The Company believes that any such development will not have a material effeff ct on
the Company’s consolidated financial position, but could have a material effeff ct on the Company’s consolidated financial results
for a given period.

Reinsurance recoverabla es on property and casualty insurance reserves were $27.8 million and $39.6 million at December 31,
2023 and 2022, respectively. These recoverabla es are concentrated with several reinsurers, the majoa rity of which are highly rated
by one or more of the principal investor and/or insurance company rating agencies. While most of these recoverabla es were
unsecured at December 31, 2023 and 2022, the agreements with the reinsurers generally provide for some form of
collateralization upon the occurrence of certain events.

NOTE 7. LIABILITY FOR FUTURE POLICYHOLDER BENEFITS

The Company’s Life Insurance Reserves are reported using the Company’s estimate of its liabia lity for future policyholder
benefits.

The liabia lity for futff urt e policyholder benefits is grouped by contract type and issue year into cohorts consistent with the
grouping used in estimating the associated liability. Significant assumption inputs to the calculation of the liability for future
policyholder benefits include mortality, lapsa es, and discount rates (both accretion and current). The Company’s actuaries review
assumptions used to measure the liability for future policyholder benefits for nonparticipating traditional and limited pay long-
duration contracts at least annually. If there is a change, assumptions are updated with the recognition and remeasurement
recorded in net income. The Company’s actuat
with Actuarial Standards of Practice, in determining the assumptions.

ries use a variety of generally accepted actuarial methodologies, in accordance

The key assumption in these estimation methodologies is that patterns observed in prior periods are indicative of how
policyholder benefits are expected to develop in the future and that such historical data can be used to predict and estimate
future losses. However, changes in the Company’s business processes and the macroeconomic environment, by their very
nature, are likely to affeff ct the actual to expected experience which generally results in the historical experience factors
becoming less reliable over time in predicting how cash flows will ultimately develop. The Company’s actuaries use
profesff
sional judgment in determining how much weight to place on the actual to expected experience based on the older
historical data and how much weight to place on more recent experience data. In some cases, the Company’s actuaries make
adjud stments to the assumptions to estimate losses. These assumptions are reviewed by the Company’s actuat
management who apply their collective judgment and determine the appropriate assumptions to adopt for the underlying
business. Numerous factors are considered in this determination process, including, but not limited to, the assessed reliabia lity of
key assumptions that may be significantly influencing the current actuat
offeff
policyholder behaviors observed over the recent past, the level of volatility within a particular line of business, and the
improvement or deterioration of actuarial indications in the current period as compared to prior periods. Changes in the
Company’s assumptions underlying these liabia lities over time will occur and may be material.

rings, changes in customer base, changes in agency operations or other changes that affeff ct the timing of payments, the

rial indications, changes in pricing and product

ries and corporate

105

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 7. LIABILITY FOR FUTURE POLICYHOLDER BENEFITS (Continued)

The following tabla es summarize balances and changes in the present value of expected net premiums, present value of expected
future policyholder benefits and net liabia lity for future policyholder benefits as of and for the years ended December 31, 2023,
2022 and 2021 was:

DOLLARS IN MILLIONS

Year Ended

Dec 31, 2023

Dec 31, 2022

Balance, Beginning of Period....................................................... $

688.6 $

669.0 $

Dec 31, 2021
396.0

Present Value
of Expected
Net Premiums

Present Value
of Expected
Future
Policyholder
Benefits

Beginning Balance at Original Discount Rate.............................. $
Effeff ct of Changes in Cash Flow Assumptions .....................
Effeff ct of Actual Variances from Expected Experience........
Adjud sted Beginning of Period Balance ........................................
Issuances..............................................................................
Interest Accruar
l ...................................................................
Net Premiums Collected......................................................
Ending Balance at Original Discount Rate...................................
Effect of Changes in Discount Rate Assumptions...............

Balance, End of Period ................................................................. $
Balance, Beginning of Period....................................................... $

Beginning Balance at Original Discount Rate.............................. $
Effeff ct of Changes in Cash Flow Assumptions .....................
Effeff ct of Actual Variances From Expected Experience.......
Adjud sted Beginning of Period Balance ........................................
Issuances .............................................................................
Interest Accruar
l ...................................................................
Benefitff Payments.................................................................
Ending Balance at Original Discount Rate...................................
Effect of Changes in Discount Rate Assumptions...............

Balance, End of Period ................................................................. $
Net Liability for Future Policyholder Benefits............................. $
Less: Reinsurance Recoverabla e ....................................................
Net Liability for Future Policyholder Benefits, Afteff
r
Reinsurance Recoverabla e ............................................................. $

728.9 $
(35.7)
(38.5)
654.7
105.2
29.7
(94.9)
694.7
(19.3)
675.4 $
3,561.0 $

3,906.2 $
(59.0)
(45.5)
3,801.7
104.6
171.0
(241.4)
3,835.9
(222.7)
3,613.2 $
2,937.8 $
—

599.8 $
68.5
(6.4)
661.9
133.2
21.9
(88.1)
728.9
(40.3)
688.6 $
4,933.1 $

3,788.1 $
77.2
(7.0)
3,858.3
133.2
164.0
(249.3)
3,906.2
(345.2)
3,561.0 $
2,872.4 $
—

325.6
124.3
64.7
514.6
133.2
17.4
(65.4)
599.8
69.2
669.0
4,924.9

3,550.3
130.0
65.1
3,745.4
134.4
162.1
(253.8)
3,788.1
1,145.0
4,933.1
4,264.1
—

2,937.8 $

2,872.4 $

4,264.1

e weighted-average liability duration of the liabia lity for future policyholder benefits as calculated under current rates is as

follows:

Weighted-Average Liability Duration of the Liability for Future Policyholder
Benefits (Years)......................................................................................................

15.3

14.6

18.2

Dec 31, 2023

Dec 31, 2022

Dec 31, 2021

106

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 7. LIABILITY FOR FUTURE POLICYHOLDER BENEFITS (Continued)

The reconciliation of the net liability for future policyholder benefits to Life and Health Insurance Reserves in the Consolidated
Balance Sheets is as follows:

DOLLARS IN MILLIONS
Net Liability for Future Policyholder Benefits ................................................................................... $
Deferred Profitff Liability .....................................................................................................................
Other1 .......................................................................................................................................................................................
Total Life and Health Insurance Reserves.......................................................................................... $
1

Other primarily consists of Accident and Health and Universal Life reserves

Dec 31, 2023

2,937.8 $
337.8
146.8
3,422.4 $

Dec 31, 2022
2,872.4
253.6
150.2
3,276.2

The amounts of expected undiscounted future benefit payments, expected undiscounted future gross premiums and expected
discounted future gross premiums, were as follows:

DOLLARS IN MILLIONS
Dec 31, 2022
Expected Future Benefit Payments, undiscounted ............................................................................. $ 10,185.2 $ 10,137.2
4,436.8
Expected Future Gross Premiums, undiscounted ............................................................................... $
2,844.4
Expected Future Gross Premiums, discounted ................................................................................... $

4,107.9 $
2,800.6 $

Dec 31, 2023

The amount of revenue and interest recognized in the Consolidated Statements of Loss is as follows:

DOLLARS IN MILLIONS
Gross Premiums or Assessments .............................................................................. $
Interest Expense ........................................................................................................ $

399.0 $
141.3 $

Dec 31, 2021
380.3
144.9

392.1 $
142.1 $

Dec 31, 2023

Year Ended

Dec 31, 2022

The weighted-average interest rate is as follows:

Interest Accretion Rate .......................................................................................................................
Current Discount Rate ........................................................................................................................

4.57 %
5.08 %

4.60 %
5.30 %

Dec 31, 2023

Dec 31, 2022

Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapsa
discount rates (both accretion and current). The Company reviewed and updated mortality and lapsa
fourth quarter of 2023. Market data that underlies current discount rates was updated from September 30, 2023.

es, and
e assumptions during the

The balances of and changes in Deferred Profitff Liability as of and for the years indicated are as follows:

DOLLARS IN MILLIONS

Balance, beginning of period

Annual assumption changes

Profitsff

deferred

Interest accrual

Amortization

Effeff ct of actuat

l variances from expected experience and other changes

Balance, end of period

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021

253.6 $

193.4 $

112.7

15.0

163.1

13.2

(12.7)

164.7

10.4

(111.2)

(101.6)

4.1

(0.6)

(4.6)

176.3

6.8

(97.6)

(0.2)

337.8 $

253.6 $

193.4

107

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 8. DEFERRED POLICY ACQUISITION COSTS

The following tabla e presents the balances and changes in Deferred Policy Acquisition Costs for the Property and Casualty and
Life and Health business for the years ended December 31, 2023, 2022 and 2021:

DOLLARS IN MILLIONS

Dec 31, 2023

Dec 31, 2022

Dec 31, 2021

Property
and
Casualty

Life and
Health

Total

Property
and
Casualty

Life and
Health

Total

Property
and
Casualty

Life and
Health

Total

Balance, Beginning of Year .... $ 231.1 $ 404.5 $ 635.6 $ 268.7 $ 419.3 $ 688.0 $ 229.1 $ 381.3 $ 610.4

Capitalizations......................

505.6

57.7

563.3

630.9

60.6

691.5

697.0

75.6

772.6

Amortization Expense .........

(571.8)

(19.9)

(591.7)

(668.5)

(28.0)

(696.5)

(657.4)

(35.7)

(693.1)

Experience Adjud stment ........

—

(15.6)

—

(8.7)

—

(1.9)

Balance ....................................

164.9

426.7

591.6

231.1

443.2

674.3

268.7

419.3

688.0

Less:

Deferred Policy Acquisition
Costs Asset Divested.............

—
Balance, End of Period............ $ 164.9 $ 426.7 $ 591.6 $ 231.1 $ 404.5 $ 635.6 $ 268.7 $ 419.3 $ 688.0

38.7

—

acquisition of business, principally commissions and certain premium taxes and

Costs directly associated with the successfulff
policy issuance costs, are deferred. Costs deferred on property and casualty insurance contracts are amortized over the period in
which premiums are earned. Costs deferred on traditional lifeff
are amortized on a constant level basis over the expected lifeff of the contracts in accordance with the assumptions used to
estimate the liabia lity for future policyholder benefits for nonparticipating traditional and limited-payment contracts. The
underlying assumptions for deferred policy acquisition costs and the liabia lity for future policyholder benefits were updated
concurrently.

insurance products and other long-duration insurance contracts

The Company made changes to future assumptions in the fourth quarter for the Life and Health business for both the years
ended December 31, 2023 and 2022.

NOTE 9. INSURANCE EXPENSES

Insurance Expenses for the years ended December 31, 2023, 2022 and 2021 were:

DOLLARS IN MILLIONS
Commissions.......................................................................................................................... $
General Expenses...................................................................................................................
Taxes, Licenses, and Fees......................................................................................................
Total Costs Incurred...............................................................................................................
Policy Acquisition Costs:

2023
584.2
342.8
79.6
1,006.6

2022
724.8
358.4
99.5
1,182.7

2021
817.6
339.5
104.3
1,261.4

Deferred.............................................................................................................................
(563.3)
Amortized..........................................................................................................................
607.1
Net Policy Acquisition Costs Amortized (Deferff
red) .............................................................
43.8
Amortization of Value of Business Acquired........................................................................
2.0
Insurance Expenses................................................................................................................ $ 1,052.4

(691.5)
705.7
14.2
4.1
$ 1,201.0

(772.6)
695.1
(77.5)
45.0
$ 1,228.9

Commissions for servicing policies are expensed as incurred, rather than deferred and amortized. The Company recorded
amortization of Deferred Policy Acquisition Costs of $607.1 million, $705.7 million and $695.1 million for the years ended
December 31, 2023, 2022 and 2021, respectively.

108

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 10. INVESTMENTS

Fixedii Maturities

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2023 were:

Gross Unrealized

Gains

Losses

Allowance
for
Expected
Credit
Losses

DOLLARS IN MILLIONS
U.S. Government and Government Agencies and Authorities........ $
States and Political Subdiu
visions.....................................................
Foreign Governments ......................................................................
Corporate Securities:

Amortized
Cost
594.1
1,575.9
4.4

Bonds and Notes .........................................................................
red Stocks .....................................................
Redeemable Preferff

4,046.8
9.0
973.6
362.0
Investments in Fixed Maturities ...................................................... $ 7,565.8

Collateralized Loan Obligations .................................................
Other Mortgage- and Asset-backed ............................................

1.9
16.3
—

35.5
0.1
0.7
0.1
54.6

(84.5) $

— $

(189.8)
(0.6)

(0.5)
—

Fair Value
511.5
1,401.9
3.8

(383.8)
(0.8)
(24.5)
(46.3)
$ (730.3) $

(7.7)
—
—
—

3,690.8
8.3
949.8
315.8
(8.2) $ 6,881.9

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2022 were:

DOLLARS IN MILLIONS

Amortized
Cost

Gross Unrealized

Gains

Losses

Allowance
for
Expected
Credit
Losses

Fair Value

U.S. Government and Government Agencies and Authorities........ $

612.5

1.3

(85.8) $

— $

528.0

States and Political Subdiu
visions.....................................................
Foreign Governments ......................................................................

1,797.6
5.0

Corporate Securities:

Bonds and Notes .........................................................................
red Stocks .....................................................
Redeemable Preferff

Collateralized Loan Obligations .................................................
Other Mortgage- and Asset-backed ............................................

4,030.3
9.0

1,014.7
342.7

10.3
—

17.7
—

—
0.1

(238.3)
(0.9)

(499.7)
(1.0)

(60.8)
(50.3)

(0.7)
—

(8.9)
—

—
—

1,568.9
4.1

3,539.4
8.0

953.9
292.5

Investments in Fixed Maturities ...................................................... $ 7,811.8

29.4

$ (936.8) $

(9.6) $ 6,894.8

Other Receivabla es included $0.9 million and $5.8 million of unsettled sales of Investments in Fixed Maturities at December 31,
2023 and December 31, 2022, respectively. There were no unsettled purchases of Investments in Fixed Maturities included in
Accruerr d Expenses and Other Liabilities as of December 31, 2023. There were $25.9 million of unsettled purchases of
Investments in Fixed Maturities included in Accruer d Expenses and Other Liabilities as of December 31, 2022.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2023 by
contractuat

l maturity were:

Amortized
Cost
DOLLARS IN MILLIONS
173.8
Due in One Year or Less ........................................................................................................................... $
903.0
r One Year to Five Years .............................................................................................................
Due afteff
1,069.5
r Five Years to Ten Years ............................................................................................................
Due afteff
3,615.5
r Ten Years...................................................................................................................................
Due afteff
Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date ............................................
1,804.0
Investments in Fixed Maturities ................................................................................................................ $ 7,565.8

Fair Value
169.9
$
876.3
940.1
3,235.4
1,660.2
$ 6,881.9

109

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 10. INVESTMENTS (Continued)

The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractuat
issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

l maturities because

Investments in Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date at December 31, 2023 consisted of
securities issued by the Government National Mortgage Association with a fair value of $237.8 million, securities issued by the
Federal National Mortgage Association with a fair value of $92.5 million, securities issued by the Federal Home Loan
Mortgage Corporation with a fair value of $64.3 million and securities of other non-governmental issuers with a fair value of
$1,265.6 million.

An aging of unrealized losses on the Company’s Investments in Fixed Maturities at December 31, 2023 is presented below.

DOLLARS IN MILLIONS

Fixed Maturities:

U.S. Government and Government Agencies
and Authorities .................................................. $
States and Political Subdiu

visions .......................

Foreign Governments ........................................

Corporate Securities:

Less Than 12 Months

12 Months or Longer

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

52.0
112.9

—

(0.8) $
(2.3)

—

401.6
928.3

1.9

(83.7) $
(187.5)

453.6
1,041.2

(0.6)

1.9

(84.5)
(189.8)

(0.6)

Bonds and Notes ...............................................

198.4

Redeemabla e Preferff
red Stocks............................
Collateralized Loan Obligations........................

Other Mortgage- and Asset-backed...................

—
38.8

15.7

(5.5)

—
(0.4)

(0.1)

2,813.0

(378.3)

3,011.4

(383.8)

7.9
747.7

287.3

(0.8)
(24.1)

(46.2)

7.9
786.5

303.0

(0.8)
(24.5)

(46.3)

Total Fixed Maturities................................................. $

417.8

(9.1) $ 5,187.7

$ (721.2) $ 5,605.5

$ (730.3)

The Company regularly reviews its fixed maturt
of an investment has resulted from an expected credit loss. The portions of the declines in the fair values of fixed maturity
investments that are determined to be due to expected credit losses are reported as losses in the Consolidated Statements of Loss
in the periods when such determinations are made.

io for factors that may indicate that a decline in fair value

ity investment portfolff

Investment-grade fixed maturity investments comprised $704.8 million and below-investment-grade fixed maturity investments
comprised $25.5 million of the unrealized losses on investments in fixed maturities at December 31, 2023. For below-
investment-grade fixed maturt
of the amortized cost basis.

ity investments in an unrealized loss position, the unrealized loss amount, on average, was 8.8%

An aging of unrealized losses on the Company’s Investments in Fixed Maturities at December 31, 2022 is presented below.

DOLLARS IN MILLIONS

Fixed Maturities:

U.S. Government and Government Agencies
and Authorities .................................................. $
visions .......................
States and Political Subdiu
Foreign Governments.........................................

Corporate Securities:

Less Than 12 Months

12 Months or Longer

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

337.3
854.7
0.1

(49.3) $
(140.6)
—

126.5
276.8
2.6

(36.5) $
(97.7)
(0.9)

463.8
1,131.5
2.7

(85.8)
(238.3)
(0.9)

Bonds and Notes................................................

2,730.6

(373.9)

Redeemabla e Preferff
red Stocks............................
Collateralized Loan Obligations........................

Other Mortgage- and Asset-backed...................

7.7
568.2

205.4

(1.0)
(34.2)

(28.9)

424.4

—
373.9

79.5

(125.8)

3,155.0

(499.7)

—
(26.6)

(21.4)

7.7
942.1

284.9

(1.0)
(60.8)

(50.3)

Total Fixed Maturities ................................................. $ 4,704.0

$ (627.9) $ 1,283.7

$ (308.9) $ 5,987.7

$ (936.8)

110

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 10. INVESTMENTS (Continued)

Investment-grade fixed maturity investments comprised $904.0 million and below-investment-grade fixed maturity investments
comprised $32.8 million of the unrealized losses on investments in fixed maturities at December 31, 2022. For below-
investment-grade fixed maturt
approximately 11% of the amortized cost basis of the investment.

ity investments in an unrealized loss position, the unrealized loss amount, on average, was

At December 31, 2023 and 2022, the Company did not have the intent to sell these investments, and it was not more likely than
not that the Company would be required to sell these investments before an anticipated recovery of value. The Company
evaluated these investments for credit losses at December 31, 2023 and 2022. The Company considers many factors in
evaluating whether the unrealized losses were credit related including, but not limited to, the extent to which the fair value has
been less than amortized cost, conditions related to the security, industry,r
investment and the likelihood of the issuer’s ability to make contractuat
related to the issuer, changes in the ratings assigned by a rating agency, and other credit enhancements that affeff ct the
investment’s expected performance. The Company determined that the unrealized losses on these securities were due to non-
credit related factors at the evaluation date.

or geographic area, payment structurt e of the
l cashfloff ws, defaults or other collectability concerns

Fixedii Maturities - Expex

cted Credit Losses

The following tabla e sets forth the change in allowance for credit losses on fixed maturities availabla e-for-sale by majoa r security
type for year ended December 31, 2023.

(Dollars in Millions)

States and
Political
u
Subdi

visions

Corporate
Bonds and
Notes

Total

Beginning of the Year...................................................................................................... $

0.7

8.9

9.6

Additions for Securities for which No Previous Expected Credit Losses were

Recognized.................................................................................................................
Reductions due to Sales.................................................................................................
Net Increase (Decrease) in Allowance on Securities for which Expected Credit
Losses were Previously Recognized .............................................................................
Write-offs Charged Against Allowance........................................................................
End of the Year ................................................................................................................ $

—
—

0.2
.4)
0.5

2.9
(2.6)

(1.1)
(0.4)
7.7

2.9
(2.6)

(0.9)
(0.8)
8.2

The following tabla e sets forth the change in allowance for credit losses on fixed maturities availabla e-for-sale by majoa r security
type for year ended December 31, 2022.

(Dollars in Millions)

States and
Political
u
Subdi

visions

Corporate
Bonds and
Notes

Beginning of the Year...................................................................................................... $

— $

7.5

Additions for Securities for which No Previous Expected Credit Losses were

Recognized.................................................................................................................

Net Increase in Allowance on Securities for which Expected Credit Losses were
Previously Recognized..................................................................................................
Write-offs Charged Against Allowance........................................................................
End of the Year ................................................................................................................ $

0.7

—

0.7

Equity Securities

Equity Securities at Fair Value

Total

7.5

7.0

6.3

5.8
(10.7)
8.9

5.8
(10.7)
9.6

Equity securities with readily-determinabla e fair values, iin lcl diudi gng eq iui yty secu iri ities hwhiichh hthe Companyy hhas lelectedd to report at
faiir vallue are classified as Equity Securities at Fair Value in the Consolidated Balance Sheets with changes in fair value
recorded as Income from Change in Fair Value of Equity and Convertible Securities in the Consolidated Statements of Loss.
Net unrealized gains arising during the year ended December 31, 2023 and recognized in earnings, related to such investments
still held as of December 31, 2023 were $3.0 million.

111

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 10. INVESTMENTS (Continued)

There were no unsettled purchases of Investments in Equity Securities at Fair Value at December 31, 2023 or December 31,
2022. There were $0.1 million in unsettled sales of Investments in Equity Securities at Fair Value at December 31, 2023. There
were no unsettled sales of Investments in Equity Securities at Fair Value at December 31, 2022.

Equity Method Limited Liability Investments

Equity Method Limited Liability Investments include investments in limited liabia lity investment companies and limited
partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of
accounting. The Company’s investments in Equity Method Limited Liability Investments are generally of a passive nature in
that the Company does not take an active role in the management of the investment entity.

In 2023 and 2022, aggregate investment income from Equity Method Limited Liability Investments exceeded 10% of the
Company’s pretax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for
its Equity Method Limited Liability Investments for all periods presented in the Consolidated Financial Statements. Such
aggregated summarized financial data does not represent the Company’s proportionate share of the Equity Method Limited
Liability Investment assets or earnings. Aggregate total assets of the Equity Method Limited Liability Investments in which the
Company invested totaled $5,720.9 million and $5,585.9 million, as of December 31, 2023 and 2022, respectively. Aggregate
total liabia lities of the Equity Method Limited Liability Investments in which the Company invested totaled $2,565.5 million and
$2,367.0 million, as of December 31, 2023 and 2022, respectively. Aggregate net income of the Equity Method Limited
Liability Investments in which the Company invested totaled $244.5 million, $381.8 million and $585.1 million for the years
ended December 31, 2023, 2022, and 2021, respectively. The aggregate summarized financial data is based on the most recent
and sufficiently-timely financial information availabla e to the Company as of the respective reporting dates and periods. The
Company’s maximum exposure to loss at December 31, 2023 is limited to the total carrying value of $221.7 million. In
addition, the Company had outstanding commitments totaling approximately $85.3 million to fund Equity Method Limited
Liability Investments at December 31, 2023. At December 31, 2023, 2.9% of Equity Method Limited Liability Investments
were reported without a reporting lag, 5.4% of the total carrying value were reported with a one month lag, and the remainder
were reported with more than a one month lag.

