Home Alternative Investments KEMPER CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations...

KEMPER CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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Summary of Results

Net Loss was $245.7 million ($(3.85) per unrestricted common share) for the nine
months ended September 30, 2022, compared to $14.7 million ($(0.23) per
unrestricted common share) for the same period in 2021.

Net Loss was $76.2 million ($(1.19) per unrestricted common share) for the three
months ended September 30, 2022, compared to $75.3 million ($(1.18) per
unrestricted common share) for the same period in 2021.


A reconciliation of Net Income (Loss) to Adjusted Consolidated Net Operating
Income (Loss) (a non-GAAP financial measure) for the nine and three months ended
September 30, 2022 and 2021 is presented below.

                                                                     Nine Months Ended                                      Three Months Ended
                                                       Sep 30,          Sep 30,            Increase           Sep 30,          Sep 30,            Increase
(Dollars in Millions and Net of Income Taxes)           2022              2021            (Decrease)            2022             2021            (Decrease)
Net Income (Loss)                                      (245.7)           (14.7)              (231.0)           (76.2)           (75.3)                (0.9)
Less:
Income (Loss) from Change in Fair Value of
Equity and Convertible Securities                       (63.1)            73.0               (136.1)            (8.8)            (0.5)                

(8.3)

Net Realized Investment Gains (Losses)                    0.3             34.0                (33.7)            (9.6)             7.9                (17.5)
Impairment Losses                                       (17.5)            (6.2)               (11.3)            (6.6)            (0.5)                (6.1)
Acquisition and Disposition Related
Transaction, Integration, Restructuring and
Other Costs                                             (32.2)           (27.5)                (4.7)           (20.7)            (6.4)               

(14.3)

Loss from Early Extinguishment of Debt                   (2.9)               -                 (2.9)               -                -                   

Adjusted Consolidated Net Operating Income
(Loss)                                               $ (130.3)         $ 

(88.0) $ (42.3) $ (30.5) $ (75.8) $

45.3


Components of Adjusted Consolidated Net
Operating Income (Loss):
Segment Net Operating Income (Loss):
Specialty Property & Casualty Insurance              $ (112.3)         $ 

(70.9) $ (41.4) $ (28.7) $ (59.3) $

30.6

Preferred Property & Casualty Insurance                 (25.0)            (5.1)               (19.9)            (2.1)            (6.4)                

4.3

Life & Health Insurance                                  33.4             23.1                 10.3             12.6              2.8                 

9.8

Total Segment Net Operating Income (Loss)              (103.9)           (52.9)               (51.0)           (18.2)           (62.9)               

44.7

Corporate and Other Net Operating Income
(Loss) From:

Other                                                   (26.4)           (35.1)                 8.7            (12.3)           (12.9)                 0.6
Corporate and Other Net Operating Income
(Loss)                                                  (26.4)           (35.1)                 8.7            (12.3)           (12.9)               

0.6

Adjusted Consolidated Net Operating Income
(Loss)                                               $ (130.3)         $ (88.0)         $     (42.3)         $ (30.5)         $ (75.8)         $      45.3


Net Income (Loss)

Net Loss increased by $231.0 million for the nine months ended September 30,
2022, compared to the same period in 2021, due primarily to lower Adjusted
Consolidated Net Operating Income (Loss) and loss from Change in Fair Value of
Equity and Convertible securities. Adjusted Consolidated Net Operating Loss
increased by $42.3 million for the nine months ended September 30, 2022,
compared to the same period in 2021, due primarily to higher Specialty Property
& Casualty Segment Insurance Net Operating Loss and Preferred Property &
Casualty Segment Insurance Net Operating Loss, partially offset by higher Life &
Health Insurance Segment Net Operating Income and lower Corporate and Other Net
Operating Loss.

See MD&A, "Specialty Property & Casualty Insurance," "Preferred Property &
Casualty Insurance" and "Life & Health Insurance," for discussion of each
respective segment's results. Corporate and Other Net Operating Income increased
due primarily to decreased general expenses. The Company's investment results
deteriorated for the nine months ended September 30, 2022, compared to the same
period in 2021, due primarily to a $136.1 million after-tax decrease in income
from the change in fair value of equity and convertible securities, a $33.7
million after-tax decrease in net realized investment gains, and a $11.3 million
after-tax increase in impairment losses. See MD&A, "Investment Results," for
additional discussion.

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Summary of Results (Continued)


Net Loss increased by $0.9 million for the three months ended September 30,
2022, compared to the same period in 2021, due primarily to increases in Net
Realized Investment Losses, Impairment Losses and Loss from Change in Fair Value
of Equity and Convertible securities, partially offset by a lower Adjusted
Consolidated Net Operating Loss. Adjusted Consolidated Net Operating Loss
decreased by $45.3 million for the three months ended September 30, 2022,
compared to the same period in 2021, due primarily to lower Specialty Property &
Casualty Segment Insurance Net Operating Loss, higher Life & Health Insurance
Segment Net Operating Income, and lower Preferred Property & Casualty Segment
Insurance Net Operating Loss.

Revenues


Earned Premiums were $3,999.3 million for the nine months ended September 30,
2022, compared to $3,894.6 million for the same period in 2021, an increase of
$104.7 million. Earned Premiums in the Specialty Property & Casualty Insurance
segment increased by $148.6 million for the nine months ended September 30,
2022, compared to the same period in 2021. Earned Premiums in the Preferred
Property & Casualty Insurance segments decreased by $34.3 million for the nine
months ended September 30, 2022, compared to the same period in 2021. See MD&A,
"Specialty Property & Casualty Insurance" and "Preferred Property & Casualty
Insurance," for discussion of the changes in each segment's earned premiums.

Earned Premiums were $1,307.0 million for the three months ended September 30,
2022, compared to $1,356.1 million for the same period in 2021, a decrease of
$49.1 million. Earned Premiums in the Specialty Property & Casualty Insurance
segment decreased by $28.8 million for the three months ended September 30,
2022, compared to the same period in 2021. Earned Premiums in the Preferred
Property & Casualty Insurance segments decreased by $14.4 million for the three
months ended September 30, 2022, compared to the same period in 2021. 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 $2.6 million for the nine months ended
September 30, 2022, compared to the same period in 2021, due primarily to lower
valuations on Equity Method Limited Liability Investments, lower rate on Fixed
Income Securities, and lower balances in Equity Securities, partially offset by
higher levels of investments in Fixed Income Securities and Company-Owned Life
Insurance and higher volume of distributions received from appreciated Limited
Liability Investments included in Equity Securities.

Net Investment Income decreased by $4.1 million for the three months ended
September 30, 2022, compared to the same period in 2021, due primarily to lower
valuations on Equity Method Limited Liability Investments, partially offset by
higher levels of investments in Fixed Income Securities and Company-Owned Life
Insurance.

Loss from the Change in Value of Alternative Energy Partnership Investments was
$21.2 million for the nine months ended September 30, 2022 compared to $46.9
million for the same period in 2021. Tax benefits related to the Alternative
Energy Partnership Investments were $8.0 million and $67.9 million for the nine
months ended September 30, 2022 and 2021 respectively. This resulted in net loss
of $13.2 million and net income of $21.0 million attributable to Alternative
Energy Partnership Investments for the nine months ended September 30, 2022 and
2021, respectively.

Income from the Change in Value of Alternative Energy Partnership Investments
was $0.4 million for the three months ended September 30, 2022, compared to a
loss of $23.8 million for the same period 2021. Tax expense related to the
Alternative Energy Partnership Investments was $0.1 million for the three months
ended September 30, 2022, compared to tax benefits of $30.6 million for the same
period in 2021. This resulted in a net income of $0.3 million and $6.8 million
attributable to Alternative Energy Partnership Investments for the three months
ended September 30, 2022 and 2021, respectively.

Other Income was $7.3 million for the nine months ended September 30, 2022,
compared to $20.8 million for the same period in 2021.

Other Income was $4.0 million for the three months ended September 30, 2022,
compared to $12.3 million for the same period in 2021.

Net Realized Investment Gains were $0.4 million for the nine months ended
September 30, 2022, compared to $43.1 million for the same period in 2021. Net
Realized Investment Gains were $12.1 million for the three months ended
September 30, 2022, compared to $10.1 million for the same period in 2021.


Impairment Losses were $22.1 million for the nine months ended September 30,
2022, compared to $7.8 million for the same period in 2021. Impairment Losses
were $8.3 million for the three months ended September 30, 2022, compared to
$0.6 million for the same period in 2021.


