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Kemper (KMPR) Surpasses Q2 Earnings and Revenue Estimates
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Kemper Corporation (KMPR - Free Report) reported second-quarter 2020 adjusted net earnings of $1.20 per share, which beat the Zacks Consensus Estimate by 27.6%. However, the bottom line declined 13% on a year-over-year basis.
Kemper witnessed poor performance across its segments and lower net investment incomes, offset by lower expenses. The insurer witnessed strong performance and industry-leading growth in its specialty auto business. Though new business sales were affected due to the pandemic, the company achieved significant policy growth for the business and enhanced franchise value.
Kemper Corporation Price, Consensus and EPS Surprise
Kemper's total operating revenues of $1.1 billion decreased 6.6% year over year. However, the top line beat the Zacks Consensus Estimate by 0.3%. Lower earned premiums, net investment income and other income resulted in the downside.
Total expenses decreased nearly 4.9% year over year to $1.1 billion on lower policyholders' benefits and incurred losses and loss adjustment expenses.
Net investment income came in at $67.8 million in the quarter under review, down 29.4% year over year, primarily due to a lower rate of return from alternative investments, lower yields on fixed income securities and higher investment expenses.
Segment Details
Specialty Property & Casualty Insurance's revenues decreased 2.5% from the prior-year quarter to $776 million. Its total earned premiums decreased 0.9% from the prior-year quarter to $759 million due to lower earned premiums by the specialty automobile business. Net investment income decreased 41.5% year over year to $16.9 million. Combined ratio improved 250 basis points (bps) year over year to 91%.
Preferred Property & Casualty Insurance's revenues decreased 16.3% from the prior-year quarter to $168 million. Its total earned premiums decreased 13.2% from the prior-year quarter to $163.6 million due to poor performance of homeowners, preferred automobile and other personal business. Net investment income decreased 65% year over year to $ 4.3 million. Combined ratio improved 90 bps year over year to 102.2%.
Life & Health Insurance's revenues decreased 4.2% from the prior-year quarter to $207.5 million. Its total earned premiums decreased 0.4% from the prior-year quarter to $162.7 million due to lower earned premium by the life and property business. Net investment income decreased 16.4% year over year to $44.3 million.
Financial Update
As of Jun 30, 2020, Kemper had cash of $389.3 million, up 184.6% from the level as of Dec 31, 2019.
Total shareholders' equity was $4.2 billion as of Jun 30, 2020, up 5.4% from the level as of Dec 31, 2019, primarily driven by net income.
Book value per share as of Jun 30, 2020 was $64.15 per share, up 8% from $59.59 as of Dec 31, 2019.
Dividend Update
During the second quarter of 2020, Kemper paid out dividends of $19.7 million.
On May 6, 2020, Kemper board of directors declared a quarterly dividend of 30 cents per share.
The company is now left with $233 million worth of shares for repurchase under its existing share repurchase authorization at the end of the second quarter.
Of the insurance industry players, which have reported second-quarter results so far, earnings of Arthur J. Gallagher & Co. (AJG - Free Report) , First American Financial Corporation (FAF - Free Report) and AXIS Capital Holdings Limited (AXS - Free Report) beat the respective Zacks Consensus Estimate.
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Kemper (KMPR) Surpasses Q2 Earnings and Revenue Estimates
Kemper Corporation (KMPR - Free Report) reported second-quarter 2020 adjusted net earnings of $1.20 per share, which beat the Zacks Consensus Estimate by 27.6%. However, the bottom line declined 13% on a year-over-year basis.
Kemper witnessed poor performance across its segments and lower net investment incomes, offset by lower expenses. The insurer witnessed strong performance and industry-leading growth in its specialty auto business. Though new business sales were affected due to the pandemic, the company achieved significant policy growth for the business and enhanced franchise value.
Kemper Corporation Price, Consensus and EPS Surprise
Kemper Corporation price-consensus-eps-surprise-chart | Kemper Corporation Quote
Behind the Headlines
Kemper's total operating revenues of $1.1 billion decreased 6.6% year over year. However, the top line beat the Zacks Consensus Estimate by 0.3%. Lower earned premiums, net investment income and other income resulted in the downside.
Total expenses decreased nearly 4.9% year over year to $1.1 billion on lower policyholders' benefits and incurred losses and loss adjustment expenses.
Net investment income came in at $67.8 million in the quarter under review, down 29.4% year over year, primarily due to a lower rate of return from alternative investments, lower yields on fixed income securities and higher investment expenses.
Segment Details
Specialty Property & Casualty Insurance's revenues decreased 2.5% from the prior-year quarter to $776 million. Its total earned premiums decreased 0.9% from the prior-year quarter to $759 million due to lower earned premiums by the specialty automobile business. Net investment income decreased 41.5% year over year to $16.9 million. Combined ratio improved 250 basis points (bps) year over year to 91%.
Preferred Property & Casualty Insurance's revenues decreased 16.3% from the prior-year quarter to $168 million. Its total earned premiums decreased 13.2% from the prior-year quarter to $163.6 million due to poor performance of homeowners, preferred automobile and other personal business. Net investment income decreased 65% year over year to $ 4.3 million. Combined ratio improved 90 bps year over year to 102.2%.
Life & Health Insurance's revenues decreased 4.2% from the prior-year quarter to $207.5 million. Its total earned premiums decreased 0.4% from the prior-year quarter to $162.7 million due to lower earned premium by the life and property business. Net investment income decreased 16.4% year over year to $44.3 million.
Financial Update
As of Jun 30, 2020, Kemper had cash of $389.3 million, up 184.6% from the level as of Dec 31, 2019.
Total shareholders' equity was $4.2 billion as of Jun 30, 2020, up 5.4% from the level as of Dec 31, 2019, primarily driven by net income.
Book value per share as of Jun 30, 2020 was $64.15 per share, up 8% from $59.59 as of Dec 31, 2019.
Dividend Update
During the second quarter of 2020, Kemper paid out dividends of $19.7 million.
On May 6, 2020, Kemper board of directors declared a quarterly dividend of 30 cents per share.
The company is now left with $233 million worth of shares for repurchase under its existing share repurchase authorization at the end of the second quarter.
Zacks Rank
Currently, Kemper carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players, which have reported second-quarter results so far, earnings of Arthur J. Gallagher & Co. (AJG - Free Report) , First American Financial Corporation (FAF - Free Report) and AXIS Capital Holdings Limited (AXS - Free Report) beat the respective Zacks Consensus Estimate.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it's expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks' just-released special report reveals 8 stocks to watch. The report is only available for a limited time.