There were no unsettled purchases of Equity Method Limited Liability Investments as of December 31, 2023 and 2022. There
were no unsettled sales of Equity Method Limited Liability Investments at December 31, 2023. There were $35.2 million in
unsettled sales of Equity Method Limited Liability Investments at December 31, 2022.

Alternative Energyr Partnett

rship Investments

Alternative Energy Partnership Investments include partnerships formed to invest in newly installed residential solar leases and
power purchase agreements. As a result of this investment, the Company has the right to certain investment tax credits and tax
depreciation benefits, and to a lesser extent, cash flows generated from the installed solar systems leased to individual
consumers for a fixed period of time. The HLBV equity method of accounting is used for the Company’s investments in
Alternative Energy Partnership Investments.

The Company’s maximum exposure to loss at December 31, 2023 is limited to the total carrying value of $17.3 million. The
Company has no outstanding commitments to fund Alternative Energy Partnership Investments as of December 31, 2023.
Alternative Energy Partnership Investments are reported on a three month lag.

Company-Owned Lifei

Insurance

The carrying values of the Company’s COLI investment at December 31, 2023 and 2022 were $513.5 million and $586.5
million, respectively.

Loans to Policyhc oldell

Loans to Policyholders represents funds loaned to policyholders up to the cash surrender value of the associated insurance
policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy
loans is recognized in Net Investment Income at the contract interest rate when earned. Policy loans are fully collateralized by
the cash surrender value of the associated insurance policies.

The carrying values of the Company’s Loans to Policyholders at Unpaid Principal investment at December 31, 2023 and 2022
were $281.2 million and $283.4 million, respectively.

112

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 10. INVESTMENTS (Continued)

Othett

r Investments

The carrying values of the Company’s Other Investments at December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS
Equity Securities at Modified Cost............................................................................................................ $
Convertible Securities at Fair Value..........................................................................................................
Real Estate at Depreciated Cost ................................................................................................................
Mortgage Loans.........................................................................................................................................

Other..........................................................................................................................................................
Total........................................................................................................................................................... $

2023

2022

32.6
—
94.7
99.8
14.8
241.9

38.4
43.3
93.6
91.1
3.5
269.9

Investments in Equity Securities at Modified Cost were $32.6 million and $38.4 million at December 31, 2023 and 2022,
respectively. The Company perforff ms a qualitative impairment analysis on a quarterly basis consisting of various factors such as
earnings performance, current market conditions, changes in credit ratings, changes in the regulatoryr environment and other
factors. If the qualitative analysis identifieff s the presence of impairment indicators, the Company estimates the fair value of the
investment. If the estimated fair value is below the carrying value, the Company records an impairment in the Consolidated
Statements of Loss to reduce the carrying value to the estimated fair value. When the Company identifieff s observabla e
transactions of the same or similar securities to those held by the Company, the Company increases or decreases the carrying
value to the observabla e transaction price. The Company did not recognize any changes in carryirr ng value due to observabla e
transactions for the year ended December 31, 2023 and 2022. The Company recognized an impairment of $0.5 million, $—
million and $4.2 million on Equity Securities at Modified Cost for the years ended December 31, 2023, 2022 and 2021,
respectively, as a result of the Company’s impairment analysis. The Company recognized no cumulative increases or decreases
in the carrying value due to observabla e transactions and $8.0 million of cumulative impairments on Equity Securities at
Modified Cost held as of December 31, 2023.

113

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 11. INCOME FROM INVESTMENTS

Net Investment Income for the years ended December 31, 2023, 2022 and 2021 was:

LARS IN MILLIONS

Investment Income:

2023

2022

2021

Interest on Fixed Income Securities ............................................................................... $
Dividends on Equity Securities Excluding Alternative Investments..............................

346.0
4.4

300.1
6.3

277.7
15.9

Alternative Investments:

Equity Method Limited Liability Investments ...........................................................
Limited Liability Investments Included in Equity Securities.....................................

Total Alternative Investments.........................................................................................

Short-term Investments...................................................................................................

Loans to Policyholders ...................................................................................................

Real Estate ......................................................................................................................
Company-Owned Life Insurance....................................................................................

Other ...............................................................................................................................

19.0

29.5
18.0

20.9

8.9

29.2
12.9

31.3

42.1

73.4
3.7

21.5

10.1

37.9
7.7

56.7

46.9

103.6
1.0

21.7

9.3

25.7
6.7

Total Investment Income .......................................................................................................

469.8

460.7

461.6

Investment Expenses:

Real Estate ......................................................................................................................
Other Investment Expenses ............................................................................................

Total Investment Expenses ....................................................................................................
Net Investment Income .......................................................................................................... $

8.8

41.3
50.1

7.9

30.2
38.1

9.7

24.6
34.3

419.7

422.6

427.3

Other Receivabla es includes accruerr d investment income of $88.4 million and $94.3 million at December 31, 2023 and 2022,
respectively.

114

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 11. INCOME FROM INVESTMENTS (Continued)

The components of Net Realized (Losses) Gains on Sales of Investments for the years ended December 31, 2023, 2022 and
2021 were:

DOLLARS IN MILLIONS
Fixed Maturities:

2023

2022

2021

5.9
(10.9)
(11.9)

31.6
(31.9)
1.7

Equity Securities:

Gains on Sales ...................................................................................................................

Losses on Sales..................................................................................................................

0.6
(2.5)

9.7
(6.8)

Equity Method Limited Liability Investments:

Gains on Sales ...................................................................................................................

Real Estate:

Other Investments:

—

—
—

0.2
(18.6) $

—

—
—

—
4.3

6.7
(13.4)
(11.9)
(18.6) $

41.3
(38.7)
1.7
4.3

63.4
(2.1)
—

4.1
(0.7)

0.4

0.1
(0.4)

—
64.8

68.0
(3.2)
—
64.8

The components of Impairment Losses reported in the Consolidated Statements of Loss for the years ended December 31, 2023,
2022 and 2021 were:

DOLLARS IN MILLIONS
Fixed Maturities ..................................................................................................................... $
Equity Securities at Modified Cost ........................................................................................
Real Estate .............................................................................................................................
Other .....................................................................................................................................
Net Impairment Losses Recognized in Earnings1.................................................................. $
I Includes losses from intent-to-sell securities of $(2.0) million, $(23.8) million and $(6.6) million for the years ended December 31, 2023, 2022 and 2021,
respectively.

(25.8) $
—
—
—
(25.8) $

(0.1) $
(0.5)
—
(0.5)
(1.1) $

2022

2023

(6.4)
(4.2)
(0.4)
—
(11.0)

2021

NOTE 12. DERIVATIVES

The Company’s earnings, cash flows, and financial position are subju ect to fluctuations due to changes in prevailing interest
rates.

The Company entered into derivative agreements with maturity dates throughout 2023. Derivative instruments are carried at fair
value on the Consolidated Balance Sheets. Derivative instruments in a gain position are presented within Other Investments and
those in a loss position are included in Accruer d Expenses and Other Liabilities. Changes in the fair values of derivatives are
recorded on the Consolidated Statements of Loss within Net Realized Investment Gains or Accumulated Other Comprehensive
Loss along with the corresponding change in the designated hedge assets. As of December 31, 2023, no derivatives qualifieff d for
hedge accounting, thereforff e, amounts previously held in Accumulated Other Comprehensive Loss have been recognized
through the Consolidated Statements of Loss.

115

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 12. DERIVATIVES (Continued)

Interest Rate Riskii

The Company’s debt securities valuations utilize the Treasury designated benchmark rate, exposing the Company to variability
due to changes in interest rates.

Interest Swap Lock

The Company entered into an interest swap lock agreement in the third quarter of 2022 classified as cash flow hedges to
manage exposure to changes in future purchase prices of fixed maturity securities attributable to changes in the benchmark
(Treasury)r
interest rate. The Company assesses the effeff ctiveness of cash flow hedges using the hypothetical derivative method.
Based on the results of the assessment, the hedge was determined to be effeff ctive. The interest swap lock agreement was closed
out in the first quarter of 2023.

Ultrll a-Lo- ng Treasury Futures

During 2023, the Company entered into two transactions of exchange-traded ultra-long Treasuryr
order to manage exposure to upcoming changes in the benchmark (Treasury)r
derivatives expire quarterly. The Treasuryrr Futures renewed in the third quarter of 2023. The open treasuryr
qualifyff

for hedge accounting. The positions are shown in the Treasuryr Futures section below.

interest rate of forecasted transactions. These

futures do not

futures (“Treasury Futures”) in

Reverserr Treasury Lock

During 2022, the Company entered into a Reverse Treasury Lock agreement to manage reinvestment risk on future purchases
of fixed maturity securities. The Reverse Treasury Lock agreement did not qualifyff
quarter of 2023. The positions are shown in the Reverse Treasury Lock section below.

for hedge accounting and matured in the first

Primary Riskii

skk Managea d by Derivatives

The following tabla e presents the derivative instruments, primaryr underlying risk exposure, gross notional amount, and estimated
fair value of the Company’s derivatives:

(Dollars in Millions)

Dec 31, 2023

Dec 31, 2022

Estimated Fair Value

Derivative Instrument

Primary Underlying Risk
Exposure

Gross
Notional
Amount

Assets

Liabilities

Gross
Notional
Amount

Assets

Liabilities

Derivatives Designated as Hedging Instruments:
Interest Swap Lock

Interest Rate Risk

— $

5.0

— $

0.4

Derivatives Not Designated or Not Qualifyiff ng as Hedging Instruments:
Interest Rate Risk
Treasuryr Futures
Interest Rate Risk
Reverse Treasuryr Lock

$
— $

149.7

$
$

14.7

$
— $

— $
— $

— $
$

100.0

— $
$
1.7

—
—

Effeff ctstt of Derivatives on the Stattt emtt

ents of Income and Comprehensive (Loss) Income

Cash Flowll Hedges

The below tabla e reflects the amounts of Losses deferred into AOCI and subsu equently reclassified into Net Loss through Net
Realized Investment Gains for derivatives qualifyiff ng as cash flow hedges for the years ended December 31, 2023 and 2022:

Year Ended

(Dollars in Millions)
Amount of Losses Deferred in AOCI
Amount of Losses Reclassified into Income
Net Comprehensive Loss from Cash Flow Hedges

Dec 31, 2023
$

Dec 31, 2022

— $
—
— $

(0.4)
—
(0.4)

116

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 12. DERIVATIVES (Continued)

Fair Value Hedges

The below tabla e reflects the effeff cts of changes in the designated hedged asset’s impacts on AOCI and Net Realized Investment
Gains as well as the derivative instruments designated as fair value hedges impact on Net Realized Investment Gains for the
years ended December 31, 2023 and 2022:

Year Ended

(Dollars in Millions)
Increase in Derivative Instruments Designated as Fair Value Hedges
Decrease in Fair Value of Hedged Assets Reclassified from AOCI
Net Gain from Hedging Activity

NOTE 13. FAIR VALUE MEASUREMENTS

Dec 31, 2023
$

Dec 31, 2022
1.1
(1.1)
—

— $
—
— $

Fair value is defined as the price that would be received to sell an asset or paid to transferff
between market participants at the measurement date. The Company is responsible for the determination of fair value of
financial assets and liabia lities, including the suppor
valuation service providers, broker quotes and internal pricing methodologies to determine fair values. The Company obtains or
estimates only one single quote or price for each financial instrument. The Company uses a hierarchical framework for inputs to
determine fair value which prioritizes the use of observabla e inputs and minimizes the use of unobservabla e inputs. Additionally,
the Company categorizes fair value measurements based on the lowest level of input that is considered to be significant to the
entire measurement.

ting assumptions and methodologies, and uses independent third-party

a liabia lity in an orderly transaction

The Company classifies its Investments in Fixed Maturities as availabla e-for-sale and reports these investments at fair value. The
Company reports equity investments with readily determinable fair values as Equity Securities at Fair Value. Certain
investments that are measured at fair value using the net asset value practical expedient are not required to be classified using
the fair value hierarchy, but are presented in the following two tabla es to permit reconciliation of the fair value hierarchy to the
amounts presented in the Consolidated Balance Sheets.

117

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 13. FAIR VALUE MEASUREMENTS (Continued)

The valuation of assets and liabia lities measured at fair value in the Company’s Consolidated Balance Sheets at December 31,
2023 is summarized below. The Company has no material liabilities that are measured and reported at fair value.

Fair Value Measurements

Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)

Significff ant
Other
Observable
Inputs
(Level 2)

Significff ant
Unobservable
Inputs
(Level 3)

Measured at Net
Asset Value

Total
Fair Value

DOLLARS IN MILLIONS
Assets:

Fixed Maturities:

U.S. Government and Government
Agencies and Authorities................ $
States and Political Subdiu
visions....
Foreign Governments .....................
Corporate Securities:

Bonds and Notes .......................
Redeemabla e Preferff
red Stock.........
Collateralized Loan Obligations ...
Other Mortgage and Asset-

backed .......................................
Total Investments in Fixed Maturities..
Equity Securities at Fair Value:
red Stocks:

Preferff

Finance, Insurance and Real
Estate .........................................
Other Industries.........................

Common Stocks:

Finance, Insurance and Real
Estate .........................................
Other Industries.........................

Other Equity Interests:

Exchange Traded Funds ............
Limited Liability Companies
and Limited Partnerships...........
Total Investments in Equity Securities
at Fair Value .........................................
Other Investments:

Derivative Instruments Not
Designated as Hedges................

Total Assets ............................................ $

98.8
—
—

—
—
—

—
98.8

—
—

0.6
0.2

7.7

—

8.5

412.7
1,401.8
3.8

— $
0.1
—

— $
—
—

511.5
1,401.9
3.8

3,513.7
1.2
949.8

310.6
6,593.6

15.6
7.5

—
—

—

23.1

177.1
7.1
—

5.2
189.5

—
2.4

—
0.4

—

2.8

—
—
—

—
—

—

191.4

3,690.8
8.3
949.8

315.8
6,881.9

15.6
9.9

0.6
0.6

7.7

191.4

225.8

—
107.3

14.7
6,631.4

—
192.3

—
191.4

14.7
7,122.4

At December 31, 2023, the Company had unfunde
liabia lity investment companies and limited partnerships that will be included in Other Equity Interests if funded.

d commitments to invest an additional $110.4 million in certain limited

118

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 13. FAIR VALUE MEASUREMENTS (Continued)

The valuation of assets measured at fair value in the Company’s Consolidated Balance Sheets at December 31, 2022 is
summarized below.

Fair Value Measurements

Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)

Significff ant
Other
Observable
Inputs
(Level 2)

Significff ant
Unobservable
Inputs
(Level 3)

Measured at Net
Asset Value

Total
Fair Value

DOLLARS IN MILLIONS
Assets:

Fixed Maturities:

U.S. Government and
Government Agencies and
Authorities.................................... $

States and Political Subdiu

visions..

Foreign Governments...................
Corporate Securities:

Bonds and Notes .....................

Redeemable Preferff
red Stocks......
Collateralized Loan Obligations...
Other Mortgage and Asset-

backed .....................................

Total Investments in Fixed Maturities
Equity Securities at Fair Value:

Preferff

red Stocks:

Finance, Insurance and Real
Estate ........................................
Other Industries.........................

Common Stocks:

Finance, Insurance and Real
Estate ........................................
Other Industries.........................

Other Equity Interests:

Exchange Traded Funds ............
Limited Liability Companies
and Limited Partnerships ..........

Total Investments in Equity Securities

at Fair Value ........................................
Other Investments:

Convertible Securities at Fair Value.

Other Assets:

Derivative Instruments Not
Designated as Hedges......................
Total Assets............................................ $
Liabilities:

Accruerr d Expenses and Other
Liabilities:

Derivative Instruments Designated
as Cash Flow Hedges ..................... $
Total Liabilities ...................................... $

103.6

424.4

— $

528.0

—

—
—

—

103.6

—

0.9

0.3

12.2

—

13.4

—

1,568.9

4.1

3,323.4

1.2
953.9

287.4

6,563.3

29.0

9.2

—

0.4

—

38.6

43.3

—

216.0

6.8
—

5.1

227.9

—

1.6

—

0.5

—

2.1

—

—
—

—

189.1

1,568.9

4.1

3,539.4

8.0
953.9

292.5

6,894.8

29.0

10.8

0.9

1.2

12.2

189.1

243.2

—

43.3

—
117.0

1.7
6,646.9

—
230.0

—
189.1

1.7
7,183.0

— $
— $

(0.4) $
(0.4) $

— $
— $

(0.4)
(0.4)

119

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 13. FAIR VALUE MEASUREMENTS (Continued)

The Company’s investments in Fixed Maturities that are classified as Level 1 primarily consist of U.S. Treasury Bonds and
Notes. The Company’s investments in Equity Securities at Fair Value that are classified as Level 1 consist of either investments
in publicly-traded common stocks or exchange traded funds. The Company’s investments in Fixed Maturities that are classified
as Level 2 primarily consist of investments in corporate bonds, obligations of states and political subdi
loan obligations, and mortgage-backed securities of U.S. government agencies. The Company’s investments in Equity
Securities at Fair Value that are classified as Level 2 primarily consist of investments in preferff
Derivative Instruments Designated as Fair Value Hedges that are classified as Level 2 primarily consist of hedges against the
io. The Company uses a leading, nationally recognized provider of market
Company’s availabla e for sale debt securities portfolff
data and analytics to price the vast majoa rity of the Company’s Level 2 measurements. The provider utilizes evaluated pricing
models that vary by asset class and incorporate availabla e trade, bid and other market information. Because many fixed maturity
securities do not trade on a daily basis, the provider’s evaluated pricing applications apply availabla e information through
processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing to prepare
evaluations. In addition, the provider uses model processes to develop prepayment and interest rate scenarios. The pricing
provider’s models and processes also take into account market convention. For each asset class, teams of its evaluators gather
information from market sources and integrate relevant credit information, perceived market movements and sector news into
the evaluated pricing applications and models. The Company generally validates the measurements obtained from its primaryr
pricing provider by comparing them with measurements obtained from one additional pricing provider that provides either
prices from recent market transactions, quotes in inactive markets or evaluations based on its own proprietary models.

red stocks. The Company’s

visions, collateralized

The Company investigates significant differences related to the values provided. On completion of its investigation,
management exercises judgment to determine the price selected and whether adjud stments, if any, to the price obtained from the
Company’s primary pricing provider would warrant classification of the price as Level 3. In instances where a measurement
cannot be obtained from either pricing provider, the Company generally will evaluate bid prices from one or more binding
quotes obtained from market makers to value investments in inactive markets and classified by the Company as Level 2. The
Company generally classifies securities when it receives non-binding quotes or indications as Level 3 securities unless the
Company can validate the quote or indication against recent transactions in the market.

The tabla e below presents quantitative information about the significant unobservabla e inputs utilized by the Company in
determining fair values for fixed maturt

ity investments classified as Level 3 at December 31, 2023.

DOLLARS IN MILLIONS

Unobservable
Input

Total
Fair Value

Range of
Unobservable Inputs

Weighted-
average
Yield

Investment-grade .......................................................................... Market Yield
Non-investment-grade:

Senior Debt ............................................................................... Market Yield

Junior Debt ............................................................................... Market Yield

Other.............................................................................................. Various

Total Level 3 Fixed Maturity Investments .................................

60.0

4.2 % -

15.8 %

8.7 %

9.2

11.8

36.7

22.5

13.5

13.8

32.6

32.5

64.4
189.5

The tabla e below presents quantitative information about the significant unobservabla e inputs utilized by the Company in
determining fair values for fixed maturt

ity investments classified as Level 3 at December 31, 2022.

DOLLARS IN MILLIONS

Unobservable
Input

Total
Fair Value

Range of
Unobservable Inputs

Weighted-
average
Yield

Investment-grade .......................................................................... Market Yield
Non-investment-grade:

Senior Debt ............................................................................... Market Yield
Junior Debt ............................................................................... Market Yield

Other.............................................................................................. Various

Total Level 3 Fixed Maturity Investments ............................

120

56.5

4.6 % -

14.5 %

9.2 %

4.6
8.8

-
-

36.7
22.5

10.9
15.1

72.9
42.1
56.4
227.9

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 13. FAIR VALUE MEASUREMENTS (Continued)

For an investment in a fixed maturt
decrease the fair value of the security. A decrease in the yield used to determine fair value will increase the fair value of the
security, but for callabla e securities the fair value increase is generally limited to par, unless security is currently callabla e at a
premium.

ity security, an increase in the yield used to determine the fair value of the security will

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for
the year ended December 31, 2023 is presented below.

DOLLARS IN MILLIONS

Fixed Maturities

Corporate
Bonds
and
Notes

States and
Political
Sub-
divisions

Redeemable
Preferred
ff
Stocks

Other
Mortgage-
and Asset-
backed

Equity
Securities

Preferred
ff
and
Common
Stocks

Total

Balance at Beginning of Year........................................ $ 216.0

— $

6.8

5.1

2.1

$ 230.0

Total (Losses) Gains:

Included in Consolidated Statements of Loss ...........
Included in Other Comprehensive Income................
Purchases .......................................................................

Settlements.....................................................................

(0.7)
6.4
50.4

—

Sales ...............................................................................

(102.6)

Transferff s into Level 3 ....................................................
Transferff s out of Level 3.................................................

7.7
(0.1)

—
—
0.1

—

—
—

—
0.3
—

—

—
—

—
0.1
—

—

—
—

Balance at End of Year .................................................. $ 177.1

0.1

7.1

5.2

(0.8)
—
1.1

—

0.4
—

2.8

(1.5)
6.8
51.6

—

(102.6)

8.1
(0.1)

$ 192.3

The transferff s into and out of Level 3 were due primarily to changes in the availabia lity of market observabla e inputs.

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for
the year ended December 31, 2022 is presented below.

DOLLARS IN MILLIONS
Balance at Beginning of Year...................................... $ 236.8
Total (Losses) Gains:

Corporate
Bonds and
Notes

Fixed Maturities

Redeemable
Preferred
ff
Stocks

Collateralized
Loan
Obligations

Equity
Securities
Preferred
ff
and
Common
Stocks

Other
Mortgage-
and Asset-
backed

6.1

— $

7.0 $

1.5

Total
$ 251.4

Included in Consolidated Statements of Loss............

(12.7)
(19.2)
Included in Other Comprehensive Income................
107.8
Purchases .....................................................................
—
Settlements...................................................................
(114.1)
Sales.............................................................................
23.1
Transferff s into Level 3..................................................
Transferff s out of Level 3...............................................
(5.7)
Balance at End of Year ................................................ $ 216.0

—
(1.3)
2.0
—
—
—
—
6.8

—
—
—
—
—
—
—
— $

—
(1.9)
—
—
—
—
—
5.1 $

—
(0.2)
2.7
—
(1.9)
—
—
2.1

(12.7)
(22.6)
112.5
—
(116.0)
23.1
(5.7)
$ 230.0

The transferff s into and out of Level 3 were due to changes in the availabia lity of market observabla e inputs.