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Summary of Results (Continued)


See MD&A, "Investment Results," under the sub-captions "Net Realized Investment
Gains (Losses)" and "Impairment Losses" for additional discussion. The Company
cannot predict if or when similar investment gains or losses may occur in the
future.

Non-GAAP Financial Measures

Underlying Losses and LAE and Underlying 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 useful to investors and uses these 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 useful for investors
to evaluate these components separately and in the aggregate when reviewing the
Company's underwriting performance.

Adjusted Consolidated Net Operating Income (Loss)

Adjusted Consolidated Net Operating Income (Loss) is an after-tax, non-GAAP
financial measure and is computed by excluding from Net Income (Loss) the
after-tax impact of:

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

(ii) Net Realized Investment Gains (Losses);

(iii) Impairment Losses;

(iv) Acquisition and Disposition Related Transaction, Integration, Restructuring
and Other Costs;

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

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


Significant non-recurring items are excluded when (a) the nature of the charge
or gain is such that it is reasonably 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 Income (Loss). There were
no applicable significant non-recurring items that the Company excluded from the
calculation of Adjusted Consolidated Net Operating Income for the nine months
ended September 30, 2022 or 2021.

The Company believes that Adjusted Consolidated Net Operating Income (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 Gains (Losses) 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, Integration, Restructuring 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, and Other Charges relate to
(i) loss from early extinguishment of debt, which is driven by the Company's
financing and refinancing decisions and capital needs, as well as

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Non-GAAP Financial Measures (Continued)


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. Significant non-recurring items
are excluded because, by their nature, they are not indicative of the Company's
business or economic trends.

The preceding non-GAAP financial measures should not be considered a substitute
for the comparable GAAP financial measures, as they do not fully recognize the
overall profitability of the Company's businesses.

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Specialty Property & Casualty Insurance


Selected financial information for the Specialty Property & Casualty Insurance
segment follows.

                                                                        Nine Months Ended                    Three Months Ended
                                                                   Sep 30,            Sep 30,            Sep 30,           Sep 30,
(Dollars in Millions)                                                2022               2021              2022               2021
Net Premiums Written                                             $ 3,012.1          $ 3,078.3          $  968.5          $ 1,024.3

Earned Premiums                                                  $ 3,064.8          $ 2,916.2          $  999.5          $ 1,028.3
Net Investment Income                                                102.8              114.7              33.9               37.0
Change in Value of Alternative Energy Partnership
Investments                                                          (10.6)             (22.3)              0.3              (11.3)
Other Income                                                           5.0                3.1               2.3                1.2
Total Revenues                                                     3,162.0            3,011.7           1,036.0            1,055.2
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                     2,709.9            2,451.8             868.0              924.4
Catastrophe Losses and LAE                                            23.1               13.2              14.8                3.4
Prior Years:
Non-catastrophe Losses and LAE                                       (24.8)             105.0              (6.6)              25.1
Catastrophe Losses and LAE                                             0.7                0.3               0.2               (0.1)
Total Incurred Losses and LAE                                      2,708.9            2,570.3             876.4              952.8
Insurance Expenses                                                   603.5              570.1             198.8              194.2
Other Expenses                                                           -                  -                 -                  -

Operating Income (Loss)                                             (150.4)            (128.7)            (39.2)             (91.8)
Income Tax Benefit (Expense)                                          38.1               57.8              10.5               32.5
Segment Net Operating Income (Loss)                              $  (112.3) 

$ (70.9) $ (28.7) $ (59.3)


Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                     88.4  %            84.0  %           86.9  %            90.0  %
Current Year Catastrophe Losses and LAE Ratio                          0.8                0.5               1.5                0.3
Prior Years Non-catastrophe Losses and LAE Ratio                      (0.8)               3.6              (0.7)               2.4
Prior Years Catastrophe Losses and LAE Ratio                             -                  -                 -                  -
Total Incurred Loss and LAE Ratio                                     88.4               88.1              87.7               92.7
Insurance Expense Ratio                                               19.7               19.5              19.9               18.9

Combined Ratio                                                       108.1  %           107.6  %          107.6  %           111.6  %
Underlying Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio                     88.4  %            84.0  %           86.9  %            90.0  %
Insurance Expense Ratio                                               19.7               19.5              19.9               18.9

Underlying Combined Ratio                                            108.1  %           103.5  %          106.8  %           108.9  %
Non-GAAP Measure Reconciliation
Combined Ratio                                                       108.1  %           107.6  %          107.6  %           111.6  %

Less:

Current Year Catastrophe Losses and LAE Ratio                          0.8                0.5               1.5                0.3
Prior Years Non-catastrophe Losses and LAE Ratio                      (0.8)               3.6              (0.7)               2.4
Prior Years Catastrophe Losses and LAE Ratio                             -                  -                 -                  -
Underlying Combined Ratio                                            108.1  %           103.5  %          106.8  %           108.9  %


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Specialty Property & Casualty Insurance (Continued)

Insurance Reserves

                                         Sep 30,        Dec 31,
(Dollars in Millions)                     2022           2021
Insurance Reserves:
Personal Automobile                    $ 1,857.0      $ 1,985.8
Commercial Automobile                      417.8          333.9
Insurance Reserves                     $ 2,274.8      $ 2,319.7
Insurance Reserves:
Loss and Allocated LAE Reserves:
Case and Allocated LAE                 $ 1,110.7      $ 1,157.9
Incurred But Not Reported                  968.2          953.0
Total Loss and LAE Reserves              2,078.9        2,110.9
Unallocated LAE Reserves                   195.9          208.8
Insurance Reserves                     $ 2,274.8      $ 2,319.7


See MD&A, "Critical Accounting Estimates," of the 2021 Annual Report 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.

Overall

Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


The Specialty Property & Casualty Insurance segment reported a Segment Net
Operating Loss of $112.3 million for the nine months ended September 30, 2022,
compared to Segment Net Operating Loss of $70.9 million for the same period in
2021. Segment Net Operating Loss increased by $41.4 million due primarily to an
increase in underlying losses and LAE as a percentage of earned premiums related
to higher severity trends. Underlying losses and LAE exclude the impact of
catastrophes and loss and LAE reserve development

Earned Premiums in the Specialty Property & Casualty Insurance segment increased
by $148.6 million for the nine months ended September 30, 2022, compared to the
same period in 2021, driven by the acquisition of AAC and higher average earned
premium per exposure resulting from rate increases associated with higher loss
trends. Policies-in-force were lower in Private Passenger Auto as a result of
ongoing profit improvement actions.

Net Investment Income in the Specialty Property & Casualty Insurance segment
decreased by $11.9 million for the nine months ended September 30, 2022,
compared to the same period in 2021, due primarily to lower returns from
Alternative Investments and lower levels of Equity Securities, partially offset
by higher yields and levels of Company-Owned Life Insurance and investments in
fixed income securities.

Loss related to Changes in Value of Alternative Energy Partnership Investments
was $10.6 million for the nine months ended September 30, 2022, compared to
$22.3 million for the same period in 2021. Tax benefits related to the
Alternative Energy Partnership Investments were $4.0 million and $32.2 million
for the nine months ended September 30, 2022 and 2021. This resulted in net loss
of $6.6 million and net income of $9.9 million attributable to Alternative
Energy Partnership Investments for the nine months ended September 30, 2022 and
2021, respectively.

Underlying losses and LAE as a percentage of earned premiums were 88.4% for the
nine months ended September 30, 2022, a deterioration of 4.4 percentage points,
compared to the same period in 2021, due primarily to higher severity trends.
Severity trends increased due to rising inflation and supply chain constraints.
Underlying losses and LAE exclude the impact of catastrophes and loss and LAE
reserve development. Favorable loss and LAE reserve development (including
catastrophe reserve development) was $24.1 million for the nine months ended
September 30, 2022, compared to adverse reserve development of $105.3 million
for the same period in 2021.


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Specialty Property & Casualty Insurance (Continued)


Catastrophe losses and LAE (excluding reserve development) were $23.1 million in
2022, compared to $13.2 million for the same period in 2021, a deterioration of
$9.9 million. Insurance Expenses were $603.5 million, or 19.7% of earned
premiums, for the nine months ended September 30, 2022, a deterioration of 0.2
percentage point compared to the same period in 2021.

