Kemper Boosts Premiums and Net Income, Benefiting From $1.3B Infinity Acquisition

Kemper Corp. reported a significant jump in net income during its 2019 first quarter, thanks largely to premium gains and a surge stemming from its acquisition of Infinity Property and Casualty Corp. Still, there were upticks in loss activity.

Kemper’s $1.3 billion acquisition of Infinity closed in July 2018.

The Chicago-based property/casualty insurance carrier said it produced $155.3 million in net income, or $2.35 per diluted share in Q1. That included a nearly $51 million after-tax gain stemming from the change in fair value of equity and convertible securities, the insurer said. A year ago, Kemper booked $53.8 million in net income, or $1.02 per diluted share.

Beyond gains from the acquisition, Kemper President and CEO Joseph Lacher Jr. credited the company’s business strategy as helping fuel its financial gains.

“Our focus on growing, niche and underserved markets and ability to meet the needs of our customers is driving growth in revenues and profitability,” Lacher said in prepared remarks.

The company said its consolidated earned premiums grew to $465 million during Q1, a 76 percent gain over the previous year. As well, its Specialty Property & Casualty Insurance segment saw earned premiums jump by nearly $451 million.

Here are result highlights:

• Kemper said it experienced a 102.7 combined ratio for its Preferred Property & Casualty Insurance segment during the quarter compared to 98.3 a year ago. The insurer blamed loss activity in its Homeowners segment for the spike. Its Specialty Property & Casualty Insurance segment reported an 89.3 combined ratio compared to 93.2 in the 2018 first quarter. That came from an improvement in the underlying loss ratio for both personal and commercial auto, Kemper noted.
• Kemper’s Preferred Property & Casualty Insurance arm said it generated $179.6 million in net premiums written during the quarter compared to $170.5 million in the 2018 first quarter. Net investment income dipped to $8.3 million versus $13.7 million in the same, year-ago period. The division saw a spike in both catastrophe and non-catastrophe losses as well as loss-adjustment expenses.
• Kemper’s Specialty Property & Casualty Insurance segment were booked at $809.1 million during Q1 compared to $318.4 million over the same period last year. Its catastrophe losses were negligible, but its non-catastrophe losses/loss adjustment expenses soared to $544.3 million versus $212.3 million in the 2018 first quarter. Net investment income grew to $21.5 million versus $9.9 million in the 2018 first quarter.

Source: Kemper