121

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 13. FAIR VALUE MEASUREMENTS (Continued)

The tabla e below shows investments reported at fair value using NAV and their unfunde
December 31, 2023 and 2022, respectively.

d commitments by asset class as of

Dollars in Millions

Reported as Equity Method Limited Liability Investments:

Asset Class

December 31, 2023

December 31, 2022

Fair Value
Using NAV

Unfunded
Commitments

Fair Value
Using NAV

Unfunded
Commitments

Mezzanine Debt ................................................................................ $
Real Estate.........................................................................................
Senior Debt .......................................................................................
Leveraged Buyout .............................................................................
Secondary Transactions ....................................................................
Distressed Debt .................................................................................

Growth Equity...................................................................................
Hedge Fund .......................................................................................

Other .................................................................................................
Total Equity Method Limited Liability Investments.............................

125.4 $
41.9
19.0
8.6
7.9
7.9
1.2
0.1
9.7
221.7

Reported as Other Equity Interests at Fair Value:

Mezzanine Debt ................................................................................
Senior Debt .......................................................................................

Leveraged Buyout .............................................................................
Distressed Debt .................................................................................
Growth Equity...................................................................................
Secondary Transactions ....................................................................
Hedge Funds .....................................................................................
Real Estate.........................................................................................
Other .................................................................................................
Total Reported as Other Equity Interests at Fair Value.........................

Reported as Equity Securities at Modified Cost:

Other .................................................................................................
Total Reported as Equity Securities at Modified Cost ..........................
Total Investments in Limited Liability Companies and Limited
Partnerships ........................................................................................... $

124.0
24.8
19.0
12.4
6.4
2.8
1.9
0.1
—
191.4

4.8
4.8

43.1
—
39.9
0.6
1.7
—
—
—
—
85.3

67.0
10.6
10.0
13.0
6.5
3.1
—
0.2
—
110.4

—
—

114.3 $
43.3
21.6
8.9
9.3
9.4
1.2
0.5
8.5
217.0

106.0
21.9
21.6
12.5
5.4
3.5
18.1
—
0.1
189.1

8.3
8.3

51.6
—
42.0
0.6
1.7
—
—
—
—
95.9

56.0
6.0
9.0
13.0
7.9
4.2
—
—
0.2
96.3

—
—

417.9 $

195.7

414.4 $

192.2

At December 31, 2023, the Company had unfunde
d commitments to invest an additional $195.7 million in certain limited
liabia lity investment companies and limited partnerships that will be included in Other Equity Interests and Equity Method
Limited Liability Investments if funded.

The fund investments included above (excluding Hedge Funds) are not redeemable, because distributions from the funds will be
received when underlying investments of the funds are liquidated. The funds are generally expected to have approximately 10
year lives at their inception, but these lives may be extended at the fund manager’s discretion, typically in one or two-year
increments.

The hedge fund investments included above, which are carried at fair value, are generally redeemable subju ect to the redemption
notices period. The majoa rity of the hedge fund investments are redeemable monthly or quarterly.

122

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 13. FAIR VALUE MEASUREMENTS (Continued)

The following tabla e includes information related to the Company’s investments in certain private equity funds or hedge funds
that calculate a net asset value per share:

Asset Class

Mezzanine Debt

Senior Debt

Distressed Debt

Secondary Transactions

Hedge Fund

Leveraged Buyout

Growth Equity

Real Estate

Other

Investment Category Includes

ing company.

dinated debt and potentially minority equity securities

Funds with investments in junior or suboru
issued by private companies.
Funds with investments in senior or first lien debt and potentially minority equity securities
typically issued by private companies.
Funds with debt or minority equity investments that are made opportunistically in companies
that are in or near default or under financial strain with potential to have an active role in
restructurt
Funds that focus on purchasing third party fund interests from investors seeking liquidity within
their own portfolff
Funds that focus primarily on investing in public securities with strategy of generating
uncorrelated returns to the public markets.
Funds with control equity investments in more mature, positive cash flowing, private companies
that are typically purchased with the use of financial leverage.
Funds that invest in early or venturt e stage companies with high growth potential with view
towards generating realizations through sale or initial public offeff
ring (“IPO”) of company.
Funds with investments in multi-family housing properties.
Consists of direct investments of preferff
private companies structurt ed as limited partnerships or limited liability companies.

red equity or minority common equity investments into

io.

Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value.

(Dollars in Millions)
Financial Assets:

December 31, 2023

December 31, 2022

Carrying
Value

Fair Value

Carrying
Value

Fair Value

Loans to Policyholders.......................................................................... $
Short-term Investments.........................................................................
Mortgage Loans ....................................................................................
Company-Owned Life Insurance..........................................................
Equity Securities at Modified Cost .......................................................

281.2
520.9
99.8
513.5
32.6

283.4
278.4
91.1
586.5
38.4

Financial Liabilities:

Long-term Debt..................................................................................... $ 1,389.2
557.4
Policyholder Obligations ......................................................................

$ 1,213.4
557.4

$ 1,386.9
601.0

$ 1,195.1
601.0

Loans to policyholders are carried at unpaid principal balance which approximates fair value and are categorized as Level 3
within the fair value hierarchy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized
by the value of the policy. Policy loans do not have a stated maturity and the balances and accruerr d interest are repaid either by
the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictabla e timing of
payments, the Company believes the carrying value of policy loans approximates fair value. The fair value measurement of
Short-term Investments is estimated using inputs that are considered either Level 1 or Level 2 measurements. The Mortgage
Loans fair value measurement is considered equal to amortized cost given the short-term nature of the investments. The fair
value measurement of Equity Securities at Modified Cost is estimated using inputs that are considered Level 3 measurements.
The cash surrender value of Company-Owned Life Insurance approximates fair value and is considered to be a Level 2
investment. The fair value of Long-term Debt is estimated using quoted prices for similar liabilities in markets that are not
active. The inputs used in the valuation are considered Level 2 measurements. Policyholder Obligations presented in the
preceding tabla e consist of advances from the Federal Home Loan Bank (“FHLB”) of Chicago, and the inputs used in the
valuation are considered Level 2 measurements.

123

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 14. GOODWILL AND INTANGIBLE ASSETS

Goodwill balances by business segment at December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS

2023

2022

Specialty Property & Casualty Insurance .................................................................................................. $ 1,043.0

$ 1,043.0

Life Insurance ............................................................................................................................................
Non-Core Operations.................................................................................................................................

207.7
—

207.7
49.6

Total........................................................................................................................................................... $ 1,250.7

$ 1,300.3

The Company tests goodwill for recoverabia lity at the reporting unit level on an annual basis, or whenever events or
circumstances indicate the fair value of a reporting unit may have declined below its carryirr ng value. The Company performed a
qualitative goodwill impairment assessment for all reporting units with goodwill as of October 1, 2023. The qualitative
assessment takes into consideration changes in macroeconomic conditions, industryrr and market considerations, cost factors,
overall financial performance, changes in management or key personnel, changes in strategy, events impacting reporting units,
and changes in Kemper’s stock price since the last quantitative assessment, which was performed on October 1, 2022. Based on
its qualitative assessment, the Company concluded that the associated goodwill was recoverabla e for each reporting unit.

During the second quarter of 2023, the Company identifieff d impairment indicators impacting the fair value of the Preferff
Property & Casualty Insurance business in connection with ongoing evaluation of strategic alternatives for the Preferff
red
Insurance business. As a result, the business’s fair value was determined using a combination of availabla e market information,
market comparisons and a discounted cash flow valuation method based on the present value of future earnings. The fair value
calculated in the second quarter of 2023 was lower than the carrying value of the business, resulting in a pre-tax impairment
charge of $49.6 million and an afteff
r-tax impairment charge of $45.5 million. A subsu tantial portion of the goodwill that was
impaired was not tax deductible. The goodwill impairment charge is reported separately in the Consolidated Statements of Loss
for the year ended December 31, 2023, with a corresponding reduction to goodwill in the Consolidated Balance Sheet as of
December 31, 2023.

red

In 2022, Kemper completed the sale of Reserve National to Medical Mutual of Ohio. As a result of the sale, goodwill attributed
to Reserve National was separately tested for recoverabia lity and the Company incurred goodwill impairment of $11.4 million.
The remaining $0.3 million of goodwill attributable to Reserve National was derecognized at the time of the sale. See Note 4,
“Dispositions”, for more information.

The gross carrying amount and accumulated amortization of definite and indefinite life intangible assets at December 31, 2023
and 2022 were:

(Dollars in Millions)

Definite Life Intangible Assets:

Value of Business Acquired ............ $
Customer Relationships...................
Agent Relationships.........................
Trade Names....................................
Internal-Use Software......................
Total Definite Life Intangible Assets...
Indefinite Life Intangible Assets:

Trade Names....................................
Insurance Licenses...........................

Total Indefinite Life Intangible Assets

2023

2022

Gross
Carrying
Amount

Accumulated
Amortization

Net Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net Amount

237.5
43.8
81.6
—
388.0
750.9

5.2
44.2

49.4

223.7
42.1
38.2
—
178.0
482.0

—
—

—

13.8
1.7
43.4
—
210.0
268.9

5.2
44.2

49.4

237.5
43.8
81.6
1.8
352.1
716.8

5.2
44.5

49.7

222.1
41.1
31.0
1.7
153.9
449.8

—
—

—

15.4
2.7
50.6
0.1
198.2
267.0

5.2
44.5

49.7

Total Intangible Assets......................... $

800.3

482.0

318.3

766.5

449.8

316.7

124

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 14. GOODWILL AND INTANGIBLE ASSETS (Continued)

The Company records intangible assets acquired in business combinations and certain costs incurred developing and
customizing internal-use software within Other Assets on the Consolidated Balance Sheets. Definite lifeff
amortized over the estimated profitff emergence period or estimated usefulff
not amortized, but rather tested annually for impairment. In 2023, 2022 and 2021, the Company recognized amortization
expense on definite life intangible assets of $48.6 million, $53.7 million and $87.0 million, respectively.

intangible assets are
life of the asset. Indefinite life intangible assets are

The amount of amortization expense expected to be recorded in the next five years for definite lifeff
follows:

intangible assets is as

DOLLARS IN MILLIONS

Definite Life Intangible Assets:

2024

2025

2026

2027

2028

Value of Business Acquired ........................... $

Customer Relationships..................................

Agent Relationships........................................
Internal-Use Software.....................................

Total

1.6

0.4

5.5
33.3

40.8

1.6

0.4

4.9
27.4

34.3

1.5

0.3

4.9
23.4

30.1

1.5

0.2

4.9
17.9

24.5

1.4

0.2

4.9
15.3

21.8

NOTE 15. VARIABLE INTEREST ENTITIES

t or is structurt ed such that equity investors lack the ability to make significant decisions relating to the entity's

A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subor
financial suppor
operations through voting rights or do not subsu tantively participate in the gains and losses of the entity. The Company
consolidates VIEs in which the Company is deemed the primary beneficiary.r The primaryrr beneficiaryrr
(1) the power to direct the activities of the VIE that most significantly affeff ct that entity's economic performance and (2) the
obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE.

is the entity that has both

dinated

Recipri ocal Exchange

The Company has formed a management company that acts as attorney-in-fact (“AIF”) for Kemper Reciprocal (the “Reciprocal
Exchange” or “Exchange”), an Illinois-domiciled reciprocal insurance exchange. The Exchange principally writes specialty
personal automobile policies sold to subsu cribers of the Exchange. The establa ishment of Kemper Reciprocal was completed in
the third quarter of 2023.

The Company consolidates the Exchange since (1) the AIF manages the business operations of the Exchange and thereforff e has
the power to direct the activities that most significantly impact the economic performance of the Exchange and (2) the
Company has provided capia tal to the Exchange and would absorb any expected losses that could potentially be significff ant to the
Exchange. The Exchange’s anticipated economic performance is the product of its underwriting and investment results. The
AIF receives a management fee for the services provided to the Reciprocal Exchange. The management fee revenues are based
upon all premiums written or assumed by the Exchange. The AIF determines the management fee rate to be paid by the
Exchange. This rate cannot exceed 30% of the Exchange’s gross written and assumed premiums.

The assets of the Reciprocal Exchange can be used only to settle the obligations of the Reciprocal Exchange for which creditors
and other beneficial owners have no recourse to the Company. The Company has no obligation related to any underwriting and/
or investment losses experienced by the Exchange. As of December 31, 2023, the Company had contributed $4.0 million of
surplus to the Reciprocal Exchange. The effeff cts of the transactions between the Company and the Reciprocal Exchange are
eliminated in consolidation to derive consolidated Net Loss. However, the management fee income earned by the AIF is
reported in Net Loss attributable to Kemper Corporation and is included in the basic and diluted earnings per share.

Noncontrolling interest is the portion of equity (net assets) not attributable, directly or indirectly, to a parent. Since the
Company has no ownership interest in Kemper Reciprocal, the difference between the carryirr ng value of the Exchange’s assets
and liabilities represents noncontrolling interest and any income or loss generated by the net assets of the Exchange is presented
as income or loss attributable to noncontrolling interest.

125

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 15. VARIABLE INTEREST ENTITIES (Continued)

Alternative Energyr Partnett

rship

The Company invests in an Alternative Energy Partnership formed to provide sustainabla e energy projects that are designed to
generate a return primarily through the realization of federal tax credits. This entity was formed to invest in newly installed
residential solar leases and power purchase agreements. As a result of this investment, the Company has the right to certain
investment tax credits and tax depreciation benefits, and to a lesser extent, cash flows generated from the installed solar systems
leased to individual consumers.

The Company’s interest in the Alternative Energy Partnership Investment is considered an investment in a VIE. The Company
has determined that it is not the primaryr beneficiaryr as it does not have the power to direct the activities that most significantly
impact the economic performance of the entity and thereforff e is not required to consolidate the VIE. The project sponsor
governs the entity and the Company only has consent rights that have been deemed protective in nature and does not participate
in key economic decisions of the entity.

The investment is accounted for using the equity method of accounting and included in Alternative Energy Partnership
Investments in the Consolidated Balance Sheets. The Company uses the HLBV equity method to account for earnings and
losses. This method provides an earnings allocation that appropriately reflects the subsu tantive economics of the investment.
Earnings and losses on the investment are reported in Change in Value of Alternative Energy Partnership Investments and
investment tax credits are recognized in Income Tax Benefit on the Consolidated Statements of Loss.

The following tabla e presents information regarding activity in the Company’s Alternative Energy Partnership Investments for
the years ended December 31, 2023, 2022 and 2021.

(Dollars in millions)
Fundings ...................................................................................................................... $
Cash distribution from Investment ..............................................................................
Income (Loss) on Investments in Alternative Energy Partnership
Income Tax Credits Recognized
Tax (Expense) Benefit Recognized from Alternative Energy Partnership

— $
2.0
2.9
0.2
(0.7)

Dec 31, 2021
80.0
0.5
(61.2)
73.9
5.1

— $
3.3
(19.9)
4.3
3.7

Year Ended

Dec 31, 2022

Dec 31, 2023

The following tabla e represents the carrying value of the associated assets and liabia lities and the associated maximum loss
exposure of the Alternative Energy Partnership Investments as of December 31, 2023 and December 31, 2022.

(Dollars in millions)
Cash .................................................................................................................................................... $
Equipment, Net of Depreciation .........................................................................................................
Other Assets........................................................................................................................................
Total Unconsolidated Assets ..............................................................................................................
Maximum Loss Exposure ...................................................................................................................

Dec 31, 2023

Dec 31, 2022
3.0
261.7
5.1
269.7
16.3

2.7 $
2
7.5
266.4
17.3

The Company’s maximum loss exposure in the event that all of the assets in the Alternative Energy Partnership are deemed
worthless is $17.3 million and $16.3 million, which is the carrying value of the investment at December 31, 2023 and
December 31, 2022, respectively.

126

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 16. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE
LOSS

The tabla es below display the changes in Accumulated Other Comprehensive Loss by component for the years ended
December 31, 2023, 2022 and 2021:

(Dollars in Millions)

Net
Unrealized
Losses on
Other
Investments

Net
Unrealized
Losses on
Investments
with an
Allowance for
Credit Losses

Net
Unrecognized
Postretirement
Benefit Costs

Gain on Cash
Flow Hedge
on Cash Flow
Hedges

Change in
Discount
Rate on
Future Life
Policyholder
Benefits

Total

Balance as of January 1, 2021

730.6

(2.1) $

(45.7) $

(2.3) $ (1,030.3) $

(349.8)

Other Comprehensive (Loss) Income
Before Reclassifications
Amounts Reclassified from Accumulated
Other Comprehensive Income Net of Tax
Benefit (Expense) of $11.3, $—, $—,
$(0.1). $—, and $11.2

Other Comprehensive Income (Loss) Net
of Tax Benefit (Expense) of $59.7, $0.4,
$2.4, $(0.1), $(47.9), and $14.5

(182.0)

(1.6)

(6.5)

—

180.6

(9.5)

(42.8)

—

0.1

0.4

—

(42.3)

(224.8)

(1.6)

(6.4)

0.4

180.6

(51.8)

Balance as of December 31, 2021

505.8

(3.7) $

(52.1) $

(1.9) $ (849.7) $

(401.6)

Balance as of December 31, 2022

(719.4) $

(2.2) $

(37.2) $

Other Comprehensive (Loss) Income
Before Reclassifications
Amounts Reclassified from Accumulated
Other Comprehensive Loss Net of Tax
Benefit of $2.7, $0.1, $0.1, $—, $—, and
$2.9
Other Comprehensive (Loss) Income Net
of Tax Benefit (Expense) of $325.9,
$(0.4), $(4.0), $(1.2), $(289.9) and $30.4

Other Comprehensive Income (Loss)
Before Reclassifications

Amounts Reclassified from Accumulated
Other Comprehensive Loss Net of Tax
(Expense) Benefit of $(0.9), $—, $(13.8),
$(0.1), $—, and $(14.8)

Other Comprehensive Income (Loss)
Before Reclassifications Net of Tax
(Expense) Benefit of $(50.3), $0.2,
$(12.5), $(0.1), $21.2, and $(41.5)

(1,215.1)

2.0

15.2

4.7

1,090.8

(102.4)

(10.1)

(0.5)

(0.3)

(1,225.2)

1.5

14.9

185.0

(0.3)

(6.0)

—

4.7

2.8

—

(10.9)

1,090.8

(113.3)

241.1

(514.9)

(80.5)

98.2

3.5

—

52.7

(0.3)

—

55.9

188.5

(0.3)

46.7

(0.3)

(80.5)

154.1

Balance as of December 31, 2023

(530.9) $

(2.5) $

9.5

2.5

160.6

(360.8)

127

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 16. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE
LOSS (Continued)

Amounts reclassified from Accumulated Other Comprehensive Loss shown above are reported in Net Loss as follows:

Components of AOCI
Net Unrealized Gains (Losses) on Other Investments and Net
Unrealized Gains (Losses) on Investments with an Allowance for Credit
Losses

Net Unrecognized Postretirement Benefit Costs

(Loss) Gain on Cash Flow Hedges

Consolidated Statements of Loss Line Item Affeff cted by
Reclassifications
Net Realized Investment (Losses) Gains and Impairment Losses

Policyholders’ Benefits and Incurred Losses and Loss Adjud stment
Expenses, Insurance Expenses, and Interest and Other Expenses
Interest and Other Expenses

Change in Discount Rate on Future Life Policyholder Benefits

Not Applicable

NOTE 17. SHAREHOLDERS’ EQUITY

Common Stock Issuance

Kemper is authorized to issue 20 million shares of $0.10 par value preferff
common stock. No preferff
and 63,912,762 shares of common stock outstanding at December 31, 2023 and 2022, respectively.

red shares were issued or outstanding at December 31, 2023 and 2022. There were 64,111,555 shares

red stock and 100 million shares of $0.10 par value

Common Stock Repur

chases

On May 6, 2020, Kemper’s Board of Directors authorized the repurchase of up to an additional $200.0 million of Kemper
common stock, in addition to the $133.3 million remaining under the August 6, 2014 authorization, bringing the remaining
share repurchase authorization to approximately $333.3 million. As of December 31, 2023, the remaining share repurchase
authorization was $171.6 million under the repurchase program.

During the years ended 2023 and 2022, Kemper did not repurchase any of its common stock. During the year ended 2021
Kemper repurchased and retired approximately 2,085,000 shares of its common stock under its share repurchase authorization
for an aggregate cost of $161.7 million and an average cost per share of $77.58.

These purchases were made in the open market in accordance with applicable federal securities laws, including Rule 10b-18
and Rule 10b5-1 of the Securities Exchange Act of 1934.

Emplm oyee Stock Purchase Plan

During the years ended December 31, 2023, 2022, and 2021, the Company issued 89,000, 102,000, and 79,000 shares under the
Kemper Employee Stock Purchase Plan (“ESPP”), respectively, at an average discounted price of $40.79, $40.83, and $58.08
per share. Compensation costs charged against income were $0.6 million, $0.7 million, and $0.8 million for the years ended
December 31, 2023, 2022, and 2021, respectively.

Dividends

In 2023, Kemper issued dividends and dividend equivalents of $80.1 million, of which $80.1 million was paid to shareholders.
Except for certain financial covenants under Kemper’s credit agreement or during any period in which Kemper elects to defer
interest payments, there are no restrictions on Kemper’s ability to pay dividends to its shareholders. Certain financial covenants,
namely minimum net worth and a maximum debt to total capia talization ratio, under Kemper’s credit agreement could limit the
amount of dividends that Kemper may pay to shareholders at December 31, 2023. Kemper had the ability to pay without
restrictions of $0.5 billion in dividends to its shareholders and still be in compliance with all financial covenants under its credit
agreement at December 31, 2023.

NOTE 18. STATUTORY FINANCIAL INFORMATION AND DIVIDEND LIMITATIONS

Kemper’s US based insurance subsu idiaries are required to file financial statements in conforff mity with accounting practices
prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutt oryrr accounting
practices include a variety of publications of the NAIC, as well as state laws, regulations and general administrative rules. All
states require domiciled insurance companies to prepare statutt ory-r basis financial statements in conforff mity with the NAIC

128

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 18. STATUTORY FINANCIAL INFORMATION AND DIVIDEND LIMITATIONS (Continued)

Accounting practices and Procedurd es Manual, subju ect to any deviations prescribed or permitted by the applicable insurance
commissioner or director. Statutt oryrr accounting practices differ from GAAP primarily since they require charging policy
acquisition costs to expense as incurred, establa ishing life insurance reserves based on different actuat
rial assumptions, and
valuing certain investments and establa ishing deferred taxes on a different basis.

The estimated combined statutt oryr net loss, excluding intercompany dividends and surplus note interest, and estimated
combined capital and surplus of the Company’s US based insurance subsu idiaries is as follows:

DOLLARS IN MILLIONS
Property and casualty companies ..................................................................................... $
Life and health companies................................................................................................