The Specialty Property & Casualty Insurance segment's effective income tax rate
differs from the federal statutory income tax rate due primarily to investment
tax credits, tax-exempt investment income and dividends received deductions.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


The Specialty Property & Casualty Insurance segment reported a Segment Net
Operating Loss of $28.7 million for the three months ended September 30, 2022,
compared to a Segment Net Operating Loss of $59.3 million for the same period in
2021. Segment Net Operating Loss decreased by $30.6 million due primarily to a
decrease in underlying losses and LAE as a percentage of earned premiums and
favorable prior year loss and LAE reserve development as a percentage of earned
premiums compared to adverse prior year loss and LAE reserve development for the
same period in 2021.

Earned Premiums in the Specialty Property & Casualty Insurance segment decreased
by $28.8 million for the three months ended September 30, 2022, compared to the
same period in 2021, driven by lower policies-in-force as a result of ongoing
profit improvement actions, offset by higher average earned premium per exposure
resulting from rate increases associated with higher loss trends.

Net Investment Income in the Specialty Property & Casualty Insurance segment
decreased by $3.1 million for the three months ended September 30, 2022,
compared to the same period in 2021, due primarily to lower returns from
Alternative Investments, partially offset by higher levels of investments in
fixed income securities.

Gain related to Change in Value of Alternative Energy Partnership Investments
was $0.3 million for the three months ended September 30, 2022, compared to a
loss of $11.3 million for the same period in 2021. Tax expense related to the
Alternative Energy Partnership Investments was $0.1 million and tax benefit
related to the Alternative Energy Partnership Investment was $14.4 million for
the three months ended September 30, 2022 and 2021, respectively. This resulted
in net income of $0.2 million and $3.1 million attributable to Alternative
Energy Partnership Investments for the three months ended September 30, 2022 and
2021, respectively.

Underlying losses and LAE as a percentage of earned premiums were 86.9% for the
three months ended September 30, 2022, an improvement of 3.1 percentage points,
compared to the same period in 2021, due primarily to lower frequency trends
offset by higher claim severity trends. Frequency trends improved as a result of
positive responses to targeted underwriting actions focused on improving
profitability. Severity trends increased due to rising inflation and supply
chain constraints. Underlying losses and LAE exclude the impact of catastrophes
and loss and LAE reserve development. Favorable loss and LAE reserve development
(including catastrophe reserve development) was $6.4 million for the three
months ended September 30, 2022, compared to adverse development of $25.0
million for the same period in 2021. Catastrophe losses and LAE (excluding
reserve development) were $14.8 million for the three months ended September 30,
2022, compared to $3.4 million for the same period in 2021, a deterioration of
$11.4 million. Insurance Expenses were $198.8 million, or 19.9% of earned
premiums, for the three months ended September 30, 2022, a deterioration of 1.0
percentage points compared to the same period in 2021.

The Specialty Property & Casualty Insurance segment's effective income tax rate
differs from the federal statutory income tax rate due primarily to investment
tax credits, tax-exempt investment income and dividends received deductions.

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Specialty Property & Casualty Insurance (Continued)

Specialty Personal Automobile Insurance


Selected financial information for the personal automobile insurance product
line follows.
                                                                        Nine Months Ended                   Three Months Ended
                                                                   Sep 30,            Sep 30,            Sep 30,           Sep 30,
(Dollars in Millions)                                                2022               2021               2022              2021
Net Premiums Written                                             $ 2,542.3          $ 2,728.5          $   805.2          $ 902.7
Earned Premiums                                                  $ 2,666.3          $ 2,615.6          $   858.8          $ 920.6

Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                   $ 2,414.1  

$ 2,235.4 $ 757.8 $ 843.9
Catastrophe Losses and LAE

                                            20.9               12.1               13.1              3.1
Prior Years:
Non-catastrophe Losses and LAE                                       (32.2)              96.7               (6.7)            25.1
Catastrophe Losses and LAE                                             0.6                0.3                0.1             (0.1)
Total Incurred Losses and LAE                                    $ 2,403.4  

$ 2,344.5 $ 764.3 $ 872.0


Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                     90.5  %            85.4  %            88.3  %          91.7  %
Current Year Catastrophe Losses and LAE Ratio                          0.8                0.5                1.5              0.3
Prior Years Non-catastrophe Losses and LAE Ratio                      (1.2)               3.7               (0.8)             2.7
Prior Years Catastrophe Losses and LAE Ratio                             -                  -                  -                -
Total Incurred Loss and LAE Ratio                                     90.1  %            89.6  %            89.0  %          94.7  %


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from personal automobile insurance increased by $50.7 million
for the nine months ended September 30, 2022, compared to the same period in
2021, due primarily to the acquisition of AAC and higher average earned premium
per exposure resulting from rate increases associated with higher loss costs,
partially offset by a decrease in new business driven by targeted underwriting
actions focused on improving profitability. Incurred losses and LAE were
$2,403.4 million, or 90.1% of earned premiums for the nine months ended
September 30, 2022, compared to $2,344.5 million, or 89.6% of earned premiums,
for the same period in 2021. Incurred losses and LAE as a percentage of earned
premiums increased due primarily to a deterioration in underlying losses and LAE
as a percentage of earned premium, partially offset by a favorable change in
prior year loss and LAE reserve development. Underlying losses and LAE as a
percentage of related earned premiums were 90.5% for the nine months ended
September 30, 2022, compared to 85.4% for the same period in 2021, a
deterioration of 5.1 points due to higher claim severity trends. Severity trends
increased due to rising inflation and supply chain constraints. Favorable loss
and LAE reserve development was $31.6 million for the nine months ended
September 30, 2022, compared to adverse development of $97.0 million for the
same period in 2021. Catastrophe losses and LAE (excluding reserve development)
were $20.9 million for the nine months ended September 30, 2022, compared to
$12.1 million for the same period in 2021, due primarily to losses arising from
Hurricane Ian.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from personal automobile insurance decreased by $61.8 million
for the three months ended September 30, 2022, compared to the same period in
2021, due primarily to decreases in new business driven by targeted underwriting
actions focused on improving profitability. Incurred losses and LAE were $764.3
million, or 89.0% of earned premiums for the three months ended September 30,
2022, compared to $872.0 million, or 94.7% of earned premiums, for the same
period in 2021. Incurred losses and LAE as a percentage of earned premiums
decreased due primarily to a decrease in underlying losses and LAE as a
percentage of earned premiums and favorable loss and LAE reserve development as
a percentage of earned premium, compared to adverse loss and LAE reserve
development as a percentage of earned premium in the same period of 2021.
Underlying losses and LAE as a percentage of related earned premiums were 88.3%
for the three months ended September 30, 2022, compared to 91.7% for the same
period in 2021, an improvement of 3.4 points due to lower frequency trends
offset by higher claim severity trends. Frequency trends improved as a result of
positive responses to targeted underwriting actions focused on improving
profitability.
                                       51
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Specialty Property & Casualty Insurance (Continued)


Severity trends increased due to rising inflation and supply chain constraints.
Favorable loss and LAE reserve development was $6.6 million for the three months
ended September 30, 2022, compared to adverse reserve development of $25.0
million for the same period in 2021. Catastrophe losses and LAE (excluding
reserve development) were $13.1 million for the three months ended September 30,
2022, compared to $3.1 million for the same period in 2021, due primarily to
losses arising from Hurricane Ian.

Commercial Automobile Insurance


Selected financial information for the commercial automobile insurance product
line follows.

                                                                       Nine Months Ended                  Three Months Ended
                                                                    Sep 30,          Sep 30,           Sep 30,           Sep 30,
(Dollars in Millions)                                                2022              2021              2022              2021
Net Premiums Written                                              $  469.8          $ 349.8          $   163.3          $ 121.6
Earned Premiums                                                   $  398.5          $ 300.6          $   140.7          $ 107.7

Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                    $  295.8  

$ 216.4 $ 110.2 $ 80.5
Catastrophe Losses and LAE

                                             2.2              1.1                1.7              0.3
Prior Years:
Non-catastrophe Losses and LAE                                         7.4              8.3                0.1                -
Catastrophe Losses and LAE                                             0.1                -                0.1                -
Total Incurred Losses and LAE                                     $  305.5  

$ 225.8 $ 112.1 $ 80.8


Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                     74.2  %          71.9  %            78.3  %          74.7  %
Current Year Catastrophe Losses and LAE Ratio                          0.6              0.4                1.2              0.3
Prior Years Non-catastrophe Losses and LAE Ratio                       1.9              2.8                0.1                -
Prior Years Catastrophe Losses and LAE Ratio                             -                -                0.1                -
Total Incurred Loss and LAE Ratio                                     76.7  %          75.1  %            79.7  %          75.0  %