Total statutt oryrr net loss ................................................................................................ $

Year Ended December 31,

2023
(150.4) $
(136.0)
(286.4) $

2022
(226.7) $
174.4
(52.3) $

2021
(206.9)
(12.4)
(219.3)

DOLLARS IN MILLIONS
Property and casualty companies........................................................................................................... $ 1,587.8
Life and health companies .....................................................................................................................
113.7
Total statutt oryrr capital and surplus .................................................................................................... $ 1,701.5

2023

2022
$ 1,582.7
265.2
$ 1,847.9

Kemper’s offsff hore subsu idiary, Kemper Bermuda Ltd., is required to file with its insurance regulator financial statements
prepared in accordance with US GAAP and presented in conforff mity with the financial reporting provisions of the Insurance Act
of 1978, amendments thereto and the Insurance Account Rules 2016 with respect to Condensed Consolidated General Purpose
Financial Statements (the “Legislation”).

Kemper’s insurance subsu idiaries are also required to hold minimum levels of statutt oryrr capia tal and surplus to satisfy regulatoryr
requirements. The minimum statutt oryr capia tal and surplus for US subsu idiaries, or company action level risk-based capital
(“RBC”), necessary to satisfyff
requirements for the Company’s US based lifeff and health insurance subsu idiaries
collectively was estimated to be approximately $36.4 million and $50.0 million at December 31, 2023 and 2022, respectively.
requirements for the Company’s property
The estimated minimum statutt oryr capia tal and surplus necessary to satisfy regulatoryr
and casualty insurance subsu idiaries collectively was approximately $574.3 million and $665.7 million at December 31, 2023
and 2022, respectively. Company action level RBC is the level at which a US based insurance company is required to file a
corrective action plan with its regulators and is equal to 200% of the authorized control level RBC.

regulatoryrr

Capia tal and surplus requirements of Kemper Bermuda Ltd. are regulated by the Bermuda Monetary Authority (“BMA”) and
differ from those applicable to the US subsu idiaries. On July 1, 2022, Kemper entered into an indefinite agreement with its
subsu idiary, Kemper Bermuda Ltd., that provides financial guarantees of up to $300.0 million in contributed capia tal to maintain a
minimum target capital ratio of 150% Enhance Capia tal Requirement, as described in Bermuda’s Insurance Act 1978. As of
December 31, 2023 and 2022, Kemper had cumulatively contributed $40.0 million and $5.0 million under this agreement.

At December 31, 2023, all insurance subsu idiaries individually are expected to exceed the minimum required statutt oryr capital
and surplus requirements.

Various insurance laws restrict the amount that an insurance subsu idiary may pay in the form of dividends, loans or advances
without the prior approval of regulatory authorities. Such insurance laws applicable to the Company’s US based subsu idiaries
generally restrict the amount of dividends paid in an annual period to the greater of statutt oryr net income from the previous year
or 10% of statutt ory capia tal and surplus. Also, that portion of a US based insurance subsu idiary’s net equity which results from
insurance accounting practices and GAAP would not be availabla e for cash dividends, loans or
differences between statutt oryr
advances. Kemper’s insurance subsu idiaries paid dividends of $640.9 million, $311.7 million and $347.0 million to Kemper in
2023, 2022 and 2021, respectively. In 2024, Kemper’s US based insurance subsu idiaries capaa
city to pay dividends to Kemper
without prior regulatoryr approval is estimated to be zero as of the filing date. Kemper’s insurance subsu idiaries had net assets of
approximately $3.5 billion and $3.6 billion, determined in accordance with GAAP, that were restricted from payment to
Kemper without prior regulatoryr approval at December 31, 2023 and 2022, respectively.

129

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 19. PENSION BENEFITS

ls were frozen for subsu tantially all of the participants under the Pension Plan. The Pension Plan was

The Company previously sponsored a qualifieff d defined benefit pension plan (the “Pension Plan”) that covered approximately
3,100 participants and beneficiaries. Effeff ctive January 1, 2006, the Pension Plan was closed to new hires and, effeff ctive June 30,
2016, benefit accruar
terminated effeff ctive November 30, 2023. The Pension Plan was generally non-contributory,rr but participation required some
employees to contribute 3% of pay, as defined, per year. Benefits for participants who were required to contribute to the
Pension Plan were based on compensation during plan participation and the number of years of participation. Benefits for the
vast majoa rity of participants who are not required to contribute to the Pension Plan are based on years of service and final
average pay, as defined. The Company funded the Pension Plan in accordance with the requirements of the Employee
Retirement Income Security Act of 1974 (“ERISA”).

In the third quarter of 2023, the Company's Pension Plan made lump-sum payments to certain vested plan participants that were
not currently receiving benefit payments and elected to receive lump-sum payments and purchased annuities on behalf of the
remaining plan participants. For plan participants who elected lump-sum payments during the election window, payments of
$90.0 million were distributed. Group annuity contracts were purchased from Banner Life Insurance Company for
$205.7 million for the remaining plan participants for whom Banner irrevocably assumed the pension obligations. These
r-
transactions resulted in a full settlement of the Pension Plan and a $70.2 million noncash settlement charge ($55.5 million afteff
tax) for the unamortized net unrecognized postretirement benefit costs related to the settled obligations recorded in Interest and
Other Expenses on the Consolidated Statements of Loss. The Pension Plan continues to have approximately $16.4 million of
net assets remaining in the trusr
r the settlement and was included within Other Assets in the accompanying consolidated
balance sheet as of December 31, 2023.

t afteff

Changes in Fair Value of Plan Assets and Changes in Projected Benefit Obligation for the Pension Plan for the years ended
December 31, 2023 and 2022 is presented below.

DOLLARS IN MILLIONS
Fair Value of Plan Assets at Beginning of Year........................................................................................ $
Actual Return on Plan Assets....................................................................................................................
Benefits Paid..............................................................................................................................................
Settlement Benefits....................................................................................................................................
Fair Value of Plan Assets at End of Year..................................................................................................
Projected Benefit Obligation at Beginning of Year ..................................................................................
Interest Cost...............................................................................................................................................
Benefits Paid..............................................................................................................................................
Settlement Benefits....................................................................................................................................
Actuarial Gains..........................................................................................................................................
Projected Benefit Obligation at End of Year.............................................................................................
Funded Statust —Plan Assets in Excess of Projected Benefit Obligation .................................................. $
Unamortized Amount Reported in AOCI at End of Year ......................................................................... $
Accumulated Benefit Obligation at End of Year ...................................................................................... $

2023
315.8
7.1
(100.9)
(205.7)
16.3
292.2
8.4
(100.9)
(205.7)
6.0
—
16.3

$
— $
— $

2022
391.7
(65.1)
(13.7)
2.9
315.8
378.8
8.7
(13.7)
2.9
(84.5)
292.2
23.6
(63.1)
289.3

The measurement dates of the assets and liabia lities at end of year presented in the preceding tabla e under the headings, “2023”
and “2022” were December 31, 2023 and December 31, 2022, respectively.

The weighted-average discount rate and rate of increase in future compensation levels used to estimate the components of the
Projected Benefit Obligation for the Pension Plan at December 31, 2022 were:

Discount Rate ................................................................................................................................................................
Rate of Increase in Future Compensation Levels..........................................................................................................

2022
5.05 %
—

130

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 19. PENSION BENEFITS (Continued)

Asset allocations for the Pension Plan at December 31, 2023 and 2022 by asset categoryr were:

ASSESS T CATEGTT ORY
Corporate Bonds and Notes .......................................................................................................................
Bond Exchange Traded Funds ...................................................................................................................
Cash and Short-term Investments ..............................................................................................................
Other Assets ...............................................................................................................................................
Total ...........................................................................................................................................................

2023

2022

— %
—
100
—
100 %

27 %
35
37
1
100 %

The investment objective of the Pension Plan was to produce current income and long-term capital growth through a
combination of equity and fixed income investments which, together with appropriate employer contributions and any required
employee contributions, was adequate to provide for the payment of the benefit obligations of the Pension Plan. The assets of
the Pension Plan could have been invested in fixed income and equity investments or any other investment vehicle or financial
instrument deemed appropriate. Fixed income investments may include cash and short-term instruments, U.S. Government
securities, corporate bonds, mortgages and other fixed income investments. Equity investments may include various types of
stock, such as large-cap,a mid-cap and small-cap stocks, and may also include investments in investment companies, collective
investment funds and Kemper common stock (subjeb ct to Section 407 and other requirements of ERISA). The Pension Plan did
not invest in Kemper common stock.

t investment committee for the Pension Plan, along with its third party fiduciary advisor, periodically reviewed the

The trusr
performance of the Pension Plan’s investments and asset allocation. Several external investment managers managed the equity
investments of the trusr
limitations, if any, establa ished by the trusr
made by the Company, subju ect to general guidelines as set by the trusrr

t for the Pension Plan. Each manager was allowed to exercise investment discretion, subju ect to

t investment committee for the Pension Plan. All other investment decisions were

t investment committee for the Pension Plan.

The Company determined its Expected Long Term Rate of Return on Plan Assets based primarily on the Company’s
expectations of future returns, with consideration to historical returns, for the Pension Plan’s investments, based on target
allocations of the Pension Plan’s investments.

The fair values of pension plan assets are estimated using the same methodologies and inputs as those used to determine the fair
values for the respective asset categoryr of the Company. These methodologies and inputs are disclosed in Note 13, “Fair Value
Measurements,” to the Consolidated Financial Statements.

Fair value measurements for the Pension Plan’s assets at December 31, 2023 are summarized below.

Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)

Significff ant
Other
Observable
Inputs
(Level 2)

Significff ant
Unobservable
Inputs
(Level 3)

Measured at Net
Asset Value

Fair Value

DOLLARS IN MILLIONS
II
Equity Securities:

Other Equity Interests:

Limited Liability Companies and

Limited Partnerships ....................
Short-term Investments..............................
Total........................................................... $

—
16.2
16.2

—
—
— $

0.1
—
0.1

0.1
16.2
16.3

131

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 19. PENSION BENEFITS (Continued)

Fair value measurements for the Pension Plan’s assets at December 31, 2022 are summarized below.

DOLLARS IN MILLIONS
Fixed Maturities:

Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)

Significff ant
Other
Observable
Inputs
(Level 2)

Significff ant
Unobservable
Inputs
(Level 3)

Measured at Net
Asset Value

Fair Value

U.S. Government and Government

Agencies and Authorities................... $

States and Political Subdiu

visions...........

Foreign Governments............................

Corporate Bonds and Notes...................

Equity Securities:

Other Equity Interests:

Bond Exchange Traded Funds.........

Limited Liability Companies and

Limited Partnerships ....................
Short-term Investments..............................
Receivabla es and Other ...............................
Total........................................................... $

40.1

— $

—

111.1

—

116.1

0.8

0.1

0.4

45.4

—

1.8

—

268.1

45.9

— $

1.8

40.1

0.1

0.4

45.4

111.1

1.8

116.1

0.8

315.8

The components of Comprehensive Pension (Income) Expense for the Pension Plan for the years ended December 31, 2023,
2022 and 2021 were:

DOLLARS IN MILLIONS
Service Cost Earned During the Year..................................................................................... $
Interest Cost on Projected Benefit Obligation........................................................................
Expected Return on Plan Assets.............................................................................................
Amortization of Prior Service Cost ........................................................................................
Amortization of Actuarial Loss ..............................................................................................
Settlement Expense ................................................................................................................
Pension Expense Recognized in Consolidated Statements of (Loss) Income........................
Unrecognized Pension Loss Arising During the Year............................................................
Prior Service Cost Arising During the Year...........................................................................
Amortization of Prior Service Cost ........................................................................................
Amortization of Accumulated Unrecognized Pension Loss...................................................
Comprehensive Pension (Income) Expense .......................................................................... $

2023

2022

2021

— $
8.4
(7.9)
0.4
—
70.2
71.1
—
—
—
—
71.1

— $
8.7
(7.4)
0.7
1.8
—
3.8
(12.0)
—
(0.7)
(1.8)
(10.7) $

—
7.2
(9.5)
—
2.9
—
0.6
(6.0)
18.3
—
(2.9)
10.0

The weighted-average discount rate, service cost discount rate, interest cost discount rate, rate of increase in future
compensation levels and expected long-term rate of return on plan assets used to develop the components of Pension Expense
for the Pension Plan for the years ended December 31, 2023, 2022 and 2021 were:

Weighted-average Discount Rate ................................................................................
Service Cost Discount Rate.........................................................................................
Interest Cost Discount Rate.........................................................................................
Rate of Increase in Future Compensation Levels........................................................
Expected Long Term Rate of Return on Plan Assets ..................................................

The Company did not contribute to the Pension Plan in 2021, 2022 or 2023.

2023

2022

2021

5.05 %
N/A

4.92

N/A

3.79

2.89 %
N/A

2.35
3.40
2.08

2.56 %
2.41
1.90
3.40
2.70

132

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 19. PENSION BENEFITS (Continued)

emental defined benefit pension plan (the “Su

lPlan )”). Benefifit
lls for
d liabia lity related to the
emental Plan was $21.8 million and $22.0 million at December 31, 2023 and 2022, respectively. Pension expense for the
emental Plan was $1.0 million, $0.8 million, and $0.7 million for the years ended December 31, 2023, 2022 and 2021,

The Company also sponsors a non-qualifieff d supplu
accruar
lalll partr icipants in the Supplu
Supplu
u
Suppl
respectively. There was an actuarial loss of $0.7 million before taxes in 2023, and actuat
million before taxes included in Other Comprehensive (Loss) Income for the years ended December 31, 2022 and 2021,
respectively.

emental Plan were frozen effeff ctive June 30, 2016. The unfunde

rial gains of $4.8 million and $1.3

lpplu
ff

ementall

The Company also sponsors several defined contribution benefit plans covering most of its employees. The Company made
contributions to those plans of $27.5 million, $30.6 million and $28.9 million in 2023, 2022 and 2021, respectively.

NOTE 20. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Kemper and Infinity Property and Casualty Corporation (“Infinity”) sponsor other than pension postretirement employee
benefit plans (“OPEB”) that together provide medical, dental and/or life insurance benefits to approximately 400 retired and
500 active employees.

Kemper has historically self-iff nsured the benefits under the Kemper OPEB Plan. The Kemper medical plan generally provides
for a limited number of years of medical insurance benefits at retirement based on the participant’s attained age at retirement
and number of years of service until specified dates and generally has required participant contributions, with most
contributions adjud sted annually. On December 30, 2016, Kemper amended the Kemper OPEB Plan and, effeff ctive December 31,
2016, no longer offeff
portion of its coverage. Rather, beginning on January 1, 2017, the Kemper OPEB Plan offeff
Medicare exchange and provides varying levels of a Company-determined subsu idy via health reimbursement accounts to certain
Medicare-eligible retirees and spouses in order to help fund a portion of the participants’ cost. Further, the amendment
eliminates the requirement for such participants to contribute to the Kemper OPEB Plan.

rs coverage to post-65 Medicare-eligible retirees and Medicare-eligible spouses under the self-iff nsured

rs access to a private, third-party

In conjunction with the amendment, the Company recorded a pre-tax reduction to its Accumulated Postretirement Benefit
Obligation of $11.0 million through Other Comprehensive (Loss) Income. This prior service credit is being amortized into
income over the remaining average lifeff of the Kemper OPEB Plan’s participants.

Changes in Fair Value of Plans’ Assets and Changes in Accumulated Postretirement Benefit Obligation for the years ended
December 31, 2023 and 2022 were:

DOLLARS IN MILLIONS
Fair Value of Plans’ Assets at Beginning of Year..................................................................................... $
Employer Contributions ............................................................................................................................
Plan Participants’ Contributions................................................................................................................
Benefits Paid..............................................................................................................................................
Fair Value of Plan Assets at End of Year..................................................................................................
Accumulated Postretirement Benefit Obligation at Beginning of Year....................................................
Service Cost...............................................................................................................................................
Interest Cost...............................................................................................................................................
Plan Participants’ Contributions................................................................................................................
Benefits Paid..............................................................................................................................................
Actuarial Gain ...........................................................................................................................................
Accumulated Postretirement Benefit Obligation at End of Year ..............................................................
Funded Statust —Ac— cumulated Postretirement Benefit Obligation in Excess of Plans’ Assets................. $

2023

2022

— $
1.0
0.3
(1.3)
—
8.1
0.1
0.4
0.3
(1.3)
(0.1)
7.5
(7.5) $

—
1.0
0.3
(1.3)
—
11.2
0.2
0.2
0.3
(1.3)
(2.5)
8.1
(8.1)

Unamortized Actuarial Gain Reported in AOCI at End of Year............................................................... $

13.9

16.9

The measurement dates of the assets and liabia lities at end of year in the preceding tabla e under the headings “2023” and “2022”
were December 31, 2023 and December 31, 2022, respectively.

133

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 20. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)

The weighted-average discount rate and rate of increase in future compensation levels used to develop the components of the
Accumulated Postretirement Benefit Obligation at December 31, 2023 and 2022 were:

Discount Rate ............................................................................................................................................
Rate of Increase in Future Compensation Levels......................................................................................

2023
4.92 %
2.20

2022
5.08 %
2.20

The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at December 31,
2023 was 6.7% for 2024, graduad lly declining to 4.7% in the year 2029 and remaining at that level thereafter for medical
benefits and 8.0% for 2024, graduad lly declining to 4.8% in the year 2030 and remaining at that level thereafter for prescription
benefits. The assumed health care cost trend rate used in measuring the Accumulated Postretirement Benefit Obligation at
drugr
December 31, 2022 was 6.0% for 2023, graduad lly declining to 4.8% in the year 2029 and remaining at that level thereafteff
r for
medical benefits and 6.7% for 2023, graduad lly declining to 4.8% in the year 2030 and remaining at that level thereafteff
r for
prescription drugr

benefits.

The components of Comprehensive OPEB (Income) Expense for the years ended December 31, 2023, 2022 and 2021 were:

DOLLARS IN MILLIONS
Service Cost Earned During the Year.................................................................................... $
Interest Cost on Accumulated Postretirement Benefit Obligation.........................................
Amortization of Prior Service Credit.....................................................................................
Amortization of Accumulated Unrecognized OPEB Gain ....................................................
OPEB Income Recognized in Consolidated Statements of Loss...........................................
Unrecognized OPEB Gain Arising During the Year .............................................................
Amortization of Prior Service Credit.....................................................................................
Amortization of Accumulated Unrecognized OPEB Gain ....................................................
Comprehensive OPEB Expense (Income) ............................................................................. $

2023

2022

2021

0.1
0.4
(1.3)
(1.8)
(2.6)
(0.1)
1.3
1.8
0.4

0.2
0.2
(1.3)
(1.8)
(2.7)
(2.5)
1.3
1.8
(2.1) $

0.3
0.1
(1.3)
(1.7)
(2.6)
(1.8)
1.3
1.7
(1.4)

The Company estimates that OPEB Expense for the year ended December 31, 2024 will include income of $2.8 million
resulting from the amortization of the related accumulated actuat
December 31, 2023.

rial gain and prior service credit included in AOCI at

The weighted-average discount rate and rate of increase in future compensation levels used to develop OPEB Expense for the
years ended December 31, 2023, 2022 and 2021 were:

Weighted-average Discount Rate ..........................................................................................
Service Cost Discount Rate ...................................................................................................
Interest Cost Discount Rate ...................................................................................................
Effeff ctive Rate for Interest on Service Cost............................................................................
Rate of Increase in Future Compensation Levels ..................................................................

2023
5.11 %
5.12
5.03
5.04
2.20

2022
2.56 %
2.79
1.97
2.54
2.20

2021
1.99 %
2.06
1.19
—
2.20

The Company expects to contribute $0.9 million, net of the expected Medicare Part D subsu idy, to its OPEB Plan to fund benefit
payments in 2024.

134

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 20. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)

The following benefit payments (net of participant contributions), which consider expected future service, as appropriate, are
expected to be paid:

DOLLARS IN MILLIONS
Estimated Benefit Payments:

2024

2025

2026

2027

2028

2029-2032

Years Ending December 31,

Excluding Medicare Part D Subsu idy ...................... $
Expected Medicare Part D Subsu idy ........................
Net Estimated Benefit Payments................................. $

0.9
—
0.9

0.8
—
0.8

0.7
—
0.7

3.0
—
3.0

NOTE 21. LONG-TERM EQUITY-BASED COMPENSATION

On May 3, 2023 (“2023 Omnibus Plan Effeff ctive Date”), Kemper’s shareholders approved the 2023 Omnibus Equity Plan
(“2023 Omnibus Plan”). The number of shares of Kemper common stock availabla e for issuance under the 2023 Omnibus Plan
is (i) 1,850,000 shares less (ii) one (1) share for everyr one (1) share granted afteff
r the 2023 Omnibus Plan Effeff ctive Date, no new awards are
Omnibus Plan Effeff ctive Date (the “Share Authorization”). Afteff
granted under the 2020 Omnibus Equity Plan (“2020 Omnibus Plan”) that had been approved by Kemper’s Shareholders on
May 6, 2020, but awards previously granted under the 2020 Omnibus Plan remain outstanding in accordance with their original
terms. As of December 31, 2023, there were 1,995,442 common shares availabla e for future grants. An additional 581,307 shares
are reserved for future grants based on the performance results under the terms of outstanding performance share units
(“PSUs”).

ry 28, 2023 and prior to the 2023

r Februar

Outstanding equity-based compensation awards as of December 31, 2023 consisted of time-based Restricted Stock Units that
typically vest over three years (“RSU”), stock option and stock appreciation rights (“Tandem Awards”), PSUs and Deferred
Stock Units (“DSUs”) that were previously granted under the 2011 Omnibus Equity Plan. RSUs, PSUs and DSUs give the
recipient the right to receive one share of Kemper common stock for each RSU, PSU or DSU issued. Recipients of DSUs
received full dividend equivalents on the same basis as all other outstanding shares of Kemper common stock, but do not
receive voting rights until such shares are issued.

For grants under the 2023 Omnibus Plan and the 2020 Omnibus Plan, recipients of RSUs and PSUs receive dividend
equivalents on the same basis as all other outstanding shares of Kemper common stock only if,ff to the extent, and at the time that
they vest and on subsu equent dividend payment dates afteff
r they vest until the awards are settled, and do not receive voting rights
until such shares are issued. For awards subju ect to a performance condition, the Company recognizes compensation expense
based upon the probabla e outcome of the performance condition. The estimate is revised if the actual number of PSUs expected
to vest is likely to differ from the previous estimate. Compensation expense for awards is recognized on a straight-line basis
over the requisite service period. For equity-based compensation awards with a graded vesting schedule, the Company
recognizes compensation expense on a straight-line basis over the requisite service period for each separately-vesting portion of
the awards as if each award were, in subsu tance, multiple awards. Compensation expense is recognized only for those awards
expected to vest, with forfeiturt es estimated at the date of grant based on the Company’s historical experience and future
expectations. Equity-based compensation expense was $29.0 million, $17.7 million and $28.0 million for the years ended
December 31, 2023, 2022 and 2021, respectively. Total unamortized compensation expense related to unvested awards at
December 31, 2023 was $18.9 million, which is expected to be recognized over the next three years ending December 31, 2024,
2025 and 2026.

Human Resources and the Compensation Committee of the Board of Directors, or the Board’s authorized designee, has sole
discretion to determine the persons to whom awards under the 2023 Omnibus Plan are granted, and the material terms of the
awards. For Tandem Awards, material terms include the number of shares covered by such awards and the exercise price,
vesting and expiration dates of such awards. Tandem Awards are non-transferff able. The exercise price of Tandem Awards is the
fair value of Kemper’s common stock on the date of grant. Tandem Awards and RSU awards granted to employees generally
vest in three equal annual installments over a period of three years, with the Tandem Awards expiring ten years from the date of
grant. Employee PSU awards generally vest over a period of three years, subju ect to performance results and other restrictions.

Under the Non-employee Director compensation program in effeff ct for 2023, each Non-employee Director elected at the 2023
annual shareholder meeting received an annual RSU award with an aggregate grant date fair value of $130,000 (“Director
RSUs”) at the conclusion of the meeting, and new Non-employee Directors who joined the Board received an initial award of
Director RSUs valued at the percentage of the full grant date fair value of $130,000 that represents the number of quarterly

135

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 21. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

Board meetings the new director was expected to attend during the remaining portion of the then-current annual compensation
period that ends on the date of the next annual shareholder meeting. The Director RSUs vest over a period of one year, enable
the award holder to make an election to defer the conversion to shares of common stock in accordance with applicable deferral
rules, and include the right to receive dividend equivalents on the same basis as all other outstanding shares of Kemper common
stock only if,ff to the extent, and at the time that they vest and on subsu equent dividend payment dates afteff
awards are settled. Each Non-employee Director elected at the 2022 annual shareholder meeting received an annual Director
RSU award with an aggregate grant date fair value of $130,000 at the conclusion of the meeting, and, each Non-employee
Director elected at the 2021 annual shareholder meeting received an annual Director RSU award with an aggregate grant date
fair value of $130,000 at the conclusion of the meeting, under the Non-employee Director compensation program in effeff ct for
the applicable year.

r they vest until the

The Company uses the Black-Scholes option pricing model to estimate the fair value of each Tandem Award on the date of
grant. The expected terms of Tandem Awards are developed by considering the Company’s historical Tandem Award exercise
experience, demographic profileff
s, historical share retention practices of employees and assumptions about their propensity for
early exercise in the future. Expected volatility is estimated using weekly historical volatility over the estimated life of each
tranche of the award. The Company believes that historical volatility is currently the best estimate of expected volatility. The
dividend yield in 2023, 2022 and 2021 was calculated by taking the natural logarithm of the annualized yield divided by the
Kemper common stock price on the date of grant. The risk-free interest rate was the yield on the grant date of U.S. Treasury
zero coupon issues with a maturity comparable to the expected term of the option.

The assumptions used in the Black-Scholes pricing model for Tandem Awards granted during the years ended December 31,
2023, 2022 and 2021 are presented below.

2023

2022

2021

TIONS

ASSUSS MPUU

OF VALUATIONII

RANGENN
Expected Volatility.....................................................
Risk-free Interest Rate................................................
Expected Dividend Yield ...........................................
EE
IN YEARS
WEIGEE HTGG EDTT
Employee Grants ........................................................

-AVERAGEGG EXPECT

LIFEII

EDTT

35.12
3.47
1.55

-%
-
-

39.27 % 33.20 % - 37.67 % 33.67
0.26
-
4.74
1.18
-
2.39

4.33
2.25

1.20
1.59

-%
-
-

38.04 %
1.33
1.78

-4

4 - 6

-4

Tandem Award activity for the year ended December 31, 2023 is presented below.

Outstanding at Beginning of the Year........................................
Granted.......................................................................................
Exercised ....................................................................................
Forfeited or Expired ...................................................................
Outstanding at December 31, 2023............................................
Vested and Expected to Vest at December 31, 2023 .................
Exercisabla e at December 31, 2023.............................................

Shares
Subject to
Awards
2,325,576
239,026
(50,297)
(140,986)
2,373,319
2,320,371
1,801,418

Weighted-
average
Exercise Price
Per Share ($)
59.10
$
58.19
37.57
62.41
59.27
59.31
59.92

$
$
$

Weighted-
average
Remaining
Contractual
Life (in Years)

Aggregate
Intrinsic
Value
($ In Millions)

5.39 $
5.32 $
4.45 $

5.4
5.4
5.4

The weighted-average grant-date fair values of Tandem Awards granted during 2023, 2022 and 2021 were $18.85, $14.67 and
$19.29, respectively. Total intrinsic value of Tandem Awards exercised was $0.6 million, $0.3 million and $1.3 million for the
years ended December 31, 2023, 2022 and 2021, respectively. Cash received from exercises of Tandem Awards was $1.9
million, $0.6 million and $3.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. Total tax benefit
realized for tax deductions from exercises of Tandem Awards was $0.1 million, $0.1 million and $0.3 million for the years
ended December 31, 2023, 2022 and 2021, respectively.

136

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 21. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

Information pertaining to Tandem Awards outstanding at December 31, 2023 is presented below.

Range of Exercise Prices ($)

20.01

30.01
40.01

50.01

60.01

70.01

80.01
20.01

-
-

30.00

40.00
50.00

60.00

70.00

80.00

90.00
90.00

Shares
Subject to
Awards

104,562

80,219
333,156

941,827

311,236

575,358

26,961
2,373,319

Outstanding

Weighted-
average
Exercise Price
Per Share ($)

Weighted-
average
Remaining
Contractual
Life (in Years)

27.71

33.97
42.64

56.23

69.22

76.61

83.39
59.27

2.17

1.75
2.93

6.72

6.42

5.13

5.81
5.39

Exercisable

Shares
Subject to
Awards

104,562

80,219
323,069

463,930

229,511

574,467

25,660
1,801,418

Weighted-
average
Exercise Price
Per Share ($)

27.71

33.97
42.48

57.31

69.04

76.61

83.51
59.92

The grant-date fair values of RSUs are determined using the closing price of Kemper common stock on the date of grant.

Activity related to nonvested RSUs for the year ended December 31, 2023 is presented below.

Time-based Restricted Stock
Unit Awards

Number of
Restricted
Stock Units

Weighted-
average
Grant-date
Fair Value
Per Unit

Nonvested Balance at Beginning of the Year ........................................................................................
Granted...................................................................................................................................................

Vested.....................................................................................................................................................

Forfeited .................................................................................................................................................

478,254
254,991

(96,855)

(68,074)

Nonvested Balance at December 31, 2023 ............................................................................................

568,316

53.78
56.79

54.91

55.20

54.77

The initial number of PSUs awarded to each participant represents the number of Kemper common shares that would vest and
be issued if the performance level attained were to be at the “target” performance level. For performance above the target level,
each participant would receive a grant of additional shares of stock up to a maximum of 100% of the initial number of PSUs
tures of PSUs for performance below the “target”
awarded to the participant. The final payout of these awards, and any forfeiff
performance level, will be determined based on the Company’s performance. If,ff at the end of the applicable performance
period, the Company’s performance:

•

exceeds the “target” performance level, all of the PSUs will vest and additional shares of stock will be issued to the
award recipient;
is below the “target” performance level, but at or above a “minimum” performance level, only a portion of the PSUs
originally issued to the award recipient will vest; or
is below a “minimum” performance level, none of the PSUs originally issued to the award recipient will vest.

137

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 21. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

Activity related to nonvested PSU awards for the year ended December 31, 2023 is presented below.

PSU Awards

Weighted-
average
Grant-date
Fair Value
Per PSU

Number of
PSUs

Nonvested Balance at Beginning of the Year........................................................................................

610,574

Granted...................................................................................................................................................

211,236

Vested ....................................................................................................................................................

(480)

Forfeited.................................................................................................................................................
Nonvested Balance at December 31, 2023 ............................................................................................

(240,023)
581,307

68.78

66.59

77.37

78.85
63.82

The number of additional shares that would be granted if the Company were to meet or exceed the maximum performance
levels related to the outstanding PSU awards for the 2023, 2022 and 2021 three-year performance periods was 189,283 common
shares, 200,520 common shares and 191,504 common shares, respectively, (as “fulff
shares, 601,560 shares, and 574,512 shares, respectively, under the Share Authorization) at December 31, 2023.

l value awards,” the equivalent of 567,849

The grant date fair values of the PSU awards with a market performance condition are determined using the Monte Carlo
simulation method. The Monte Carlo simulation model produces a risk-neutral simulation of the daily returns on the common
stock of Kemper and each of the other companies included in the peer group. Returns generated by the simulation depend on
the risk-free interest rate used and the volatilities of,ff and the correlation between, these stocks. The model simulates stock prices
and dividend payouts to the end of the three-year performance period. Total shareholder returns are generated for each of these
stocks based on the simulated prices and dividend payouts. The total shareholder returns are then ranked, and Kemper’s
simulated ranking is converted to a payout percentage based on the terms of the PSU awards. The payout percentage is applied
to the simulated stock price at the end of the performance period, reinvested dividends are added back, and the total is
discounted to the valuation date at the risk-free rate. This process is repeated approximately ten thousand times, and the grant
date fair value is equal to the average of the results from these trials.

Sixty-seven percent of the PSU awards granted to employees in 2023, sixty-seven percent of the PSU awards granted to
employees in 2022 and sixty-seven percent of the PSU awards granted to employees in 2021 are measured using a market
performance condition. Fair value for these awards was estimated using the Monte Carlo simulation method described above.
Final payout for these awards, and any forfeitures of units for performance below the “target” performance level, will be based
on Kemper’s total shareholder return, relative to a peer group comprised of all the companies in the S&P Supeu rcomposite
Insurance Index, over a three-year performance period. The three-year performance periods for the 2023, 2022 and 2021 awards
end on January 31, 2025, Januaryrr 31, 2024 and January 31, 2023, respectively. Compensation cost for these awards is
recognized ratabla y over the requisite service period. In the event that the market performance condition is not satisfied,
previously recognized compensation cost would not reverse, but it would reverse if the requisite service period is not met.

Thirty-three percent of the PSU awards granted to employees in 2023, thirty-three percent of the PSU awards granted to
employees in 2022 and thirty-three percent of the PSU awards granted to employees in 2021 are measured solely using a
Company-specific metric. Final payout for these awards, and any forfeiff
tures of shares for performance below the “target”
performance level, will be determined based on Kemper’s adjud sted return on equity over a three-year performance period. The
three-year performance periods for the 2023, 2022 and 2021 awards end on December 31, 2025, December 31, 2024 and
December 31, 2023, respectively. Fair value for these awards was determined using the closing price of Kemper common stock
on the date of grant. Accruar
performance condition.

ls of compensation cost for these awards are estimated based on the probabla e outcome of the

The total fair value of RSUs and PSUs that vested during the year ended December 31, 2023 was $5.2 million. The tax benefits
for tax deductions realized from such awards was $1.1 million. The total fair value of RSUs and PSUs that vested during the
year ended December 31, 2022 was $7.5 million. The tax benefits for tax deductions realized from such awards was $1.6
million. The total fair value of RSUs and PSUs that vested during the year ended December 31, 2021 was $19.6 million. The
tax benefits for tax deductions realized from such awards was $4.1 million.

138

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 21. LONG-TERM EQUITY-BASED COMPENSATION (Continued)

The grant-date fair values of DSU awards issued under the 2011 Omnibus Plan granted to Non-employee Directors were
determined using the closing price of Kemper common stock on the date of grant. Beginning in 2019 DSU awards are no longer
issued to Non-employee Directors. All previously granted shares had vested upon issuance and as such, no DSUs vested during
the years ended December 31, 2023, 2022 and 2021.

Activity related to DSU awards for the year ended December 31, 2023 is presented below.

Vested Balance at Beginning of the Year ............................................................................................

Reduction for Shares Issued on Conversion.........................................................................................

Vested Balance at December 31, 2023.................................................................................................

NOTE 22. POLICYHOLDER OBLIGATIONS

Policyholder Obligations at December 31, 2023 and 2022 were as follows:

Weighted-
average
Grant-date
Fair Value
Per DSU

Number of
DSUs

36,600

(8,220)

28,380

45.25

42.43

46.07

DOLLARS IN MILLIONS

FHLB Funding Agreements ......................................................................................................... $
Universal Life-type Policyholder Account Balances ...................................................................

Total ............................................................................................................................................. $

December 31,

2023

2022

557.4
98.3

655.7

601.0
100.3

701.3

Kemper’s subsu idiary, United Insurance Company of America (“United Insurance”) has entered into funding agreements with
the FHLB of Chicago in exchange for cash, which it uses for spread lending purpos
es. United Insurance received advances of
$122.5 million from the FHLB of Chicago and made repayments of $166.1 million under the spread lending program in 2023.
United Insurance received advances of $334.8 million and made repayments of $135.7 million from the FHLB of Chicago in
2022 under the spread lending program.

When a funding agreement is issued, United Insurance is then required to post collateral in the form of eligible securities
including mortgage-backed, government, and agency debt instruments for each of the advances that are entered. The fair value
of the collateral pledged must be maintained at certain specified levels above the borrowed amount, which can vary depending
on the assets pledged. If the fair value of the collateral declines below these specifieff d levels of the amount borrowed, United
Insurance would be required to pledge additional collateral or repay outstanding borrowings. Upon any event of default by
United Insurance, the FHLB’s recovery on the collateral is limited to the amount of United Insurance’s liability under the
funding agreements to the FHLB of Chicago.

United Insurance’s liability under the funding agreements with the FHLB of Chicago, the amount of collateral pledged under
such agreements and FHLB of Chicago common stock owned by United Insurance at December 31, 2023 and 2022 is presented
below.

DOLLARS IN MILLIONS

2023

2022

Liability under Funding Agreements......................................................................................................... $

557.4

601.0

Fair Value of Collateral Pledged ...............................................................................................................
FHLB of Chicago Common Stock Owned at Cost....................................................................................

629.3
16.6

744.6
17.5

Universarr

l Lifei

-typtt

e Policyhc oldell

r Account Balances

The Company’s weighted-average crediting rate for Universal Life-type Policyholder Account Balances was 5.1% as of
December 31, 2023 and 2022. Guaranteed minimum benefit amounts in excess of the current account balances for these
contracts were $294.1 million and $311.4 million as of December 31, 2023 and 2022, respectively. The cash surrender value of

139

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 22. POLICYHOLDER OBLIGATIONS (Continued)

the Company’s policyholder obligations for these contracts were $98.2 million and $100.0 million as of December 31, 2023 and
2022, respectively.

NOTE 23. DEBT

Amended and Extendeddd Credit Agreg ement and Term Loan Facility

city by an additional $200.0 million for a total

Financial covenants within the agreement limit the Company from accessing the maximum capacity. The amount availabla e as
of December 31, 2023 was $393.0 million. There were no outstanding borrowings under the credit agreement at either
December 31, 2023 or December 31, 2022.

The Company incurred $2.2 million of debt issuance costs in relation to the amended agreement. As of December 31, 2023
there were $1.7 million of remaining unamortized costs under the credit agreement, which will be amortized under the
remaining term of the credit agreement.

Long-term Debt

Total amortized cost of Long-term Debt outstanding at December 31, 2023 and 2022 was:

(Dollars in Millions)

Senior Notes:............................................................................................................................................

4.350% Senior Notes due Februar
2.400% Senior Notes due September 30, 2030...................................................................................

ry 15, 2025...................................................................................... $

3.800% Senior Notes due Februar
5.875% Fixed-Rate Reset Junior Suboru

ry 23, 2032......................................................................................
dinated Debenturt es due 2062.....................................................

Dec 31,
2023

Dec 31,
2022

449.6
397.0

396.0
146.6

449.3
396.6

395.5
145.5

Total Long-term Debt Outstanding .......................................................................................................... $ 1,389.2

$ 1,386.9

4.350% Senior Notes Due 2025

Kemper has $450.0 million aggregate principal of 4.350% senior notes due Februarr
Kemper initially issued $250.0 million of the notes in Februarr
ry of 2015 and issued an additional $200.0 million of the notes in
June of 2017. The additional notes are fungible with the initial notes issued in 2015, and together are treated as part of a single
series for all purpos
es under the indenturt e governing the 2025 Senior Notes. The 2025 Senior Notes are unsecured and may be
redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices.

ry 15, 2025 (the “2025 Senior Notes”).

2.400% Senior Notes Due 2030

Kemper has $400.0 million aggregate principal of 2.400% senior notes due September 30, 2030 (the “2030 Senior Notes”). The
net proceeds of issuance were $395.8 million, net of discount and transaction costs for an effeff ctive yield of 2.52%. The 2030
Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time, at Kemper’s option, at
specified redemption prices.

3.800% Senior Notes Due 2032

ry 15, 2022, Kemper offeff

On Februar
2032 (the “2032 Senior Notes”). The net proceeds of issuance were $395.1 million, net of discount and transaction costs for an
effeff ctive yield of 3.950%. The 2032 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time
to time, at Kemper’s option, at specifieff d redemption prices.

red and sold $400.0 million aggregate principal of 3.800% senior notes due Februarr

ry 23,

140

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 23. DEBT (Continued)

In anticipation of the issuance of the 2032 Senior Notes and for risk management purpos
es, the Company entered into a
derivative transaction to hedge the risk of changes in the debt cash flows attributable to changes in the benchmark U.S.
Treasuryr
interest rate during the period leading up to the debt issuance (“Treasuryr Lock”). The effeff ctive portion of the gain on
the derivative instrument upon discontinuance was $5.9 million before taxes, and is reported as a component of Accumulated
Other Comprehensive (Loss) Income. Beginning with the issuance of the 2032 Senior Notes described in the preceding
paragraph, such gain is being amortized into earnings and reported in Interest and Other Expenses in the same periods that the
hedged items affeff ct earnings. Amortization, reported in Interest and Other Expenses, was $0.6 million for the year ended
December 31, 2023. The Company expects to reclassify $0.5 million of net gain on derivative instruments from AOCI to
earnings for the twelve months ended December 31, 2024 as interest expense on the debt is recognized.

5.875% Fixedii

-Rdd ate Reset Junior Subordinated Debentures Due 2062

dinated Debenturt es due March 15, 2062 (the “2062 Junior Debenturt es”). The net proceeds from issuance were

On March 10, 2022, Kemper issued $150.0 million aggregate principal amount of 5.875% Fixed-Rate Reset Junior
Suboru
$144.7 million, net of discount and transaction costs. The 2062 Junior Debenturt es will bear interest from and including the date
of original issue to, but excluding, March 15, 2027 (the “First Reset Date”) at the fixed rate of 5.875% per annum. The interest
rate on the First Reset Date, and subsu equent Reset Dates, will be equal to the Five-Year Treasuryr Rate as of the most recent
Reset Date plus 4.140% to be reset on each Reset Date. Interest is due quarterly in arrears beginning on June 15, 2022. The
Company has the option to defer interest payments for one or more optional deferral periods of up to five consecutive years,
provided that no optional deferral period shall extend beyond March 15, 2062, or any earlier accelerated maturity date arising
from an event of default or any earlier redemption of the 2062 Junior Debenturt es.

The 2062 Junior Debenturt es are unsecured and may be redeemed in whole or in part on the First Reset Date or any time
thereafteff
interest.

r, at a redemption price equal to the principal amount of the debenturt es being redeemed plus any accruer d and unpaid

Short-term Debt

Kemper’s subsu idiaries, United Insurance, Trinity Universal Insurance Company (“Trinity”) and American Access Casualty
Company (“AAC”), are members of the FHLBs of Chicago, Dallas and Chicago, respectively. Alliance United Insurance
Company (“Alliance”) was a member of the FHLB of San Francisco until it surrendered all Califorff nia licenses on January 30,
2023, and ceased to exist as an insurance company. As a requirement of membership in the FHLBs, United Insurance, Trinity,
and AAC maintain a certain level of investment in FHLB stock. The Company periodically uses short-term FHLB borrowings
for cash management and risk management purpor
program. The Company received advances and made repayments of $0.0 million, $81.0 million and $85.0 million for the years
ended December 31, 2023, 2022 and 2021, respectively, for cash and risk management purpos
es. There were no short-term debt
advances from the FHLBs of Chicago or Dallas outstanding at December 31, 2023 or December 31, 2022. For information on
United Insurance’s funding agreement with the FHLB of Chicago in connection with the spread lending program, see Note 22,
“Policyholder Obligations,” to the Consolidated Financial Statements.

ses, in addition to long-term FHLB borrowings for the spread lending

Interest Expex nse and Interest Paid

Interest Expense, including facility fees, accretion of discount, amortization of premium and amortization of issuance costs, was
$56.1 million, $54.7 million and $43.6 million for the years ended December 31, 2023, 2022 and 2021 respectively. Interest
paid, including facility fees, was $54.5 million, $51.5 million and $43.9 million for the years ended December 31, 2023, 2022
and 2021 respectively.

NOTE 24. LEASES

The Company leases certain offiff ce space under non-cancelable operating leases, with initial terms typically ranging from one to
fifteen years, along with options that permit renewals for additional periods. The Company also leases certain vehicles and
equipment under non-cancelable operating leases, with initial terms typically ranging from one to five years. Minimum rent is
expensed on a straight-line basis over the term of the lease.

141

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 24. LEASES (Continued)

The following tabla e presents operating lease right-of-use assets and lease liabia lities.

(Dollars in Millions)
Operating Lease Right-of-Use Assets............................................................................................ $
Operating Lease Liabilities ............................................................................................................

Dec 31, 2023
38.4
62.3

Dec 31, 2022
45.1
72.6

Lease expenses are primarily included in insurance expenses in the Consolidated Statements of Loss. Additional information
regarding the Company’s operating leases for the year ended December 31, 2023 and 2022 is presented below.

(Dollars in Millions)
Lease Cost:

Operating Lease Cost ..................................................................................................................

Variable Lease Cost.....................................................................................................................
Short-Term Lease Cost1 ..............................................................................................................
Total Lease Expense ...................................................................................................................... $

Less: Short-Term Lease Cost.........................................................................................................
Total Lease Cost............................................................................................................................. $
1 Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets.

2023

2022

15.7

3.2

0.3
19.2

—

19.2

21.3

0.3

3.8
25.4

0.1

25.3

The Company incurred expenses of $18.0 million for the year ended December 31, 2023, associated with lease impairments and
other related costs. The Company had no expenses during the year ended December 31, 2022 and 2021 associated with lease
impairments and other related costs.

Othett

r Infon rmation on Operating Leases

Significant judgments and assumptions for determining lease asset and liabia lity at December 31, 2023 and 2022 are presented
below.

Weighted-average Remaining Lease Term - Operating Leases.....................................................
Weighted-average Discount Rate - Operating Leases ...................................................................

2023
5.5 years
4.3 %

2022
5.6 years
3.6 %

Most of the Company’s leases do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate
based on the information availabla e at the commencement date to determine its lease payments’ present value.

Future minimum lease payments under operating leases at December 31, 2023 are presented below.