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from commercial automobile insurance increased by $97.9 million
for the nine months ended September 30, 2022, compared to the same period in
2021, due primarily to higher volume and higher average earned premium per
exposure. Incurred losses and LAE were $305.5 million, or 76.7% of earned
premiums in 2022, compared to $225.8 million, or 75.1% of earned premiums in
2021. Incurred losses and LAE as a percentage of earned premiums increased due
primarily to an increase in underlying losses and LAE as a percentage of earned
premiums and lower development on prior year claims. Underlying losses and LAE
as a percentage of earned premiums were 74.2% in 2022, compared to 71.9% in
2021, a deterioration of 2.3 percentage points due primarily to higher claim
severity trends. Severity trends increased due to rising inflation and supply
chain constraints. Adverse loss and LAE reserve development was $7.5 million in
2022, compared to $8.3 million in 2021.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from commercial automobile insurance increased by $33.0 million
for the three months ended September 30, 2022, compared to the same period in
2021, due primarily to higher volume and higher average earned premium per
exposure. Incurred losses and LAE were $112.1 million, or 79.7% of earned
premiums in 2022, compared to $80.8 million, or 75.0% of earned premiums in
2021. Incurred losses and LAE as a percentage of earned premiums increased due
primarily to an increase in underlying losses and LAE as a percentage of earned
premiums. Underlying losses and LAE as a percentage of earned premiums were
78.3% in 2022, compared to 74.7% in 2021, a deterioration of 3.6 percentage
points due primarily to higher claim severity trends. Severity trends increased
due to rising inflation and supply chain constraints. Adverse loss and LAE
reserve development was $0.2 million in 2022, compared to $0.0 million in 2021.

                                       52
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Preferred Property & Casualty Insurance


Selected financial information for the Preferred Property & Casualty Insurance
segment follows.

                                                                       Nine Months Ended                  Three Months Ended
                                                                    Sep 30,          Sep 30,           Sep 30,           Sep 30,
(Dollars in Millions)                                                2022              2021              2022              2021
Net Premiums Written                                              $  412.0          $ 488.8          $   133.3          $ 164.8

Earned Premiums                                                   $  454.8          $ 489.1          $   149.3          $ 163.7
Net Investment Income                                                 36.2             51.5               11.8             16.1
Changes in Value of Alternative Energy Partnership
Investments                                                           (5.0)           (12.5)                 -             (6.4)
Other Income                                                             -                -                  -                -
Total Revenues                                                       486.0            528.1              161.1            173.4
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                       333.4            328.0              110.7            115.6
Catastrophe Losses and LAE                                            45.7             71.6               10.8             23.4
Prior Years:
Non-catastrophe Losses and LAE                                         3.6              5.1               (0.3)               -
Catastrophe Losses and LAE                                            (4.7)            (3.6)              (0.7)             0.1
Total Incurred Losses and LAE                                        378.0            401.1              120.5            139.1
Insurance Expenses                                                   142.4            154.8               43.9             51.7

Operating Income (Loss)                                              (34.4)           (27.8)              (3.3)           (17.4)
Income Tax Benefit (Expense)                                           9.4             22.7                1.2             11.0
Segment Net Operating Income (Loss)                               $  (25.0) 

$ (5.1) $ (2.1) $ (6.4)


Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                     73.3  %          67.1  %            74.2  %          70.6  %
Current Year Catastrophe Losses and LAE Ratio                         10.0             14.6                7.2             14.3
Prior Years Non-catastrophe Losses and LAE Ratio                       0.8              1.0               (0.2)               -
Prior Years Catastrophe Losses and LAE Ratio                          (1.0)            (0.7)              (0.5)             0.1
Total Incurred Loss and LAE Ratio                                     83.1             82.0               80.7             85.0
Insurance Expense Ratio                                               31.3             31.6               29.4             31.6

Combined Ratio                                                       114.4  %         113.6  %           110.1  %         116.6  %
Underlying Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio                     73.3  %          67.1  %            74.2  %          70.6  %
Insurance Expense Ratio                                               31.3             31.6               29.4             31.6

Underlying Combined Ratio                                            104.6  %          98.7  %           103.6  %         102.2  %
Non-GAAP Measure Reconciliation
Combined Ratio                                                       114.4  %         113.6  %           110.1  %         116.6  %

Less:

Current Year Catastrophe Losses and LAE Ratio                         10.0             14.6                7.2             14.3
Prior Years Non-catastrophe Losses and LAE Ratio                       0.8              1.0               (0.2)               -
Prior Years Catastrophe Losses and LAE Ratio                          (1.0)            (0.7)              (0.5)             0.1
Underlying Combined Ratio                                            104.6  %          98.7  %           103.6  %         102.2  %


                                       53
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Preferred Property & Casualty Insurance (Continued)

                       Catastrophe Frequency and Severity

                                                                               Nine Months Ended
                                                               Sep 30, 2022                        Sep 30, 2021
                                                        Number of        Losses and         Number of        Losses and
(Dollars in Millions)                                    Events              LAE             Events              LAE
Range of Losses and LAE Per Event:
Below $5                                                    49           $   45.7               45           $   36.5
$5 - $10                                                     -                  -                3               20.4
$10 - $15                                                    -                  -                1               14.7
$15 - $20                                                    -                  -                -                  -
$20 - $25                                                    -                  -                -                  -
Greater Than $25                                             -                  -                -                  -
Total                                                       49           $   45.7               49           $   71.6


                               Insurance Reserves

                                                        Sep 30,      Dec 31,
                (Dollars in Millions)                    2022         2021
                Insurance Reserves:
                Personal Automobile                    $ 303.6      $ 308.6
                Homeowners                                93.7         95.4
                Other                                     29.7         29.2
                Insurance Reserves                     $ 427.0      $ 433.2
                Insurance Reserves:
                Loss and Allocated LAE Reserves:
                Case and Allocated LAE                 $ 259.6      $ 272.5
                Incurred But Not Reported                138.1        131.9
                Total Loss and LAE Reserves              397.7        404.4
                Unallocated LAE Reserves                  29.3         28.8
                Insurance Reserves                     $ 427.0      $ 433.2


See MD&A, "Critical Accounting Estimates," of the 2021 Annual Report 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.

Overall

Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


The Preferred Property & Casualty Insurance segment reported a Segment Net
Operating Loss of $25.0 million for the nine months ended September 30, 2022,
compared to a Segment Net Operating Loss of $5.1 million for the same period in
2021. Segment Net Operating Loss increased by $19.9 million due primarily to
higher underlying losses and LAE as a percentage of earned premiums, partially
offset by lower catastrophe losses and LAE and Net Investment Income.

Earned Premiums in the Preferred Property & Casualty Insurance segment decreased
by $34.3 million for the nine months ended September 30, 2022, compared to the
same period in 2021, due primarily to lower personal automobile insurance
volumes as a result of ongoing profit improvement actions.


                                       54
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Preferred Property & Casualty Insurance (Continued)

Net Investment Income in the Preferred Property & Casualty Insurance segment
decreased by $15.3 million for the nine months ended September 30, 2022,
compared to the same period in 2021, due primarily to lower returns from
Alternative Investments and lower levels of Equity Securities.



Loss related to Changes in Value of Alternative Energy Partnership Investments
was $5.0 million for the nine months ended September 30, 2022, compared to $12.5
million for the same period in 2021. Tax benefits related to the Alternative
Energy Partnership Investments were $1.9 million and $18.1 million for the nine
months ended September 30, 2022 and 2021, respectively. This resulted in a net
loss of $3.1 million and net income of $5.6 million attributable to Alternative
Energy Partnership Investments for the nine months ended September 30, 2022 and
2021, respectively.

Underlying losses and LAE as a percentage of earned premiums were 73.3% and
67.1% for the nine months ended September 30, 2022 and 2021, respectively.
Underlying losses and LAE as a percentage of earned premiums increased primarily
due to higher claim severity trends. Severity trends increased due to rising
inflation and supply chain constraints. Catastrophe losses and LAE (excluding
reserve development) were $45.7 million in 2022, compared to $71.6 million in
2021, a decrease of $25.9 million. Catastrophe losses and LAE (excluding reserve
development) decreased due primarily to a decrease in severity of catastrophic
events in 2022 compared to 2021. There were zero catastrophic events above $5
million in 2022, compared to four catastrophic events above $5 million in 2021.
Favorable loss and LAE reserve development (including catastrophe reserve
development) was $1.1 million in 2022, compared to adverse development of $1.5
million in 2021.

Insurance expenses were $142.4 million, or 31.3% of earned premiums in 2022, an
improvement of 0.3% percentage points compared to 2021.


The Preferred Property & Casualty Insurance segment's effective income tax rate
differs from the federal statutory income tax rate due primarily to investment
tax credits, tax-exempt investment income, and dividends received deductions.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


The Preferred Property & Casualty Insurance segment reported a Segment Net
Operating Loss of $2.1 million for the three months ended September 30, 2022,
compared to a Segment Net Operating Loss of $6.4 million for the same period in
2021. Segment Net Operating Loss decreased by $4.3 million due primarily to
lower Catastrophe Losses and LAE as a percentage of earned premiums, partially
offset by higher underlying losses and LAE as a percentage of earned premiums
and lower Net Investment Income compared to the same period in 2021.

Earned Premiums in the Preferred Property & Casualty Insurance segment decreased
by $14.4 million for the three months ended September 30, 2022, compared to the
same period in 2021, due primarily to lower personal automobile insurance
volumes as a result of ongoing profit improvement actions.

Net Investment Income in the Preferred Property & Casualty Insurance segment
decreased by $4.3 million for the three months ended September 30, 2022,
compared to the same period in 2021, due primarily to lower returns from
Alternative Investments.


Loss related to Changes in Value of Alternative Energy Partnership Investments
was $0.0 million for the three months ended September 30, 2022, compared to $6.4
million for the same period in 2021. Tax benefits related to the Alternative
Energy Partnership Investments were $0.0 million and $8.2 million for the three
months ended September 30, 2022, and 2021, respectively. This resulted in a net
income of $0.0 million and $1.8 million attributable to Alternative Energy
Partnership Investments for the three months ended September 30, 2022 and 2021,
respectively.

Underlying losses and LAE as a percentage of earned premiums were 74.2% and
70.6% for the three months ended September 30, 2022 and 2021, respectively.
Underlying losses and LAE as a percentage of earned premiums increased primarily
due to severity trends caused by ongoing supply chain issues and rising
inflation. Catastrophe losses and LAE (excluding reserve development) were $10.8
million in 2022, compared to $23.4 million in 2021, a decrease of $12.6 million.
Catastrophe losses and LAE (excluding reserve development) decreased due
primarily to a decrease in severity of catastrophic events in 2022, compared to
2021. There were zero catastrophic events above $5 million in 2022, compared to
one catastrophic events above $5 million in 2021. Favorable loss and LAE reserve
development (including catastrophe reserve development) was $1.0 million in
2022, compared to adverse loss and LAE reserve development (including
catastrophe reserve development) of $0.1 million in 2021.

                                       55
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Preferred Property & Casualty Insurance (Continued)

Insurance expenses were $43.9 million, or 29.4% of earned premiums in 2022, an
improvement of 2.2% percentage points compared to 2021.


The Preferred Property & Casualty Insurance segment's effective income tax rate
differs from the federal statutory income tax rate due primarily to investment
tax credits, tax-exempt investment income, and dividends received deductions.

Preferred Personal Automobile Insurance


Selected financial information for the personal automobile insurance product
line follows.

                                                                       Nine Months Ended                  Three Months Ended
                                                                    Sep 30,          Sep 30,           Sep 30,           Sep 30,
(Dollars in Millions)                                                2022              2021              2022              2021
Net Premiums Written                                              $  242.1          $ 304.7          $   73.3           $  99.9
Earned Premiums                                                   $  279.5          $ 309.1          $   89.5           $ 102.6

Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                    $  235.0          $ 234.2          $   76.7           $  84.8
Catastrophe Losses and LAE                                             3.2              6.1               1.1               2.7
Prior Years:
Non-catastrophe Losses and LAE                                         1.7              4.9               0.2               0.1
Catastrophe Losses and LAE                                             0.2                -               0.1               0.1
Total Incurred Losses and LAE                                     $  240.1          $ 245.2          $   78.1           $  87.7

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                     84.1  %          75.7  %           85.8   %          82.7  %
Current Year Catastrophe Losses and LAE Ratio                          1.1              2.0               1.2               2.6
Prior Years Non-catastrophe Losses and LAE Ratio                       0.6              1.6               0.2               0.1
Prior Years Catastrophe Losses and LAE Ratio                           0.1                -               0.1               0.1
Total Incurred Loss and LAE Ratio                                     85.9  %          79.3  %           87.3   %          85.5  %


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums on personal automobile insurance decreased by $29.6 million for
the nine months ended September 30, 2022, compared to the same period in 2021,
due primarily to lower volume as a result of ongoing profit improvement actions.
Incurred losses and LAE were $240.1 million, or 85.9% of earned premiums, for
the nine months ended September 30, 2022, compared to $245.2 million, or 79.3%
of earned premiums, for the same period in 2021. Incurred losses and LAE as a
percentage of earned premiums increased due primarily to a deterioration in the
underlying loss and LAE ratio, partially offset by lower levels of prior year
loss and LAE reserve development. Underlying losses and LAE as a percentage of
earned premiums were 84.1% for the nine months ended September 30, 2022,
compared to 75.7% for the same period in 2021, a deterioration of 8.4 percentage
points primarily due to higher claim severity trends. Severity trends increased
due to rising inflation and supply chain constraints. Adverse loss and LAE
reserve development (including catastrophe loss reserve development) was $1.9
million for the nine months ended September 30, 2022, compared to $4.9 million
for the same period in 2021. Catastrophe losses and LAE (excluding reserve
development) were $3.2 million for the nine months ended September 30, 2022,
compared to $6.1 million in for the same period in 2021.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums on preferred personal automobile insurance decreased by $13.1
million for the three months ended September 30, 2022, compared to the same
period in 2021, due primarily to lower volume as a result of ongoing profit
improvement actions. Incurred losses and LAE were $78.1 million, or 87.3% of
earned premiums, for the three months ended September 30, 2022, compared to
$87.7 million, or 85.5% of earned premiums, for the same period in 2021.
Incurred losses and


                                       56
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Preferred Property & Casualty Insurance (Continued)


LAE as a percentage of earned premiums increased due primarily to a
deterioration in the underlying loss and LAE ratio offset by lower incurred
catastrophe losses (excluding loss reserve development). Underlying losses and
LAE as a percentage of earned premiums were 85.8% for the three months ended
September 30, 2022, compared to 82.7% for the same period in 2021, a
deterioration of 3.1 percentage points primarily due to higher claim severity
trends. Severity trends increased due to rising inflation and supply chain
constraints. Adverse loss and LAE reserve development (including catastrophe
loss reserve development) was $0.3 million for the three months ended
September 30, 2022, compared to $0.2 million for the same period in 2021.
Catastrophe losses and LAE (excluding reserve development) were $1.1 million for
the three months ended September 30, 2022, compared to $2.7 million for the same
period in 2021.

Homeowners Insurance

Selected financial information for the homeowners insurance product line
follows.

                                                                       Nine Months Ended                  Three Months Ended
                                                                    Sep 30,          Sep 30,            Sep 30,           Sep 30,
(Dollars in Millions)                                                2022              2021              2022              2021
Net Premiums Written                                              $  147.5          $ 158.5          $    52.8           $ 56.1
Earned Premiums                                                   $  150.9          $ 154.6          $    51.9           $ 52.5

Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                    $   84.9          $  81.3          $    28.8           $ 26.6
Catastrophe Losses and LAE                                            41.5             64.2                9.4             20.4
Prior Years:
Non-catastrophe Losses and LAE                                        (1.7)            (2.5)                 -             (0.2)
Catastrophe Losses and LAE                                            (4.4)            (1.8)              (0.8)             0.1
Total Incurred Losses and LAE                                     $  120.3          $ 141.2          $    37.4           $ 46.9

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                     56.2  %          52.6  %            55.5   %         50.6  %
Current Year Catastrophe Losses and LAE Ratio                         27.5             41.5               18.1             38.9
Prior Years Non-catastrophe Losses and LAE Ratio                      (1.1)            (1.6)                 -             (0.4)
Prior Years Catastrophe Losses and LAE Ratio                          (2.9)            (1.2)              (1.5)             0.2
Total Incurred Loss and LAE Ratio                                     79.7  %          91.3  %            72.1   %         89.3  %


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums in homeowners insurance decreased by $3.7 million for the nine
months ended September 30, 2022, compared to the same period in 2021, due
primarily to lower volume as a result of ongoing profit improvement actions.
Incurred losses and LAE were $120.3 million, or 79.7% of earned premiums, for
the nine months ended September 30, 2022, compared to $141.2 million, or 91.3%
of earned premiums, for the same period in 2021. Incurred losses and LAE as a
percentage of earned premiums decreased due primarily to lower incurred
catastrophe losses (excluding loss reserve development) and increased favorable
prior year development, partially offset by higher underlying losses and LAE.
Underlying losses and LAE as a percentage of earned premiums were 56.2% for the
nine months ended September 30, 2022, compared to 52.6% for the same period in
2021, a deterioration of 3.6 percentage points. Catastrophe losses and LAE
(excluding reserve development) were $41.5 million for the nine months ended
September 30, 2022, including Hurricane Ian, compared to $64.2 million for the
same period in 2021. There were zero catastrophic events above $5 million for
the nine months ended September 30, 2022, compared to four catastrophic events
above $5 million for the same period in 2021. Favorable loss and LAE reserve
development (including catastrophe loss reserve development) was $6.1 million
for the nine months ended September 30, 2022, compared to $4.3 million for the
same period in 2021.