(Dollars in Millions)
2024 ........................................................................................................................................................... $
2025 ...........................................................................................................................................................
2026 ...........................................................................................................................................................
2027 ...........................................................................................................................................................
2028 ...........................................................................................................................................................
2029 and Thereafteff
r...................................................................................................................................
Total Future Payments............................................................................................................................... $
Less: Discount ...........................................................................................................................................
Present Value of Minimum Lease Payments............................................................................................. $

As of December 31, 2023, the Company did not have any finance leases.

20.4
15.5
9.4
7.2
4.4
15.2
72.1
9.8
62.3

142

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 25. CATASTROPHE REINSURANCE

Catastrophes and natural disasters are inherent risks of the property and casualty insurance business. These catastrophic events
and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and
winter storms. Such events result in insured losses that are, and will continue to be, a material factor in the results of operations
and financial position of the Company’s property and casualty insurance companies. Further, because the level of these insured
losses occurring in any one year cannot be accurately predicted, these losses may contribute to material year-to-year
fluctuations in the results of operations and financial position of these companies. Specificff
likely to occur at certain times within the year than others. This factor adds an element of seasonality to property and casualty
insurance claims. The Company has adopted the industry-r wide catastrophe classifications of storms and other events
promulgated by the Insurance Services Offiff ce (“ISO”) to track and report losses related to catastrophes. ISO classifies a disaster
as a catastrophe when the event causes $25.0 million or more in direct insured losses to property and affeff cts a significant
number of policyholders and insurers. ISO-classified catastrophes are assigned a unique serial number recognized throughout
the insurance industry.r The discussions that follow utilize ISO’s definition of catastrophes.

types of catastrophic events are more

The Company manages its exposure to catastrophes and other natural disasters through a combination of geographical
diversificff ation, restrictions on the amount and location of new business production in certain regions, and reinsurance. To limit
its exposures to catastrophic events, the Company maintains a catastrophe reinsurance program for the property and casualty
insurance companies. In 2023, the property business written through the Life segment was included in the catastrophe
reinsurance program. Coverage for the catastrophe reinsurance program is provided in various layers through multiple excess of
loss reinsurance contracts and an annual aggregate excess property catastrophe reinsurance contract.

Coverage on individuad l catastrophes provided under the excess of loss reinsurance contracts effeff ctive January 1, 2023 to
December 31, 2023 is provided in various layers as presented below.

DOLLARS IN MILLIONS
Retained ........................................................................................................................... $
1st Layer of Coverage......................................................................................................
2nd Layer of Coverage.....................................................................................................
3rd Layer of Coverage .....................................................................................................
4th Layer of Coverage .....................................................................................................

Catastrophe Losses and
LAE

In Excess of

— $

50.0
150.0
0
295.0

Up to

50.0
150.0
250.0
295.0
325.0

Percentage
of Coverage
— %

95.0
95.0
95.0
95.0

Coverage on individuad l catastrophes provided under the excess of loss reinsurance contracts effeff ctive January 1, 2022 to
December 31, 2022 is provided in various layers as presented below.

Catastrophe Losses and
LAE

In Excess of

— $

50.0
150.0
0
325.0

Up to

50.0
150.0
250.0
325.0
350.0

Percentage
of Coverage
— %

95.0
95.0
95.0
95.0

Coverage on individuad l catastrophes provided under the excess of loss reinsurance contracts effeff ctive January 1, 2021 to
December 31, 2021 is provided in various layers as presented below.

Catastrophe Losses and
LAE

In Excess of

— $

50.0
150.0
0

Up to

50.0
150.0
250.0
275.0

Percentage
of Coverage
— %

95.0
95.0
95.0

143

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 25. CATASTROPHE REINSURANCE (Continued)

In the event that the incurred catastrophe losses and LAE covered by the catastrophe reinsurance programs presented in the
three preceding tabla es exceed the retention for that particular layer, each of the programs allow for one reinstatement of such
coverage. In such an instance, the Company is required to pay a reinstatement premium to the reinsurers to reinstate the full
amount of reinsurance availabla e under such layer.

The aggregate property catastrophe reinsurance contract was discontinued in 2023.

Coverage provided under the 2022 aggregate property catastrophe reinsurance contract is summarized below.

Aggregate Catastrophe
Losses and LAE

DOLLARS IN MILLIONS
Retained .................................................................................................................................................. $
Coverage .................................................................................................................................................

In Excess of

— $

65.0

Up to

65.0

115.0

Coverage provided under the 2021 aggregate property catastrophe reinsurance contract is summarized below.

Aggregate Catastrophe
Losses and LAE

In Excess of

— $

60.0

Up to

60.0

110.0

The catastrophe reinsurance in 2023, 2022 and 2021 for the property and casualty insurance companies also included
reinsurance coverage from the Florida Hurricane Catastrophe Fund (“FHCF”) for hurricane losses in Florida at retentions lower
than those described above. The Life Insurance segment also purchases reinsurance from the FHCF for hurricane losses in
Florida.

Reinsurance premiums for the Company’s catastrophe reinsurance programs and the FHCF Program reduced earned premiums
for the years ended December 31, 2023, 2022 and 2021 by the following:

DOLLARS IN MILLIONS
Specialty Property & Casualty Insurance ..............................................................................
Life Insurance ........................................................................................................................
Non-Core Operations .............................................................................................................
Total Ceded Catastrophe Reinsurance Premiums.................................................................. $

2023

2022

2021

6.1
0.7
9.5
16.3

8.9
0.6
22.5
32.0

7.0
1.3
22.0
30.3

The Company did not pay any reinstatement premiums in 2023, 2022, or 2021.

Catastrophe losses and LAE (including reserve development), net of reinsurance recoveries, for the years ended December 31,
2023, 2022 and 2021 by business segment are presented below.

DOLLARS IN MILLIONS
Specialty Property & Casualty Insurance ..............................................................................
Life Insurance ........................................................................................................................
Non-Core Operations .............................................................................................................
Total Catastrophe Losses and LAE........................................................................................ $

2023

2022

2021

32.2
3.0
52.4
87.6

23.6
3.3
48.3
75.2

16.0
12.9
73.5
102.4

The Company had no material recoveries under its catastrophe reinsurance treaties for the years ended December 31, 2023 and
2022.

Total prior year catastrophe loss and LAE reserves, net of reinsurance recoverabla es, developed favorably by $9.1 million in
2023, favorably by $4.1 million in 2022 and favorably by $5.4 million in 2021. The Specialty Property & Casualty Insurance
segment reported favorable catastrophe reserve development of $2.3 million, adverse development of $0.6 million, and adverse
development of $0.3 million in 2023, 2022 and 2021, respectively. The Life Insurance segment reported adverse catastrophe

144

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 25. CATASTROPHE REINSURANCE (Continued)

reserve development of $0.8 million, adverse development of $1.5 million and favorable development of $0.1 million in 2023,
2022 and 2021, respectively. The Non-Core Operations reported favorable catastrophe reserve development of $7.6 million,
favorable development of $6.2 million and favorable development of $5.6 million in 2023, 2022 and 2021, respectively.

The process of estimating and establa ishing reserves for catastrophe losses is inherently uncertain and the actual ultimate cost of
a claim, net of actual reinsurance recoveries, may vary materially from the estimated amount reserved. The Company’s
estimates of direct catastrophe losses are generally based on inspections by claims adjud sters and historical loss development
experience for areas that have not been inspected or for claims that have not yet been reported. The Company’s estimates of
direct catastrophe losses are based on the coverages provided by its insurance policies. The Company’s homeowners and
dwelling insurance policies do not provide coverage for losses caused by floods, but generally provide coverage for physical
damage caused by wind or wind-driven rain. Accordingly, the Company’s estimates of direct losses for homeowners and
dwelling insurance do not include losses caused by flood. Depending on the policy, automobile insurance may provide
coverage for losses caused by flood. Estimates of the number and severity of claims ultimately reported are influenced by many
variables, including, but not limited to, repair or reconstrucr
quantifyff and will influence the final amount of claim settlements. All these factors, coupled with the impact of the availabia lity
of labor
and material on costs, require significant judgment in the reserve setting process. A change in any one or more of these
a
factors is likely to result in an ultimate net claim cost different from the estimated reserve. The Company’s estimates of indirect
losses from wind pools and joint underwriting associations are based on a variety of factors, including, but not limited to, actual
or estimated assessments provided by or received from such entities, insurance industryr estimates of losses, and estimates of the
Company’s market share in the assessabla e states. Actual assessments may differ materially from these estimated amounts.

tion costs and determination of cause of loss that are difficult to

NOTE 26. OTHER REINSURANCE

In addition to the reinsurance programs described in Note 25, “Catastrophe Reinsurance,” to the Consolidated Financial
Statements, Kemper’s insurance subsu idiaries utilize other reinsurance arrangements to limit their maximum loss, provide
greater diversificff ation of risk and to minimize exposures on larger risks. The ceding of insurance does not discharge the primaryr
liabia lity of the original insurer. Accordingly, insurance reserve liabilities are reported gross of any estimated recovery from
reinsurers in the Consolidated Balance Sheets. Amounts recoverabla e from reinsurers are estimated in a manner consistent with
the insurance reserve liability and are included in Other Receivables in the Consolidated Balance Sheets. Reinsurance
Recoverabla es were $86.5 million and $99.6 million at December 31, 2023 and 2022, respectively, of which $34.1 million and
$47.3 million was related to short-duration policies, respectively, and $52.4 million and $52.3 million related to long-duration
policies, respectively.

Earned Premiums ceded on long-duration and short-duration policies were $32.7 million, $42.7 million and $36.1 million for
the years ended December 31, 2023, 2022 and 2021, respectively, of which $16.3 million, $32.0 million and $30.3 million,
respectively, was related to catastrophe reinsurance. See Note 25, “Catastrophe Reinsurance,” to the Consolidated Financial
Statements for additional information regarding the Company’s catastrophe reinsurance programs. Certain insurance
subsu idiaries assume business from other insurance companies and involuntaryr pools. Earned Premiums assumed on long-
duration and short-duration policies were $42.9 million, $41.4 million and $56.7 million for the years ended December 31,
2023, 2022 and 2021, respectively.

Trinity and Capia tol County Mutual Fire Insurance Company (“Capia tol”) are parties to a quota share reinsurance agreement
for ceded losses for dwelling coverage.
whereby Trinity assumes 100% of the business written by Capia tol, subju ect to a cap,a
Earned Premiums assumed by Trinity from Capia tol were $10.4 million, $11.9 million and $17.3 million for the years ended
December 31, 2023, 2022 and 2021, respectively. Capia tol is a mutual insurance company and, accordingly, is owned by its
policyholders. Trinity and Old Reliabla e Casualty Company (“ORCC”), a subsu idiary of Capia tol, are parties to a quota share
reinsurance agreement whereby Trinity assumes 100% of the business written by ORCC, subju ect to a cap, for ceded losses for
dwelling coverage. Earned Premiums assumed by Trinity from ORCC were $2.7 million, $3.2 million and $4.7 million for the
years ended December 31, 2023, 2022 and 2021, respectively.

Five employees of the Company serve as directors of Capia tol’s five member board of directors. Nine employees of the
Company also serve as directors of ORCC’s nine member board of directors. Kemper’s subsu idiary, United Insurance, provides
claims and administrative services to Capia tol and ORCC. In addition, agents appointed by Kemper’s subsu idiary, The Reliabla e
Life Insurance Company, and who are employed by United Insurance, are also appointed by Capia tol and ORCC to sell property
insurance products for the Company’s Life Insurance segment. The Company also provides certain investment services to
Capia tol and ORCC.

145

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 27. INCOME TAXES

The tax effeff cts of temporaryrr differff ences that give rise to significant portions of the Company’s Net Deferred Income Tax Assets
and Deferred Income Tax Liabilities at December 31, 2023 and 2022 were:

LARS IN MILLIONS

Deferred Income Tax Assets:

Unearned Premium Reserves ................................................................................................................ $
Tax Capia talization of Policy Acquisition Costs ....................................................................................
Payroll and Employee Benefit Accruar
ls................................................................................................
Investments............................................................................................................................................
Net Operating Loss and Credit Carryforwards......................................................................................
Other ......................................................................................................................................................
Subtu otal....................................................................................................................................................
Valuation Allowance ...............................................................................................................................
Total Deferred Income Tax Assets ............................................................................................................
Deferred Income Tax Liabilities:

Insurance Reserves ................................................................................................................................
Deferred Policy Acquisition Costs ........................................................................................................
Life VIF and P&C Customer Relationships ..........................................................................................
Goodwill and Other Intangible Assets Acquired...................................................................................
Depreciable Assets ................................................................................................................................
Other ......................................................................................................................................................
Total Deferred Income Tax Liabilities.......................................................................................................
Net Deferred Income Tax Assets ............................................................................................................... $

2023

2022

54.0
46.3
34.8
103.4
114.6
32.2
385.3
(27.4)
357.9

12.7
124.3
3.2
32.6
19.3
6.0
198.1
159.8

70.8
45.9
32.8
152.2
49.7
22.6
374.0
—
374.0

24.9
133.3
3.7
36.9
35.7
10.5
245.0
129.0

Due to jurisdictional differences in which the Company operates, the consolidated net deferred tax asset of $159.8 million is
reported on the Consolidated Balance Sheets as a total deferred tax asset of $210.4 million and a deferred tax liability of
$50.6 million.

The evaluation of the recoverabia lity of the deferred tax asset and the need for a valuation allowance is based on the weight of all
availabla e positive and negative evidence. For the year ended December 31, 2023, a valuation of $27.4 million was recorded
against those deferred tax assets that were determined not to be more likely than not to be realized based on Management’s
assessment, an increase of $27.4 million from the year ended December 31, 2022 when no valuation allowance was recorded.

The expiration of federal net operating loss (“NOL”) and tax credit carryforwards and their related deferred income tax assets at
December 31, 2023 is presented below by year of expiration.

DOLLARS IN MILLIONS
Expiring in:

NOL
Carry-
forwards

Deferred
Tax Asset

2027....................................................................................................................................................... $
2028.......................................................................................................................................................
2040.......................................................................................................................................................

2041.......................................................................................................................................................
2042.......................................................................................................................................................
2043.......................................................................................................................................................
No Expiration ........................................................................................................................................

0.8
4.4
1.4

4.5
6.0
140.4
343.3

0.2
0.9
1.4

4.5
6.0
29.5
72.1

Total All Years .......................................................................................................................................... $

500.8

114.6

146

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 27. INCOME TAXES (Continued)

The carryforwards relate to general business and investment tax credits and federal NOL carryfr orff wards which the Company
expects to fully utilize prior to expiration.

There were no Unrecognized Tax Benefits at December 31, 2023, 2022 or 2021. The Company recognizes interest and
penalties, if any, related to unrecognized tax benefits in Income Tax Benefit (Expense). There were no liabilities for accruerr d
interest and penalties as of December 31, 2023, 2022 or 2021.

The statutt e of limitations related to Kemper and its eligible subsu idiaries’ consolidated Federal income tax returns is closed for
all tax years up to and including 2011 as well as 2018 and 2019. As a result of the Company filing amended federal income tax
returns, tax years 2012 and 2013 are under limited examination with respect to carryback adjud stments associated with the
amended returns. The statutt e of limitations related to tax years 2015, 2016, 2017 and 2018 has been extended to June 30, 2024.
Tax years 2020, 2021 and 2022 are subju ect to a statutt e of three years from the extended due dates of October 15, 2021, 2022
and 2023, respectively.

The expiration of the statutt e of limitations related to the various state income tax returns that Kemper and its subsu idiaries file
varies by state.

The components of Income Tax Benefit from Operations for the years ended December 31, 2023, 2022 and 2021 were:

DOLLARS IN MILLIONS
Current Income Tax Benefit (Expense) ................................................................................. $
Deferred Income Tax Benefit ................................................................................................
Income Tax Benefit................................................................................................................ $

2023

2022

4.0
70.8
74.8

(6.2) $
90.6
84.4

2021
122.7
2.9
125.6

Federal income tax refunds received, net of income taxes paid, were $107.7 million in 2023. Federal income taxes paid, net of
income tax refunds received, were $1.1 million, and $34.7 million in 2022 and 2021, respectively.

State income taxes paid, net of income tax refunds received, were $1.0 million in 2023. State income tax refunds received, net
of income taxes paid, were $0.4 million in 2022. State income taxes paid, net of income tax refunds received, were $3.3 million
in 2021.

No foreign income taxes were paid or refunded in 2023, 2022, or 2021.

A reconciliation of the Statutt oryr Federal Income Tax Benefit and Rate to the Company’s Effeff ctive Income Tax Benefit and
Rate from Operations for the years ended December 31, 2023, 2022 and 2021 is presented below.

LARS IN MILLIONS

Amount

Rate

Amount

Rate

Amount

Rate

2023

2022

2021

Statutt oryrr Federal Income Tax Benefit ........................ $
Tax-exempt Income and Dividends Received

Deduction ................................................................

Untaxed Earnings on Company-Owned Life
Insurance .....................................................................
Tax credits...................................................................
Stock-Based Compensation ........................................
Nondeductible Executive Compensation ....................
Goodwill impairment ..................................................
Expense on Transactions.............................................
Effeff ct of foreign operations ........................................
Change in valuation allowance ...................................
Other, Net....................................................................
Effeff ctive Income Tax Benefit ..................................... $

72.8

21.0 % $

77.9

21.0 % $

52.3

21.0 %

4.8

1.4

5.3

1.3

4.6

1.9

1.8
0.9
(0.1)
(0.5)
(1.8)
—
7.9
(7.9)
(1.1)
21.6 % $

8.0
6.5
(1.3)
(1.5)
—
(11.5)
—
—
1.0
84.4

2.1
1.7
(0.3)
(0.4)
—
(3.0)
—
—
0.3
22.7 % $

5.4
66.1
0.3
(2.7)
—
—
—
—
(0.4)
125.6

2.2
27.0
0.1
(1.1)
—
—
—
—
(0.2)
50.9 %

6.1
3.1
(0.3)
(1.8)
(6.3)
—
27.4
(27.4)
(3.6)
74.8

147

Kemper Corporation and Subsidiaries
Notes to the Consolidated Financial Statements

NOTE 27. INCOME TAXES (Continued)

Comprehensive Income Tax Benefit included in the Consolidated Financial Statements for the years ended December 31, 2023,
2022 and 2021 was:

DOLLARS IN MILLIONS
Income Tax Benefit (Expense):
Operations .............................................................................................................................. $
Unrealized (Appreciation) Depreciation on Securities ..........................................................
Tax Effeff cts from Postretirement Benefit Plans .....................................................................
Tax Effeff cts on changes in Discount Rate for Life Reserves..................................................
Tax Effeff cts from Cash Flow Hedge.......................................................................................
Comprehensive Income Tax Benefit ..................................................................................... $

2023

2022

2021

74.8
(50.3)
(12.4)
21.2
—
33.3

84.4
325.5
(4.0)
(289.9)
(1.2)
114.8

125.6
60.7
1.8
(47.9)
(0.1)
140.1

NOTE 28. COMMITMENTS AND CONTINGENCIES

tration, regulatoryr
In the ordinary course of its businesses, the Company is involved in legal proceedings including lawsuits, arbir
examinations, audits and inquiries. Based on currently availabla e information, the Company does not believe that it is reasonabla y
possible that any of its pending legal proceedings will have a material effeff ct on the Company’s Consolidated Financial
Statements and Notes to the Consolidated Financial Statements.

NOTE 29. RELATED PARTIES

As described in Note 26, “Other Reinsurance,” to the Consolidated Financial Statements, the Company has certain relationships
with Capia tol, a mutual insurance company that is owned by its policyholders.

148

Report of Independent Registered
Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Kemper Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Kemper Corporation and subsu idiaries (the "Company") as of
December 31, 2023 and 2022, the related consolidated statements of loss, comprehensive loss, shareholders' equity, and cash
flows, for each of the three years in the period ended December 31, 2023 and the related notes and the schedules listed in the
Index at Item 15 (collectively referred to as the "finff ancial statements"). We also have audited the Company’s internal control
over financial reporting as of December 31, 2023, based on criteria establa ished in Internal Controt
l — Integre ated Frameworkrr
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2023, in conforff mity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the Company maintained, in all material respects, effeff ctive internal control over financial
reporting as of December 31, 2023, based on criteria establa ished in Internal Controt
COSO.

l — Integre ated Frameworkrr (2013) issued by

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company changed its method of accounting, measurement, and
disclosure of long duration contracts effeff ctive January 1, 2023, using the modified retrospective method applied as of the
transition date of January 1, 2021, dued
Imprm ovements to the Accounting for Long Duration Contrat ctstt .

to adoption of ASU 2018-12, Financial Services - Insurance (TopiTT

c 944): Targeted

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effeff ctive internal control over
financial reporting, and for its assessment of the effeff ctiveness of internal control over financial reporting, included in the
accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Publu ic Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonabla e assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud, and whether effeff ctive internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedurd es to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedurd es to respond to those risks. Such procedurd es
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effeff ctiveness of internal control based on the assessed risk. Our audits also included
performing such other procedurd es as we considered necessary in the circumstances. We believe that our audits provide a
reasonabla e basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonabla e assurance regarding the
reliabia lity of financial reporting and the preparation of financial statements for external purpos
es in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedurd es
that (1) pertain to the maintenance of records that, in reasonabla e detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonabla e assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the

149

Report of Independent Registered
Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

company; and (3) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effeff ct on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effeff ctiveness to future periods are subju ect to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedurd es may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subju ective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.

Propertytt and casualtyll

insurance reserves – Refee r to Notes 2 and 6 to the consolidll atdd edtt

finaii ncial stattt emtt

ents

Critical Audit Matter Descripti

ion

The estimation of property and casualty insurance reserves for losses and loss adjud stment expenses (“property and casualty
insurance reserves”), including those claims that are incurred but not reported, requires significant judgment. Estimating
property and casualty insurance reserves is inherently uncertain as estimates are generally derived using a variety of actuat
rial
estimation techniques that are dependent on assumptions and expectations about future events, many of which are difficult to
quantify.ff The estimation process, particularly for claims with longer-tailed exposures that may not be discovered or reported
immediately, is an inherently subju ective exercise and modest changes in judgments and assumptions can materially impact the
valuation of these reserves.

Given the significant judgments made by management in estimating property and casualty insurance reserves, auditing property
and casualty insurance reserves required a high degree of auditor judgment and an increased extent of effoff
involvement of our actuarial specialists.

rt, including the

How the Critical Audit Matter Was Addrdd essed in the Audit

Our audit procedurd es related to property and casualty insurance reserves included the following, among others:

• We tested the effeff ctiveness of controls related to property and casualty insurance reserves, including those controls
related to the estimation of and management’s review of the property and casualty insurance reserves.

• We tested the underlying data, including historical claims, that served as the basis for the actuat
the inputs to the actuarial estimates were accurate and complete.

rial analyses to test that

• With the assistance of our actuarial specialists:

– We developed a range of independent estimates of the property and casualty insurance reserves and
compared our estimates to the recorded reserves.
– We compared our prior year estimates of expected incurred losses to actual experience during the most
recent year to identify potential bias in the Company’s determination of property and casualty insurance
reserves.

Fixeii d Maturitieii

s at Fair Value – Refee r to Notes 2, 10, and 13 to the consolidll atdd edtt

finaii ncial stattt emtt

ents

Critical Audit Matter Descripti

ion

Investments in fixed maturity securities classified as availabla e-for-sale are reported at fair value in the financial statements.
Fixed maturity securities without readily determinable market values are valued using significant unobservabla e inputs, such as
credit profileff

, credit spread and resulting market yield, which involve considerable judgment by management.

150

Report of Independent Registered
Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

Given management uses significant unobservabla e inputs to estimate the fair value of fixed maturity securities without readily
determinable market values, performing audit procedurd es to evaluate these inputs required a high degree of auditor judgment
and an increased extent of effoff

rt, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addrdd essed in the Audit

Our audit procedurd es related to the unobservabla e inputs used by management to estimate the fair value of fixed maturity
securities without readily determinable market values included the following, among others:

• We tested the effeff ctiveness of controls related to fixed maturity securities, including those controls related to the
determination of fair value.

• We evaluated management’s ability to accurately estimate fair value by comparing management’s historical estimates
to recent or subsu equent transactions, taking into account changes in market conditions.

• We evaluated the reasonabla eness of the models, methodologies, and unobservabla e inputs used by management to
estimate fair value.

• With the assistance of our fair value specialists, we compared management’s unobservabla e inputs to external sources,
and for a sample of the investments, developed independent estimates of the fair value and compared our estimates to the
Company’s estimates.

/s/ Deloitte & Touche LLP

Chicago, Illinois
ry 7, 2024
Februar

We have served as the Company’s auditor since 2002.

151

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not Applicable.

Item 9A.

Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, with participation of Kemper’s Chief Executive Offiff cer and Chief Financial Offiff cer, has
evaluated the effeff ctiveness of the Company’s disclosure controls and procedurd es (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period
covered by this report. Based on such evaluation, Kemper’s Chief Executive Offiff cer and Chief Financial Offiff cer have
concluded that, as of the end of such period, the Company’s disclosure controls and procedurd es are effeff ctive in ensuring that
information required to be disclosed by Kemper in reports that it files or submu
processed, summarized and reported, within the time periods specified by the SEC’s rules and forms, and accumulated and
communicated to the Company’s management, including Kemper’s Chief Executive Offiff cer and Chief Financial Offiff cer, as
appropriate to allow timely decisions regarding required disclosure.

its under the Exchange Act is recorded,

Changes in Internal Controls Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2023 that have materially
affeff cted, or are reasonabla y likely to materially affeff ct, the Company’s internal control over financial reporting.

Management Report on Internal Control Over Financial Reporting

We, as management of the Company, are responsible for establa ishing and maintaining adequate internal control over financial
reporting. Pursuant to the rules and regulations of the SEC, internal control over financial reporting is a process designed by, or
under the supeu rvision of,ff a company’s principal executive and principal financial offiff cers, or persons performing similar
functions, and effeff cted by the company’s board of directors, management and other personnel, to provide reasonabla e assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purpos
with generally accepted accounting principles and includes those policies and procedurd es that:

es in accordance

•

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company;

Provide reasonabla e assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and

Provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the company’s assets that could have a material effeff ct on the financial statements.

Management has evaluated the effeff ctiveness of its internal control over financial reporting as of December 31, 2023, based on
the control criteria establa ished in a report entitled Internal Contrott
Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that the Company’s
internal control over financial reporting is effeff ctive as of December 31, 2023.

issued in 2013 by the Committee of

l—In— tegre ated Framework,rr

The independent registered public accounting firm of Deloitte & Touche LLP, as auditors of the consolidated financial
statements of Kemper and its subsu idiaries, has issued an attestation report on the effeff ctiveness of management’s internal control
over financial reporting based on criteria establa ished in Internal Controt
Committee of Sponsoring Organizations of the Treadway Commission.

l—In— tegre ated Framework,rr

issued in 2013 by the

JOSEPH P. LACHER, JR.

/s/
Joseph P. Lacher, Jr.

Chairman of the Board, President and Chief Executive Offiff cer

Kemper Corporation

Februar

ry 7, 2024

EY T. CAMDEN

RR
/s/ BRADL
Bradley T. Camden
Senior Vice President and Interim Chief Financial Offiff cer

Kemper Corporation

152

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

The attestation report of the independent registered public accounting firm, Deloitte & Touche LLP, on the Company’s internal
control over financial reporting is included in Item 8 under the heading “Report of Independent Registered Publu ic Accounting
Firm,” and is incorporated herein by reference.

Item 9B.

Other Information.

None.

153

Item 10.

Directors, Executive Offiff cers and Corporate Governance.

PART III

The information required by this Item is incorporated herein by reference to the sections captioned “Director Biographies,”
rate Governance” in the Proxy Statement for
“Executive Offiff cers,” “Beneficff
Kemper’s 2024 Annual Meeting of Shareholders. Kemper plans to file such proxy statement within 120 days afteff
r
December 31, 2023, the end of Kemper’s fiscal year.

ial Ownership of Common Stock” and “Corporr

Kemper’s code of ethics applicable to its chief executive offiff cer, chief financial offiff cer and principal accounting offiff cer (“Code
of Ethics for Senior Financial Executives”) is posted in the “Governance” section of Kemper’s investor relations website,
investors.kemper.com. Kemper also intends to disclose any future amendments to, and any waivers from (though none are
anticipated), the Code of Ethics for Senior Financial Executives in the “Governance” section of its website.

Item 11.

Executive Compensation.

The information required by this Item is incorporated herein by reference to the sections captioned “Executive Compensation,”
“Director Compensation,” “HR & Compensation Committee Interlocks and Insider Participation,” and “Compensation
Committee Report” in the Proxy Statement for Kemper’s 2024 Annual Meeting of Shareholders. The Compensation Committee
Report to be included in such Proxy Statement shall be deemed to be furnished in this report and shall not be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act as a result of such furnishing in this Item 11.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is set forth in the tabla e below and incorporated herein by reference to the section
captioned “Ownership of Kemper Common Stock” in the Proxy Statement for Kemper’s 2024 Annual Meeting of Shareholders.

Equity Compensation Plan Information

Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights

Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights

Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
or Programs1

2,373,319

59.27

1,995,442

—
1,995,442

Plan Category
Equity Compensation Plans Approved by

Security Holders

Equity Compensation Plans Not Approved by

Security Holders

—
59.27
1 Includes 581,307 shares reserved for future grants based on performance results under the terms of outstanding PSU awards.

—
2,373,319

Total

Kemper’s 2023 Omnibus Plan permits various stock-based awards including, but not limited to, stock options, stock
appreciation rights, RSUs, and PSUs.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated herein by reference to the sections captioned “Related Person
Transactions” and “Director Independence” in the Proxy Statement for Kemper’s 2024 Annual Meeting of Shareholders.

Item 14.

Principal Accounting Fees and Services.

The information required by this Item is incorporated by reference to the section captioned “Independent Registered Publu ic
Accountant” in the Proxy Statement for Kemper’s 2024 Annual Meeting of Shareholders.

154

Item 15.

Exhibits, Financial Statement Schedules.

(a)a Documentstt

t
filed as part of this Repor

PART IV

1. Financial Statements. The consolidated balance sheets of Kemper and subsu idiaries as of December 31, 2023 and 2022, and

the consolidated statements of loss, comprehensive loss, cash flows and shareholders’ equity for the years ended
December 31, 2023, 2022 and 2021, together with the notes thereto and the report of Deloitte & Touche LLP thereon
appearing in Item 8 are included in this 2023 Annual Report.

2. Financial Statement Schedules. The following four financial statement schedules are included on the pages immediately
following the signature pages hereof.ff Schedules not listed here have been omitted because they are not applicable or not
material or the required information is included in the Consolidated Financial Statements.

Schedule I Investments Other Than Investments in Related Parties

Schedule II Parent Company Financial Statements

Schedule III Supplu

ementary Insurance Information

Schedule IV Reinsurance Schedule

The Report of Independent Registered Publu ic Accounting Firm, Deloitte & Touche LLP, with regards to the Financial
Statement Schedules listed above, is incorporated by reference to the Report of Independent Registered Publu ic Accountant
included in Item 8.

3. Exhibits. An Exhibit Index has been filed as part of this report on pages 156 through 159.

(b) Eb

xhEE ibits. Included in Item 15(a)(( 3 above

inFF ancial Statement Schedules. Included in Item 15(a)(( 2 above

Item 16. Form 10-K Summary

None.

155

The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers followed by an asterisk
(*) indicate exhibits that are management contracts or compensatory plans or arrangements.

Exhibit Index

Exhibit
Number
3.1

Exhibit Description

Restated Certificate of Incorporation

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

10.1

10.2

Amended and Restated Bylaws of Kemper
Corporation
Indenture, dated as of February 27, 2014, by and
between Kemper Corporation and The Bank of
New York Mellon Trust Company, N.A., as
Trustee

Second Supplemental Indenture, dated as of
February 24, 2015, to the Indenture, dated as of
February 27, 2014, between Kemper
Corporation and The Bank of New York Mellon
Trust Company, N.A., as Trustee (including the
form of 4.350% Senior Notes due 2025)
Indenture, dated as of September 29, 2020, by
and between the Company and U.S. Bank
National Association

First Supplemental Indenture, dated as of
September 29, 2020, by and between the
Company and U.S. Bank National Association
(Including the form of 2.400% Senior Notes due
2030)
Second Supplemental Indenture, dated as of
February 23, 2022, by and between the
Company and U.S. Bank Trust Company,
National Association (Including the form of
3.800% Senior Notes due 2032)
Third Supplemental Indenture, dated as of
March 10, 2022, by and between the Company
and U.S. Bank Trust Company, National
Association (Including the form of 5.875%
Fixed-Rate Reset Junior Subordinated
Debentures due 2062)
Form of Certificate Representing Shares of
Kemper Corporation Common Stock

Description of Securities Registered Under
Section 12 of the Exchange Act
Third Amended and Restated Credit Agreement,
dated as of March 15, 2022, by and among the
Company, as the borrower, the lenders and
issuing banks from time to time party thereto,
and JPMorgan Chase Bank, N.A., as
administrative agent

Advances and Security Agreement and
Addendum to Advances and Security
Agreement, effective as of December 31, 2013,
between Trinity Universal Insurance Company
and the Federal Home Loan Bank of Dallas

Incorporated by Reference

Form

File Number
001-18298

8-K

001-18298

Exhibit

Filing Date

3.2 August 8,
2014
3.1 December 6,
2022

8-K

001-18298

4.1 Februar

ry 27,

2014

Filed or
Furnished
Herewith

8-K

001-18298

4.2 Februar

ry 24,

2015

8-K

001-18298

8-K

001-18298

4.1 September

29, 2020

4.2 September

29, 2020

8-K

001-18298

4.2 Februar

ry 23,

2022

8-K

001-18298

4.2 March 10,
2022

10-K

001-18298

4.7 Februar

ry 20,

2019

8-K

001-18298

10.1 March 17,
2022

10.2 Februar

ry 14,

2014

10-K

001-18298

156

Exhibit
Number
10.3

10.4

10.5

10.6*

10.7*

10.8*

10.9*

10.10*

10.11*

10.12*

10.13*

10.14*

10.15*

Exhibit Description

Advances, Collateral Pledge, and Security
Agreement, dated as of March 18, 2014,
between United Insurance Company of America
and the Federal Home Loan Bank of Chicago
Advances and Security Agreement, effective
August 14, 2020, between Alliance United
Insurance Company and the Federal Home Loan
Bank of San Francisco

Advances, Collateral Pledge, and Security
Agreement, dated as of May 10, 2022, between
American Access Casualty Company and the
Federal Home Loan Bank of Chicago
Kemper Pension Equalization Plan, as amended
and restated effective August 25, 2011, as
amended by Amendment No. 2 effective
September 16, 2013

Kemper Supplemental Retirement Plan, as
amended and restated effective September 22,
2016

Kemper 2011 Omnibus Equity Plan, as amended
and restated effective February 8, 2017

Form of Stock Option and SAR Agreement for
Non-employee Directors, as of May 1, 2013,
under the Kemper 2011 Omnibus Equity Plan

Form of Deferred Stock Unit Agreement for
Non-employee Directors, as of May 1, 2013,
under the Kemper 2011 Omnibus Equity Plan

Form of Stock Option and SAR Agreement -
Installment-Vesting Form, as of February 4,
2014, under the Kemper 2011 Omnibus Equity
Plan

Form of Stock Option and SAR Agreement -
Installment-Vesting Form, as of February 7,
2017, under the Kemper 2011 Omnibus Equity
Plan

Form of Non-Qualified Stock Option and SAR
Award Agreement (Installment Vesting), as of
February 6, 2018, under the Kemper 2011
Omnibus Equity Plan
Kemper Executive Performance Plan, amended
and restated as of May 1, 2018

Form of individual Indemnification Agreements
between Kemper and its directors and executive
officers

10.16*

2020 Omnibus Plan

10.17*

Form of Non-Employee Director Restricted
Stock Unit Award Agreement as of May 5, 2020
under the 2020 Omnibus Equity Plan

Incorporated by Reference

Form

8-K

File Number
001-18298

Exhibit

Filing Date

10.1 March 21,
2014

Filed or
Furnished
Herewith

8-K/A

001-18298

10.1 August 20,
2020

8-K

001-18298

10.1 May 11, 2022

10-K

001-18298

10.3 Februar

ry 14,

2014

10-K

001-18298

10.5 Februar

ry 13,

2017

10-K

001-18298

10.17 Februar

ry 13,

2017

10-Q

001-18298

10.1 May 2, 2013

10-Q

001-18298

10.2 May 2, 2013

001-18298

10.24 Februar

ry 14,

2014

001-18298

10.31 Februar

ry 13,

2017

10-K

001-18298

10.39 Februar

ry 13,

2018

10-Q

001-18298

10.2

July 30, 2018

8-K

001-18298

10.1 Februar

ry 11,

2020

001-18298 Appendix
B

March 25,
2020
10.1 May 11, 2020

001-18298

Schedule
14A
8-K

157

Exhibit
Number
10.18*

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

Exhibit Description
Form of Non-Qualified Stock Option and SAR
Award Agreement (Cliff-Vesting) as of May 5,
2020 under the 2020 Omnibus Equity Plan

Form of Non-Qualified Stock Option and SAR
Award Agreement (Installment-Vesting) as of
May 5, 2020 under the 2020 Omnibus Equity
Plan

Form of Performance Share Unit Award
Agreement (Adjusted ROE) as of May 5, 2020
under the 2020 Omnibus Equity Plan

Form of Performance Share Unit Award
Agreement (Relative TSR) as of May 5, 2020
under the 2020 Omnibus Equity Plan

Form of individual change in control severance
agreements between Kemper and its executive
officers

Each of the agreements is identical except that
the multipliers for benefits related to bonus,
severance, life insurance and health insurance
are 150%, 3 years, 3 years and 36 months,
respectively, for the Chief Executive Offiff cer and
110%, 2 years, 2 years and 24 months,
respectively, for the other offiff cers.

Form of Non-Qualified Stock Option and SAR
Award Agreement (Cliff Vesting) as of
February 1, 2022 under the 2020 Equity
Omnibus Plan

Form of Non-Qualified Stock Option and SAR
Award Agreement (Installment Vesting) as of
February 1, 2022 under the 2020 Equity
Omnibus Plan

Form of Restricted Stock Unit Award
Agreement (Cliff Vesting) as of February 1,
2022 under the 2020 Equity Omnibus Plan

Form of Restricted Stock Unit Award
Agreement (Installment Vesting) as of February
1, 2022 under the 2020 Equity Omnibus Plan

Form of Performance Share Unit Award
Agreement (Adjusted ROE) as of February 1,
2022 under the 2020 Equity Omnibus Plan

Form of Performance Share Unit Award
Agreement (Relative TSR) as of February 1,
2022 under the 2020 Equity Omnibus Plan

Form of Special Equity Award Agreement as of
February 1, 2022 under the 2020 Omnibus
Equity Plan

10.30*

2023 Omnibus Plan

10.31*

Form of Non-Employee Director Restricted
Stock Unit Award Agreement as of May 2, 2023
under the 2023 Omnibus Plan

Incorporated by Reference

Form

8-K

File Number
001-18298

Exhibit

Filing Date

10.2 May 11, 2020

Filed or
Furnished
Herewith

001-18298

10.3 May 11, 2020

8-K

001-18298

10.6 May 11, 2020

8-K

001-18298

10.7 May 11, 2020

10-K

001-18298

10.42 Februar

ry 13,

2017

001-18298 Appendix
A

001-18298

March 22,
2023
10.1 August 7,
2023

Schedule
14A
10-Q

158

Exhibit
Number
10.32*

10.33*

10.34*

10.35*

10.36*

10.37*

18.1

31.1

31.2

32.1

32.2

97.1

101.1
101.2
101.3

101.4

101.5

101.6

Exhibit Description
Form of Non-Qualified Stock Option and SAR
Award Agreement (Cliff-Vesting) as of May 2,
2023 under the 2023 Omnibus Plan
Form of Non-Qualified Stock Option and SAR
Award Agreement (Installment-Vesting) as of
May 2, 2023 under the 2023 Omnibus Plan
Form of Restricted Stock Unit Award
Agreement (Cliff-Vesting) as of May 2, 2023
under the 2023 Omnibus Plan
Form of Restricted Stock Unit Award
Agreement (Installment-Vesting) as of May 2,
2023 under the 2023 Omnibus Plan
Form of Performance Share Unit Award
Agreement (Adjusted ROE) as of May 2, 2023
under the 2023 Omnibus Plan
Form of Performance Share Unit Award
Agreement (Relative TSR) as of May 2, 2023
under the 2023 Omnibus Plan
Preferability letter from Deloitte & Touche LLP
regarding change in accounting principle

Subsidiaries of Kemper Corporation
Consent of Deloitte & Touche LLP
Power of Attorney (included on the signature
page hereof)
Certification of Chief Executive Officer
Pursuant to SEC Rule 13a-14(a)
Certification of Chief Financial Officer Pursuant
to SEC Rule 13a-14(a)
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (furnished pursuant to Item
601(b)(32) of Regulation S-K)
Certification of Chief Financial Officer Pursuant
to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002 (furnished pursuant to Item 601(b)(32) of
Regulation S-K)
Kemper Corporation Policy on Recoupment of
Incentive Compensation
XBRL Instance
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation
Linkbase Document
XBRL Taxonomy Extension Labea
Document
XBRL Taxonomy Extension Presentation
Linkbase Document
XBRL Taxonomy Extension Definition
Linkbase Document

l Linkbase

Incorporated by Reference

Form

File Number

Exhibit

Filing Date

Filed or
Furnished
Herewith

10.2 August 7,
2023

10.3 August 7,
2023

10.4 August 7,
2023

10.5 August 7,
2023

10.6 August 7,
2023

10.7 August 7,
2023

X
X

X
X
X

159

POWER OF ATTORNEY

Each person whose signature appears below on the following page hereby appoints each of Joseph P. Lacher, Jr., President and
Chief Executive Offiff cer, Bradley T. Camden, Senior Vice President and Interim Chief Financial Offiff cer, and James A.
Alexander, Senior Vice President and Chief Accounting Offiff cer, so long as such individual remains an executive offiff cer of
Kemper Corporation, his or her truer
each such signatory, and with authority to file with the SEC, any and all amendments to this 2023 Annual Report of Kemper
Corporation, together with any and all exhibits thereto and other documents therewith, necessary or advisabla e to enable Kemper
Corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations, and requirements of
the SEC in respect thereof, which amendments may make such other changes in the 2023 Annual Report as the aforff esaid
attorney-in-fact executing the same deems appropriate.

attorney-in-fact with authority together or individually to execute in the name of

and lawfulff

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, Kemper Corporation has duly caused this
2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023 to be signed on its behalf by the undersigned,
thereunto duly authorized, on Februar

ry 7, 2024.

KEMPER CORPORATRR ION
(Registrant)

By:

JOSEPH P. LACHER, JR.

/s/
Joseph P. Lacher, Jr.

Chairman of the Board, President and Chief Executive Offiff cer

160

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of Kemper Corporation in the capaa

cities indicated on Februar

ry 7, 2024.

Signature

JOSEPH P. LACHER, JR.

/s/
Joseph P. Lacher, Jr.

/s/ BRADLEY T. CAMDEN
Bradley T. Camden

/s/

JAMES A. ALEXANDER

James A. Alexander

/s/ TERESA A. CANIAA DA

Teresa A. Canida

/s/ GEORGE N. COCHRANAA

George N. Cochran

/s/ KATHLEEN M. CRONIN
Kathleen M. Cronin

JASON N. GOREVIC

/s/
Jason N. Gorevic

/s/ LACY M. JOHNSON

Lacy M. Johnson

/s/ GERALD LADERMAN

Gerald Laderman

/s/ ALBERTO PARACCHINI

Alberto J. Paracchini

/s/ STUART B. PARKER

Stuart B. Parker

/s/ CHRISTOPHER B. SAROFIM
Christopher B. Sarofim

/s/ SUSANAA D. WHITING

Susan D. Whiting

Title
Chairman of the Board, President and Chief Executive Offiff cer
(Principal Executive Offiff cer)

Senior Vice President and Interim Chief Financial Offiff cer
(Principal Financial Offiff cer)

Senior Vice President and Chief Accounting Offiff cer
(Principal Accounting Offiff cer)

Director

161

KEMPER CORPORATRR ION AND SUBSIDIARIES
INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 2023
(Dollars in Millions)

SCHEDULE I

Amortized
Cost

Fair Value

Amount
Carried in
Balance Sheet

594.1
1,575.9
4.4

511.5
1,401.9
3.8

3,690.8
8.3
949.8
315.8
6,881.9

25.5
1.2
199.1
225.8

XXX.X
XXX.X
XXX.X
XXX.X
XXX.X
XXX.X

3,690.8
8.3
949.8
315.8
6,881.9

25.5
1.2
199.1
225.8

221.7
17.3
520.9
513.5
281.2
241.9
8,904.2

Fixed Maturities:

Bonds and Notes:

United States Government and Government Agencies and Authorities.............. $
States and Political Subdiu
visions .........................................................................
Foreign Governments...........................................................................................
Corporate Securities:

Other Bonds and Notes....................................................................................

Redeemable Preferff
red Stocks..........................................................................
Collateralized Loan Obligations......................................................................
Other Mortgage- and Asset-backed.................................................................
Total Investments in Fixed Maturities ...........................................................................
Equity Securities at Fair Value:

Preferff
red Stocks ........................................................................................................
Common Stocks ........................................................................................................
Other Equity Interests................................................................................................
Total Investments in Equity Securities ..........................................................................

4,046.8
9.0
973.6
362.0
7,565.8

25.5
1.2
199.1
225.8

Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed
Earnings......................................................................................................................
221.7
Alternative Energy Partnership Investments .................................................................
17.3
Short-term Investments..................................................................................................
520.9
Company-Owned Life Insurance...................................................................................
513.5
Loans to Policyholders...................................................................................................
281.2
Other Investments ..........................................................................................................
241.9
Total Investments........................................................................................................... $ 9,588.1

See Accompanying Report of Independent Registered Publu ic Accounting Firm.