                                       57
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Preferred Property & Casualty Insurance (Continued)

Three Months Ended September 30, 2022 Compared to the Same Period in 2021

Earned Premiums in homeowners insurance decreased by $0.6 million for the three
months ended September 30, 2022, compared to the same period in 2021, due
primarily to lower volume as a result of ongoing profit improvement actions.


Incurred losses and LAE were $37.4 million, or 72.1% of earned premiums, for the
three months ended September 30, 2022, compared to $46.9 million, or 89.3% of
earned premiums, for the same period in 2021. Incurred losses and LAE as a
percentage of earned premiums decreased due primarily to lower incurred
catastrophe losses (excluding loss reserve development). Underlying losses and
LAE as a percentage of earned premiums were 55.5% for the three months ended
September 30, 2022, compared to 50.6% for the same period in 2021, an increase
of 4.9 percentage points. Catastrophe losses and LAE (excluding reserve
development) were $9.4 million for the three months ended September 30, 2022,
including Hurricane Ian, compared to $20.4 million for the same period in 2021.
There were zero catastrophic events above $5 million for the three months ended
September 30, 2022, compared to one catastrophic event above $5 million for the
same period in 2021. Favorable loss and LAE reserve development (including
catastrophe loss reserve development) was $0.8 million for the three months
ended September 30, 2022, compared to $0.1 million for the same period in 2021.

Other Personal Insurance

Other personal insurance products include umbrella, dwelling fire, inland
marine, earthquake, boat owners, and other liability coverages. Selected
financial information for other personal insurance product lines follows.


                                                                       Nine Months Ended                     Three Months Ended
                                                                    Sep 30,           Sep 30,          Sep 30,                Sep 30,
(Dollars in Millions)                                                 2022             2021              2022                   2021
Net Premiums Written                                              $    22.4          $ 25.6          $    7.2                $   8.8
Earned Premiums                                                   $    24.4          $ 25.4          $    7.9                $   8.6

Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                    $    13.5          $ 12.5          $    5.2                $   4.2
Catastrophe Losses and LAE                                              1.0             1.3               0.3                    0.3
Prior Years:
Non-catastrophe Losses and LAE                                          3.6             2.7              (0.5)                   0.1
Catastrophe Losses and LAE                                             (0.5)           (1.8)                -                   (0.1)
Total Incurred Losses and LAE                                     $    17.6          $ 14.7          $    5.0                $   4.5

Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                      55.2  %         49.3  %           65.8   %               48.8  %
Current Year Catastrophe Losses and LAE Ratio                           4.1             5.1               3.8                    3.5
Prior Years Non-catastrophe Losses and LAE Ratio                       14.8            10.6              (6.3)                   1.2
Prior Years Catastrophe Losses and LAE Ratio                           (2.0)           (7.1)                -                   (1.2)
Total Incurred Loss and LAE Ratio                                      72.1  %         57.9  %           63.3   %               52.3  %


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums in other personal insurance decreased by $1.0 million for the
nine months ended September 30, 2022, compared to the same period in 2021.
Incurred losses and LAE was $17.6 million, or 72.1% of earned premiums for the
nine months ended September 30, 2022, compared to $14.7 million, or 57.9% of
earned premiums, for the same period in 2021. Underlying losses and LAE as a
percentage of earned premiums were 55.2% for the nine months ended September 30,
2022, compared to 49.3% for the same period in 2021, a deterioration of 5.9
percentage points. Catastrophe losses and LAE (excluding loss reserve
development) was $1.0 million for the nine months ended September 30, 2022,
compared to $1.3 million for the same period in 2021. Adverse loss and LAE
reserve development (including catastrophe losses development) for the nine
months ended September 30, 2022 was $3.1 million, compared to $0.9 million for
the same period in 2021.

                                       58
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Preferred Property & Casualty Insurance (Continued)

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums in other personal insurance decreased by $0.7 million for the
three months ended September 30, 2022, compared to the same period in 2021.
Incurred losses and LAE were $5.0 million, or 63.3% of earned premiums, for the
three months ended September 30, 2022, compared to $4.5 million, or 52.3% of
earned premiums, for the same period in 2021. Underlying losses and LAE as a
percentage of earned premiums were 65.8% for the three months ended
September 30, 2022, compared to 48.8% for the same period in 2021, a
deterioration of 17.0 percentage points. Catastrophe losses and LAE (excluding
loss reserve development) was $0.3 million for the three months ended
September 30, 2022, compared to $0.3 million for the same period in 2021.
Favorable loss and LAE reserve development (including catastrophe losses
development) for the three months ended September 30, 2022 was $0.5 million,
compared to favorable development of $0.0 million for the same period in 2021.


                                       59
--------------------------------------------------------------------------------

Life & Health Insurance


Selected financial information for the Life & Health Insurance segment follows.

                                                                      Nine Months Ended                     Three Months Ended
                                                                   Sep 30,           Sep 30,             Sep 30,             Sep 30,
(Dollars in Millions)                                               2022               2021                2022                2021

Earned Premiums                                                 $    479.7          $ 489.3          $    158.2             $ 164.1
Net Investment Income                                                163.9            151.9                52.6                48.4
Changes in Value of Alternative Energy Partnership
Investments                                                           (5.6)           (12.1)                0.1                (6.1)
Other Income                                                          (0.8)             0.3                   -                 0.1
Total Revenues                                                       637.2            629.4               210.9               206.5
Policyholders' Benefits and Incurred Losses and LAE                  339.2            353.5               105.6               119.5
Insurance Expenses                                                   262.2            269.4                91.5                92.9

Operating Income (Loss)                                               35.8              6.5                13.8                (5.9)
Income Tax Benefit (Expense)                                          (2.4)            16.6                (1.2)                8.7
Segment Net Operating Income (Loss)                             $     33.4          $  23.1          $     12.6             $   2.8


                               INSURANCE RESERVES

                                                                                                    Dec 31,
(Dollars in Millions)                                                        Sep 30, 2022             2021
Insurance Reserves:
Future Policyholder Benefits                                               $     3,505.0          $ 3,454.1
Incurred Losses and LAE Reserves:
Life                                                                                55.7               60.7
Accident and Health                                                                 23.4               26.1
Property                                                                             3.6                3.6
Total Incurred Losses and LAE Reserves                                              82.7               90.4
Insurance Reserves (1)                                                     $     3,587.7          $ 3,544.5
(1) September 30, 2022 includes reserves classified as Liabilities Held-for-Sale on the Condensed Consolidated
Balance Sheets. See Note 4, "Dispositions," for more information.


Use of Death Verification Databases


In the third quarter of 2016, the Company's Life & Health segment voluntarily
began implementing a comprehensive process under which it cross-references its
life insurance policies against the Death Master File maintained by the Social
Security Administration and other death verification databases to identify
potential situations where the beneficiaries may not have filed a claim
following the death of an insured and initiate an outreach process to identify
and contact beneficiaries and settle claims. Policyholders' Benefits and
Incurred Losses and Loss Adjustment Expenses for the year ended December 31,
2016 included a pre-tax charge of $77.8 million to recognize the initial impact
of using death verification databases in the Company's operations, including to
determine its IBNR liability for unpaid claims and claims adjustment expenses
for life insurance products. Subsequently, the Company reduced its estimate of
the initial impact of using death verification databases by $30.3 million.

Overall

Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums in the Life & Health Insurance segment decreased by $9.6 million
for the nine months ended September 30, 2022, compared to the same period in
2021. This is due primarily to lower volume on accident and health insurance
products and property insurance products, partially offset by higher volume on
life insurance products.

Net Investment Income increased by $12.0 million for the nine months ended
September 30, 2022, compared to the same period in 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 offset by lower yields on Fixed Income
Securities and lower levels of investments and yields on Equity Securities.

                                       60
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Life & Health Insurance (Continued)


Loss related to Changes in Value of Alternative Energy Partnership Investments
was $5.6 million for the nine months ended September 30, 2022, compared to $12.1
million for the same period in 2021. Tax benefits related to the Alternative
Energy Partnership Investments were $2.1 million and $17.6 million for the nine
months ended September 30, 2022 and 2021, respectively. This resulted in net
loss of $3.5 million and net income of $5.5 million attributable to Alternative
Energy Partnership Investments for the nine months ended September 30, 2022 and
2021, respectively.

Policyholders' Benefits and Incurred Losses and LAE decreased by $14.3 million
for the nine months ended September 30, 2022, compared to the same period in
2021, due primarily to lower mortality for life insurance, lower frequency of
accident and health insurance claims and lower current year property catastrophe
losses and LAE.

Insurance Expenses in the Life & Health Insurance segment decreased by $7.2
million
for the nine months ended September 30, 2022, compared to the same
period in 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.


Segment Net Operating Income in the Life & Health Insurance segment was $33.4
million for the nine months ended September 30, 2022, compared to $23.1 million
in 2021.

The Life & Health Insurance segment’s effective income tax rate differs from the
federal statutory income tax rate due primarily to investment tax credits,
tax-exempt investment income, and dividends received deductions.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums in the Life & Health Insurance segment decreased by $5.9 million
for the three months ended September 30, 2022, compared to the same period in
2021. This is due primarily to lower volume on accident and health insurance
products and property insurance products.

Net Investment Income increased by $4.2 million for the three months ended
September 30, 2022, compared to the same period in 2021, due primarily to higher
levels of investments in Fixed Income Securities and Company-Owned Life
Insurance
, partially offset by lower levels of investments in Equity Securities.


Income related to Changes in Value of Alternative Energy Partnership Investments
was $0.1 million for the three months ended September 30, 2022, compared to loss
of $6.1 million for the same period in 2021. Tax expense related to the
Alternative Energy Partnership Investments was $0.0 million for the three months
ended September 30, 2022, compared to tax benefits of $8.0 million for the same
period in 2021. This resulted in net income of $0.1 million and $1.9 million
attributable to Alternative Energy Partnership Investments for the three months
ended September 30, 2022 and 2021, respectively.

Policyholders' Benefits and Incurred Losses and LAE decreased by $13.9 million
for the three months ended September 30, 2022, compared to the same period in
2021, due primarily to lower mortality for life insurance, lower frequency of
accident and health insurance claims and lower current year property catastrophe
losses and LAE.

Insurance Expenses in the Life & Health Insurance segment decreased by $1.4
million
for the three months ended September 30, 2022, compared to the same
period in 2021, due primarily to lower commission expense.


Segment Net Operating Income in the Life & Health Insurance segment was $12.6
million for the three months ended September 30, 2022, compared to $2.8 million
in 2021.

The Life & Health Insurance segment’s effective income tax rate differs from the
federal statutory income tax rate due primarily to investment tax credits,
tax-exempt investment income and dividends received deductions.







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Life & Health Insurance (Continued)

Life Insurance

Selected financial information for the life insurance product line follows.

                                                                       Nine Months Ended                     Three Months Ended
                                                                    Sep 30,           Sep 30,             Sep 30,             Sep 30,
(Dollars in Millions)                                                2022               2021                2022                2021
Earned Premiums                                                  $    304.6          $ 300.2          $    100.4             $ 101.5
Net Investment Income                                                 159.0            147.5                51.0                47.0
Changes in Value of Alternative Energy Partnership
Investments                                                            (5.2)           (11.5)                0.1                (5.8)
Other Income                                                           (1.2)               -                (0.1)                  -
Total Revenues                                                        457.2            436.2               151.4               142.7
Policyholders' Benefits and Incurred Losses and LAE                   253.3            257.1                78.6                87.3
Insurance Expenses                                                    178.8            175.1                62.5                61.5

Operating Income (Loss)                                                25.1              4.0                10.3                (6.1)
Income Tax Benefit (Expense)                                           (0.3)            16.3                (0.5)                8.4
Total Product Line Net Operating Income (Loss)                   $     24.8          $  20.3          $      9.8             $   2.3


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from life insurance increased by $4.4 million for the nine
months ended September 30, 2022, compared to the same period in 2021, due
primarily to increased volume of sales. Policyholders' Benefits and Incurred
Losses and LAE on life insurance were $253.3 million for the nine months ended
September 30, 2022, compared to $257.1 million for the same period in 2021, a
decrease of $3.8 million due primarily to lower mortality.
Insurance Expenses increased by $3.7 million for the nine months ended
September 30, 2022, compared to the same period in 2021, due primarily to higher
commission from a higher volume of life insurance products.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from life insurance decreased by $1.1 million for the three
months ended September 30, 2022, compared to the same period in 2021.
Policyholders' Benefits and Incurred Losses and LAE on life insurance were $78.6
million for the three months ended September 30, 2022, compared to $87.3 million
for the same period 2021, a decrease of $8.7 million due primarily to lower
mortality.

Insurance Expenses increased by $1.0 million for the three months ended
September 30, 2022, compared to the same period in 2021.












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Life & Health Insurance (Continued)

Accident and Health Insurance


Selected financial information for the accident and health insurance product
line follows.
                                                                   Nine Months Ended                       Three Months Ended
                                                                Sep 30,           Sep 30,              Sep 30,               Sep 30,
(Dollars in Millions)                                            2022               2021                 2022                 2021
Earned Premiums                                              $    136.8          $ 142.3          $     45.9               $   47.0
Net Investment Income                                               2.5              2.7                 0.8                    0.9
Changes in Value of Alternative Energy Partnership
Investments                                                        (0.1)            (0.2)                  -                   (0.1)
Other Income                                                        0.4              0.3                 0.1                    0.1
Total Revenues                                                    139.6            145.1                46.8                   47.9
Policyholders' Benefits and Incurred Losses and LAE                70.3             74.2                22.3                   22.9
Insurance Expenses                                                 63.3             70.1                22.4                   23.5

Operating Income (Loss)                                             6.0              0.8                 2.1                    1.5
Income Tax Benefit (Expense)                                       (1.2)             0.1                (0.4)                  (0.2)
Total Product Line Net Operating Income (Loss)               $      4.8          $   0.9          $      1.7               $    1.3


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from accident and health insurance decreased by $5.5 million for
the nine months ended September 30, 2022, compared to the same period in 2021.
This is due primarily to lower volume of sales. Policyholders' Benefits and
Incurred Losses and LAE on accident and health insurance were $70.3 million for
the nine months ended September 30, 2022, compared to $74.2 million for the same
period in 2021. This is due primarily to lower frequency of claims.

Insurance Expenses decreased by $6.8 million for the nine months ended
September 30, 2022, compared to the same period in 2021, due primarily to lower
volume of accident and health insurance products.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from accident and health insurance decreased by $1.1 million for
the three months ended September 30, 2022, compared to the same period in 2021.
This is due primarily to lower volume of sales. Policyholders' Benefit and
Incurred Losses and LAE on accident and health insurance were $22.3 million for
the three months ended September 30, 2022, compared to $22.9 million for the
same period in 2021. This is due primarily to lower frequency of claims.

Insurance Expenses decreased by $1.1 million for the three months ended
September 30, 2022, compared to the same period in 2021, due primarily to lower
volume of accident and health insurance products.

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Life & Health Insurance (Continued)

Property Insurance


Selected financial information for the property insurance product line follows.