KEMPER CORPORATRR ION
PARENT COMPANY BALANCAA E SHEETS
(Dollars in Millions)

SCHEDULE II

December 31,

2023

20221

ASSETS
Investments in Subsu idiaries ....................................................................................................................... $ 3,594.1
Fixed Maturities at Fair Value (Amortized Cost: 2023 – $177.4; 2022 - $122.5) ....................................
174.3
Equity Securities at Fair Value (Cost: 2023 - $11.6; 2022 - $39.3) ..........................................................
9.9
Short-term Investments..............................................................................................................................
180.2
Other Investments......................................................................................................................................
18.8
Cash ...........................................................................................................................................................
1.5
Other Receivabla es......................................................................................................................................
38.5
Current Income Taxes................................................................................................................................
33.9
Right-of-Use Assets...................................................................................................................................
7.7
Other Assets...............................................................................................................................................
32.5
Total Assets ............................................................................................................................................... $ 4,091.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Senior Notes Payabla e, 4.350% due 2025 (Fair Value: 2023 – $440.8; 2022 – $438.5)............................ $
Senior Notes Payabla e, 2.400% due 2030 (Fair Value: 2023 – $313.6; 2022 – $310.3)............................
Senior Notes Payabla e, 3.800% due 2032 (Fair Value: 2023 - $338.4; 2022 - $336.2) .............................
Fixed-Rate Reset Junior Suboru
2022 - $110.1)............................................................................................................................................
Current Income Tax Liability ....................................................................................................................
Deferred Income Tax Liability ..................................................................................................................
Liabilities for Benefit Plans .......................................................................................................................
Right-of-Use Liabilities .............................................................................................................................
Accruerr d Expenses and Other Liabilities....................................................................................................
Total Liabilities..........................................................................................................................................
Shareholders’ Equity:

146.6
—
119.5
28.1
23.3
26.3
1,586.4

dinated Debenturt es, 5.875% due 2062 (Fair Value: 2023 - $120.6;

449.6
397.0
396.0

$ 3,849.0
120.0
24.1
67.7
—
66.3
5.6
12.0
12.2
35.6
$ 4,192.5

449.3
396.6
395.5

145.5
—
49.1
35.4
24.4
26.1
1,521.9

Common Stock......................................................................................................................................
Additional Paid-in Capia tal.....................................................................................................................
Retained Earnings .................................................................................................................................
Accumulated Other Comprehensive Loss.............................................................................................
Total Shareholders’ Equity attributable to Kemper Corporation...............................................................
Noncontrolling Interest .........................................................................................................................
Total Shareholders’ Equity ........................................................................................................................
2,505.0
Total Liabilities and Shareholders’ Equity ................................................................................................ $ 4,091.4

6.4
1,845.3
1,014.3
(360.8)
2,505.2

6.4
1,812.7
1,366.4
(514.9)
2,670.6
—
2,670.6
$ 4,192.5

(0.2) $

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

See Accompanying Report of Independent Registered Publu ic Accounting Firm.

KEMPER CORPORATRR ION
PARENT COMPANY STATEMENTS OF LOSS
(Dollars in Millions)

For the Year Ended December 31,
20211
20221
2023

Net Investment Income .......................................................................................................... $
3.4
(Loss) Income from Change in Fair Value of Equity Securities ...........................................
10.0
Net Realized Investment (Losses) Gains ...............................................................................
10.6
Impairment Losses
—
Other Income .........................................................................................................................
—
Total Revenues.......................................................................................................................
24.0
Interest Expense .....................................................................................................................
32.0
Pension Settlement Expense ..................................................................................................
—
Other Operating Expenses .....................................................................................................
5.9
Total Operating Expenses ......................................................................................................
37.9
Loss before Income Taxes and Equity in Net Loss of Subsu idiaries ......................................
(13.9)
Income Tax Benefit (Expense) ..............................................................................................
(0.6)
Loss before Equity in Net Loss of Subsu idiaries.....................................................................
(14.5)
Equity in Net Loss of Subsu idiaries.........................................................................................
(109.2)
Net Loss .................................................................................................................................
(123.7)
Less: Net Loss attributable to Noncontrolling Interest ..........................................................
—
Net Loss attributable to Kemper Corporation........................................................................ $ (272.1) $ (286.6) $ (123.7)

8.6
(1.5)
(11.9)
(0.4)
—
(5.2)
56.7
70.2
6.1
133.0
(138.2)
28.4
(109.8)
(162.5)
(272.3)
(0.2)

16.6
(14.8)
3.0
(0.2)
1.1
5.7
52.6
—
6.6
59.2
(53.5)
14.0
(39.5)
(247.1)
(286.6)
—

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

See Accompanying Report of Independent Registered Publu ic Accounting Firm.

KEMPER CORPORATRR ION
PARENT COMPANY STATEMENTS OF COMPREHENSIVE LOSS
(Dollars in Millions)

Net Loss .................................................................................................................................................
Other Comprehensive Income:

Changes in Net Unrealized (Losses) Gains on Investment Securities:
Having No Credit Losses Recognized in Consolidated Statements of Loss:

For the Year Ended December 31,
20211
20221
2023
(272.3) $

(286.6) $

(123.7)

Securities Held by Subsu idiaries ..................................................................................................
Securities Held by Parent............................................................................................................

235.0
(0.6)

(1,535.7)
(2.6)

(230.4)
—

1.9

(2.0)

Having Credit Losses Recognized in Consolidated Statements of Loss:

Securities Held by Subsu idiaries

Reclassification Adjud stment for Amounts Included in Net Loss:

Unrecognized Postretirement Benefit Costs Arising During the Year:

Reclassification Adjud stment for Postretirement Benefit Costs Arising During the Year:

Subsu idiaries.................................................................................................................................
Parent ..........................................................................................................................................
Gains on Cash Flow Hedge...............................................................................................................
Change in Discount Rate on Future Life Policyholder Benefits.......................................................
Other Comprehensive Income (Loss) Before Income Taxes.................................................................
Income Tax (Expense) Benefit:

Changes in Net Unrealized (Losses) Gains on Investment Securities:
Having No Credit Losses Recognized in Consolidated Statements of Loss:

(0.5)

4.5
(0.1)

0.1
(7.4)

(0.3)
66.8
(0.2)
(101.7)
195.6

(12.8)
—

1.1
18.2

—
(0.4)
5.9
1,380.7
(143.7)

(49.5)
0.1

322.7
0.5

Having Credit Losses Recognized in Consolidated Statements of Loss:

Securities Held by Subsu idiaries ..................................................................................................

0.2

(0.4)

Reclassification Adjud stment for Amounts Included in Net Loss:

Unrecognized Postretirement Benefit Costs Arising During the Year:

Reclassification Adjud stments for Amounts Included in Net Loss:

Subsu idiaries.................................................................................................................................
Parent ..........................................................................................................................................
Changes in Gain on Cash Flow Hedges............................................................................................
Change in Discount Rate on Future Life Policyholder Benefits ......................................................
Income Tax (Expense) Benefit ..............................................................................................................
Other Comprehensive Income (Loss) ....................................................................................................
Total Comprehensive Loss ....................................................................................................................

(1.0)
0.1

—
1.3

0.2
(14.0)
(0.1)
21.2
(41.5)
154.1
(118.2)

2.7
—

(0.2)
(3.9)

—
0.1
(1.2)
(289.9)
30.4
(113.3)
(399.9)

Less: Total Comprehensive Loss attributable to Noncontrolling Interest .............................................
Total Comprehensive Loss attributable to Kemper Corporation...........................................................

(0.2)
(118.0) $

—
(399.9) $

(43.5)
(10.6)

0.6
(9.5)

—
0.1
0.5
228.5
(66.3)

48.4
—

0.4

9.1
2.2

(0.1)
2.5

—
—
(0.1)
(47.9)
14.5
(51.8)
(175.5)

—
(175.5)

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

See Accompanying Report of Independent Registered Publu ic Accounting Firm.

KEMPER CORPORATRR ION
PARENT COMPANY STATEMENTS OF CASH FLOWS
(Dollars in Millions)

Operating Activities:

Net Loss............................................................................................................................. $ (272.3) $ (286.6) $ (123.7)
Adjud stment Required to Reconcile Net (Loss) Income to Net Cash (Used in) Provided
by Operations:

r the Year Ended December 31,
20211
20221

2023

Equity in Net Loss (Income) of Subsu idiaries ...............................................................
Cash Dividends from Subsu idiaries...............................................................................
Net Realized Investment Losses (Gains) .....................................................................
Settlement Costs Related to Defined Benefit Pension Plan.........................................
Impairment Losses .......................................................................................................
Income (Loss) from Change in Fair Value of Equity and Convertible Securities .......
Other, Net.....................................................................................................................
Net Cash Provided by (Used in) Operating Activities...........................................................
Investing Activities:

Capia tal Contributed to Subsu idiaries...................................................................................
Proceeds from Sales, Calls and Maturities of Fixed Maturities ........................................
Proceeds from the Sales or Paydowns of Investments: .....................................................
Equity Securities .............................................................................................................
Purchases of Investments: .................................................................................................
Fixed Maturities ..............................................................................................................
Equity Securities .............................................................................................................
Net Purchases of Short-term Investments .........................................................................
Acquisition of Business.....................................................................................................
Other..................................................................................................................................
Net Cash (Used in) Provided by Investing Activities............................................................
Financing Activities:

Notes Payabla e Proceeds:

Proceeds from Issuance of 3.800% Senior Notes due Februar

ry 23, 2032

Issuance Fees from Issuance of 3.800% Senior Notes due Februarr
Proceeds from Issuance of 5.875% Fixed-Rate Reset Junior Subor
Debenturt es due 2062
Issuance Fees from Issuance of 5.875% Fixed-Rate Reset Junior Suboru
Debenturt es due 2062
Proceeds from Issuance of 2.400% Senior Notes due September 30, 2030
Issuance Fees from Issuance of 2.400% Senior Notes due September 30, 2030

ry 23, 2032
dinated

dinated

Repayments of Long-term Debt ........................................................................................
Proceeds from Shares Issued under Employee Stock Purchase Plan ................................
Common Stock Repurchases.............................................................................................
Dividends and Dividend Equivalents Paid ........................................................................
Other..................................................................................................................................
Net Cash (Used in) Provided by Financing Activities...........................................................
Net (decrease) increase in cash ..............................................................................................
Cash, Beginning of Year........................................................................................................
Cash, End of Year .................................................................................................................. $

162.5
320.8
11.9
70.2
0.4
1.5
(30.6)
264.4

247.1
25.3
(3.0)
—
0.2
14.8
(48.9)
(51.1)

(181.5)
50.8

(537.8)
0.1

109.2
170.3
(10.6)
—
—
(10.0)
(35.3)
99.9

(36.5)
181.3

14.8

71.9

28.5

—
(2.1)
(112.2)
—
(23.2)
(253.4)

(40.3)
(5.6)
138.9
—
(3.1)
(375.9)

—
—

—

—
—
—
—
4.3
—
(79.6)
(0.5)
(75.8)
(64.8)
66.3
1.5

396.3
(1.2)

145.6

(0.9)
—
—
—
4.9
—
(79.7)
0.6
465.6
38.6
27.7
66.3

—
(48.7)
411.3
(370.9)
—
165.0

—
—

—

—
—
—
(50.0)
5.4
(161.7)
(80.6)
3.7
(283.2)
(18.3)
46.0
27.7

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

See Accompanying Report of Independent Registered Publu ic Accounting Firm.

KEMPER CORPORATRR ION
FINANCIAL INFORMATION OF KEMPER CORPORATRR ION
NOTES TO FINANCIAL INFORMATION
(Dollars in Millions)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial information of Kemper Corporation (“Kemper” or the “Parent Company”) should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included in Item 8 of this Form 10-K. Kemper’s subsu idiaries are
accounted for using the equity method of accounting. Equity in Net Loss of Subsu idiaries of these subsu idiaries is presented on
the Statements of Operations as Equity in Net Loss of Subsu idiaries.

NOTE 2. GUARANTEES

ry 23, 2022, Kemper issued a notice of redemption for the entire $275.0 million aggregate principal outstanding of

On Februar
the 2022 Senior Notes at a redemption price equal to 100% of their principal, plus accruer d and unpaid interest on the
redemption date. On March 25, 2022, Kemper completed the redemption, and the 2022 Senior Notes were repaid in full. The
Company recognized a Loss from Early Extinguishment of Debt of $3.7 million in the first quarter of 2022 which is reflected in
the Consolidated Statements of Loss.

The Company used the proceeds received from Kemper’s 2032 Senior Notes offeff
“3.800% Senior Notes Due 2032” in the Debt disclosure, Note 23 for additional information regarding the debt issuance.

ring to repay the 2022 Senior Notes. See

On July 1, 2022, Kemper executed an indefinite agreement with its subsu idiary, Kemper Bermuda Ltd, which requires Kemper
to contribute up to $300.0 million in contributed capia tal to maintain its minimum Enhanced Capia tal Requirement (“ECR”) as
required by the Bermuda Monetary Authority as a Class C insurer. As of December 31, 2023 and 2022, Kemper had
contributed $40.0 million and $5.0 million, respectively, under this agreement.

NOTE 3. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Kemper received $385.6 million and $300.1 million in non-cash dividends from subsu idiaries in 2023 and 2022, respectively.
Kemper made non-cash capia tal contributions of $336.5 million and $156.3 million to subsu idiaries in 2023 and 2022,
respectively.

NOTE 4. LEASES

Kemper leases certain offiff ce space for its current and former corporate headquarters under non-cancelable operating leases.

The following tabla e presents operating lease Right-of-Uff

se (“ROU”) assets and lease liabia lities at December 31, 2023 and 2022.

DOLLARS IN MILLIONS
Operating Lease Right-of-Use Assets.................................................................................. $
Operating Lease Liabilities..................................................................................................

2023

2022

7.7
23.3

12.2
24.4

emental cash flow information related to Kemper’s operating leases for the year-ended December 31, 2023 and

Supplu
December 31, 2022 respectively are presented follows.

DOLLARS IN MILLIONS
Operating Cash Flows from Operating Leases (Fixed Payments)....................................... $
Operating Cash Flows from Operating Leases (Liabia lity Reduction) .................................
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities..............

2023

2022

5.8
4.8
—

2.4
1.4
—

KEMPER CORPORATRR ION
FINANCIAL INFORMATION OF KEMPER CORPORATRR ION
NOTES TO FINANCIAL INFORMATION
(Dollars in Millions)

NOTE 4. LEASES (Continued)

Significant judgments and assumptions for determining lease asset and liabia lity as December 31, 2023 and December 31, 2022
respectively are presented below.

DOLLARS IN MILLIONS
Weighted-average Remaining Lease Term - Operating Leases ..........................................

Weighted-average Discount Rate - Operating Leases .........................................................

2023

2022

10.0 years

11.0 years

4.1 %

4.0 %

Kemper’s leases do not provide an implicit rate. Accordingly, Kemper uses its incremental borrowing rate based on the
information availabla e at the commencement date in determining the present value of its lease payments.

Future minimum operating lease payments at December 31, 2023 were:

LARS IN MILLIONS

2024 ........................................................................................................................................................... $
2025 ...........................................................................................................................................................
2026 ...........................................................................................................................................................
2027 ...........................................................................................................................................................
2028 ...........................................................................................................................................................
2028 and Thereafteff
r ..................................................................................................................................
Total Future Payments............................................................................................................................... $
Less Discount ............................................................................................................................................
Present Value of Minimum Lease Payments............................................................................................. $

Operating
Leases

2.9
2.6
2.6
2.7
2.8
14.8
28.4
5.1
23.3

NOTE 5. DEBT

4.350% Senior Notes Due 2025

Kemper has $450.0 million aggregate principal of 4.350% senior notes due Februarr
Kemper initially issued $250.0 million of the notes in Februarr
ry of 2015 and issued an additional $200.0 million of the notes in
June of 2017. The additional notes are fungible with the initial notes issued in 2015, and together are treated as part of a single
es under the indenturt e governing the 2025 Senior Notes. The 2025 Senior Notes are unsecured and may be
series for all purpos
redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices.

ry 15, 2025 (the “2025 Senior Notes”).

2.400% Senior Notes Due 2030

3.800% Senior Notes Due 2032

ry 15, 2022, Kemper offeff

red and sold $400.0 million aggregate principal of 3.800% senior notes due Februarr

ry 23,

KEMPER CORPORATRR ION
FINANCIAL INFORMATION OF KEMPER CORPORATRR ION
NOTES TO FINANCIAL INFORMATION
(Dollars in Millions)

NOTE 5. DEBT (Continued)

Treasuryr
interest rate during the period leading up to the debt issuance (“Treasuryr Lock”). The effeff ctive portion of the gain on
the derivative instrument upon discontinuance was $5.9 million before taxes, and is reported as a component of Accumulated
Other Comprehensive Loss. Beginning with the issuance of the 2032 Senior Notes described in the preceding paragraph, such
gain is being amortized into earnings and reported in Interest and Other Expenses in the same periods that the hedged items
affeff ct earnings. Amortization, reported in Interest and Other Expenses, was $0.6 million for the year ended December 31, 2023.
The Company expects to reclassify $0.5 million of net gain on derivative instruments from AOCI to earnings for the twelve
months ended December 31, 2024 as interest expense on the debt is recognized.

5.875% Fixedii

-Rdd ate Reset Junior Subordinated Debentures Due 2062

dinated Debenturt es due March 15, 2062 (the “2062 Junior Debenturt es”). The net proceeds from issuance were

rate on the First Reset Date, and subsu equent Reset Dates, will be equal to the Five-Year Treasuryr Rate as of the most recent
Reset Date plus 4.140% to be reset on each Reset Date. Interest is due quarterly in arrears beginning on June 15, 2022. The
Company has the option to defer interest payments for one or more optional deferral periods of up to five consecutive years,
provided that no optional deferral period shall extend beyond March 15, 2062, or any earlier accelerated maturity date arising
from an event of default or any earlier redemption of the 2062 Junior Debenturt es.

The 2062 Junior Debenturt es are unsecured and may be redeemed in whole or in part on the First Reset Date or any time
thereafteff
interest.

r, at a redemption price equal to the principal amount of the debenturt es being redeemed plus any accruer d and unpaid

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S

KEMPER CORPORATRR ION
REINSURANCAA E SCHEDULE
(Dollars in Millions)

SCHEDULE IV

Gross
Amount

Ceded to
Other
Companies

Assumed
from Other
Companies

Net
Amount

Percentage
of Amount
Assumed to
Net

Year Ended December 31, 2023
Life Insurance in Force......................................................... $ 19,750.8
Premiums:

Life Insurance................................................................... $
Accident and Health Insurance ........................................
Property and Liability Insurance ......................................

322.0
34.7
4,175.7
Total Premiums..................................................................... $ 4,532.4
Year Ended December 31, 2022
Life Insurance in Force1........................................................ $ 19,885.1
Premiums:

Life Insurance1 ................................................................. $
Accident and Health Insurance ........................................
Property and Liability Insurance ......................................

355.8
167.9
4,706.1
Total Premiums..................................................................... $ 5,229.8
Year Ended December 31, 2021
Life Insurance in Force1........................................................ $ 20,287.7
Premiums:

327.4
185.8
4,667.4
Total Premiums..................................................................... $ 5,180.6

339.4

3.3
11.6
17.8
32.7

354.8

3.6
1.1
38.0
42.7

372.3

0.9
0.3
34.9
36.1

129.9

$ 19,541.3

0.7 %

0.5
—
29.2
29.7

319.2
23.1
4,187.1
$ 4,529.4

0.2 %
—
0.7
0.7 %

137.1

$ 19,667.4

0.7 %

0.6
1.4
24.3
26.3

352.8
168.2
4,692.4
$ 5,213.4

0.2 %
0.8
0.5
0.5 %

144.5

$ 20,059.9

0.7 %

0.7
4.4
29.6
34.7

327.2
189.9
4,662.1
$ 5,179.2

0.2 %
2.3
0.6
0.7 %

11 AsA of Januaryr 1, 2023, the Company adopted ASU 2018-12 using the modifiei
period amountstt
additional infon rmation.

in the financial statements have been recast to reflee

ctive method applied as of the transition date of Januaryr 1, 2021. Prior
ct application of the new guidance. See Note 2 to the Consolidatdd ed Financial Statements for

d retrospes

See Accompanying Report of Independent Registered Publu ic Accounting Firm.

[THIS PAGE INTENTIONALLY LEFT BLANK]

Kemper Corporation Board of Directors

Joseph P. Lacher, Jr.
Chairman of the Board, President and
Chief Executive Officer
Kemper Corporation

Stuart B. Parker
Lead Director,
Kemper Corporation
Retired President and
Chief Executive Officer
USAA

Teresa A. Canida
Principal and Portfolio Manager
Ceeto Capital Group, LLC

George N. Cochran
Retired Chairman
Global Financial Institutions Group
Macquarie Capital

Jason N. Gorevic
Chief Executive Officer
Teladoc Health, Inc.

Lacy M. Johnson
Partner
Taft Stettinius & Hollister LLP

Gerald Laderman
Executive Vice President, Finance
United Airlines

Suzet M. McKinney
Principal and Director, Life Sciences
Sterling Bay

Alberto J. Paracchini
President, Byline Bancorp, Inc. and
President and CEO, Byline Bank

Christopher B. Sarofim
Chairman
Fayez Sarofim & Co.

Susan D. Whiting
Retired Vice Chairman
Nielsen Holdings plc
Director and Trustee

Kemper Corporation Senior Executives

Joseph P. Lacher, Jr.
President, Chief Executive
Officer and Chairman

Ismat Duckson Aziz
Executive Vice President
Chief Human Resources Officer
Chief Administrative Officer

John M. Boschelli
Executive Vice President
Chief Investment Officer

Charles T. Brooks
Executive Vice President
Operations and Systems

C. Thomas Evans, Jr.
Executive Vice President
Secretary and General Counsel

Matthew A. Hunton
Executive Vice President
President, Kemper Auto

Bradley T. Camden
Exectutive Vice President
Chief Financial Officer

Christopher W. Flint
Executive Vice President
President, Kemper Life

Duane A. Sanders
Executive Vice President
Chief Claims Officer, P&C

Kemper Corporation Information

Stock Listing
Kemper Corporation is traded
on the New York Stock Exchange
under the symbol KMPR.

Common Stock Transfer Agent/Registrar
Please direct questions regarding stock registration,
change of address, change of name or transfer to:

Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, KY 40233

877.282.1168 (in the United States)
computershare.com/investor

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, IL 60606

2024 Annual Meeting
Wednesday, May 1, 2024
8:30a.m. CT
200 East Randolph Street
70th Floor
Chicago, IL 60601

Investor Relations
Kemper Corporation
200 East Randolph Street
Suite 3300
Chicago, IL 60601

312.661.4930
investors@kemper.com

200 East Randolph Street, Suite 3300
Chicago, IL 60601
312.661.4600
Kemper.com