                                                                      Nine Months Ended                  Three Months Ended
                                                                   Sep 30,           Sep 30,           Sep 30,           Sep 30,
(Dollars in Millions)                                                2022             2021              2022              2021
Earned Premiums                                                  $    38.3          $ 46.8          $    11.9           $ 15.6
Net Investment Income (Loss)                                           2.4             1.7                0.8              0.5
Changes in Value of Alternative Energy Partnership
Investments                                                           (0.3)           (0.4)                 -             (0.2)

Total Revenues                                                        40.4            48.1               12.7             15.9
Incurred Losses and LAE related to:
Current Year:
Non-catastrophe Losses and LAE                                        10.5            11.0                2.8              3.6
Catastrophe Losses and LAE                                             2.4            10.1                1.4              5.7
Prior Years:
Non-catastrophe Losses and LAE                                         1.2             1.2                0.1              0.4
Catastrophe Losses and LAE                                             1.5            (0.1)               0.4             (0.4)
Total Incurred Losses and LAE                                         15.6            22.2                4.7              9.3
Insurance Expenses                                                    20.1            24.2                6.6              7.9

Operating Income (Loss)                                                4.7             1.7                1.4             (1.3)
Income Tax Benefit (Expense)                                          (0.9)            0.2               (0.3)             0.5
Total Product Line Net Operating Income (Loss)                   $     3.8          $  1.9          $     1.1           $ (0.8)
Ratios Based On Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio                     27.4  %         23.4  %            23.5   %         23.1  %
Current Year Catastrophe Losses and LAE Ratio                          6.3            21.6               11.8             36.5
Prior Years Non-catastrophe Losses and LAE Ratio                       3.1             2.6                0.8              2.6
Prior Years Catastrophe Losses and LAE Ratio                           3.9            (0.2)               3.4             (2.6)
Total Incurred Loss and LAE Ratio                                     40.7  %         47.4  %            39.5   %         59.6  %


Nine Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from property insurance decreased by $8.5 million for the nine
months ended September 30, 2022, compared to the same period in 2021, due
primarily to lower volume of property insurance products. Incurred losses and
LAE on property insurance were $15.6 million, or 40.7% of earned premiums, for
the nine months ended September 30, 2022, compared to $22.2 million, or 47.4% of
earned premiums for the same period in 2021. Underlying losses and LAE were
$10.5 million, or 27.4% of earned premiums for the nine months ended
September 30, 2022, compared to $11.0 million, or 23.4% of earned premiums for
the same period in 2021, an increase of 4.0 percentage points due primarily to
higher claim severity. Catastrophe losses and LAE (excluding loss reserve
development) were $2.4 million for the nine months ended September 30, 2022,
compared to $10.1 million for the same period in 2021. Catastrophe losses and
LAE decreased $7.7 million due primarily to lower frequency of catastrophe
claims. Adverse loss and LAE reserve development was $2.7 million for the nine
months ended September 30, 2022, compared to adverse development of $1.1 million
in the same period in 2021.

Insurance expenses decreased $4.1 million for the nine months ended
September 30, 2022, compared to the same period in 2021 due primarily to lower
volume of property insurance products.

Three Months Ended September 30, 2022 Compared to the Same Period in 2021


Earned Premiums from property insurance decreased by $3.7 million for the three
months ended September 30, 2022, compared to the same period in 2021, due
primarily to lower volume of property insurance products. Incurred losses and
LAE on property insurance were $4.7 million, or 39.5% of earned premiums, for
the three months ended September 30, 2022, compared to $9.3 million, or 59.6% of
earned premiums for the same period in 2021. Underlying losses and LAE were $2.8
million, or 23.5% of

                                       64
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Life & Health Insurance (Continued)


earned premiums for the three months ended September 30, 2022, compared to $3.6
million, or 23.1% of earned premiums for the same period in 2021, an increase of
0.4 percentage points due primarily to higher claim severity. Catastrophe losses
and LAE (excluding loss reserve development) were $1.4 million for the three
months ended September 30, 2022, compared to $5.7 million for the same period in
2021. Catastrophe losses and LAE decreased $4.3 million due primarily to lower
frequency and lower severity of catastrophe claims. Adverse loss and LAE reserve
development was $0.5 million for the three months ended September 30, 2022,
compared to no development for the same period in 2021.

Insurance expenses decreased $1.3 million for the three months ended
September 30, 2022, compared to the same period in 2021 due primarily to lower
volume of property insurance products.

Investment Results

Net Investment Income


Net Investment Income for the nine and three months ended September 30, 2022 and
2021 was:

                                                                     Nine Months Ended                     Three Months Ended
                                                                  Sep 30,           Sep 30,             Sep 30,             Sep 30,
(Dollars in Millions)                                              2022               2021                2022                2021
Investment Income:
Interest on Fixed Income Securities                            $    218.4          $ 207.1          $    76.9              $  68.4

Dividends on Equity Securities Excluding Alternative
Investments

                                                           4.3              9.8                1.1                  2.9
Alternative Investments:
Equity Method Limited Liability Investments                          28.0             50.9               (0.6)                12.0

Limited Liability Investments Included in Equity
Securities                                                           34.9             29.3                8.8                  9.5
Total Alternative Investments                                        62.9             80.2                8.2                 21.5
Short-term Investments                                                1.4              0.6                1.1                  0.2
Loans to Policyholders                                               16.3             16.3                5.5                  5.4
Real Estate                                                           7.6              7.1                3.1                  2.3
Company-Owned Life Insurance                                         28.0             18.3                9.9                  7.2
Other                                                                 5.1              4.8                1.7                  1.9
Total Investment Income                                             344.0            344.2              107.5                109.8
Investment Expenses:
Real Estate                                                           5.8              6.8                2.3                  2.6
Other Investment Expenses                                            21.9             18.5                7.4                  5.3
Total Investment Expenses                                            27.7             25.3                9.7                  7.9
Net Investment Income                                          $    316.3          $ 318.9          $    97.8              $ 101.9


Net Investment Income was $316.3 million and $318.9 million for the nine months
ended September 30, 2022 and 2021, respectively. Net Investment Income decreased
by $2.6 million in 2022 due primarily to lower valuations on Equity Method
Limited Liability Investments, lower rate on Fixed Income Securities, and lower
balances in Equity Securities, partially offset by higher levels of investments
in Fixed Income Securities and Company-Owned Life Insurance and higher volume of
distributions received from appreciated Limited Liability Investments included
in Equity Securities.

Net Investment Income was $97.8 million and $101.9 million for the three months
ended September 30, 2022 and 2021, respectively. Net Investment Income decreased
by $4.1 million in 2022 due primarily to lower valuations on Equity Method
Limited Liability Investments, partially offset by higher levels of investments
in Fixed Income Securities and Company-Owned Life Insurance.

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.

                                       65
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Investment Results (Continued)

Total Comprehensive Investment Gains (Losses)

The components of Total Comprehensive Investment Gains (Losses) for the nine and
three months ended September 30, 2022 and 2021 were:

                                                                       Nine Months Ended                    Three Months Ended
                                                                   Sep 30,            Sep 30,            Sep 30,            Sep 30,
(Dollars in Millions)                                               2022               2021                2022               2021
Recognized in Condensed Consolidated Statements of
Income:
Income (Loss) from Change in Fair Value of Equity and
Convertible Securities                                          $    (79.9)         $   92.4          $     (11.2)         $  (0.6)
Gains on Sales                                                        34.6              45.0                 18.7             10.7
Losses on Sales                                                      (34.2)             (1.9)               (30.5)            (0.6)
Gains (Losses) on Hedging Activity                                       -                 -                 (0.3)               -
Impairment Losses                                                    (22.1)             (7.8)                (8.3)            (0.6)

Net Gains (Losses) Recognized in Condensed Consolidated
Statements of Income

                                                (101.6)            127.7                (31.6)             8.9
Recognized in Other Comprehensive Income (Loss)                   (1,644.5)           (255.9)              (412.3)           (79.3)
Total Comprehensive Investment Gains (Losses)                   $ (1,746.1) 

$ (128.2) $ (443.9) $ (70.4)



Total Comprehensive Investment Losses were $1,746.1 million and $128.2 million
for the nine months ended September 30, 2022 and 2021, respectively. Total
Comprehensive Investment Losses increased by $1,617.9 million primarily due to a
decrease in the fair value of the Company's fixed income bond portfolio and a
loss from the change in fair value of the Company's fair value method equity and
convertible securities.

Total Comprehensive Investment Losses were $443.9 million for the three months
ended September 30, 2022 compared to Total Comprehensive Investment Losses of
$70.4 million in the same period 2021. Total Comprehensive Investment Losses
increased by $373.5 million primarily due to a decrease in the fair value of the
Company's fixed income bond portfolio and a loss from the change in fair value
of the Company's fair value method equity and convertible securities.

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


The components of Income (Loss) from Change in Fair Value of Equity and
Convertible Securities for the nine and three months ended September 30, 2022
and 2021 were:

                                                                       Nine Months Ended                       Three Months Ended
                                                                   Sep 30,             Sep 30,              Sep 30,              Sep 30,
(Dollars in Millions)                                                2022                2021                 2022                 2021
Preferred Stocks                                               $     (8.4)            $   1.8          $      (2.5)             $   0.1
Common Stocks                                                        (0.5)                3.2                  0.8                 (1.1)
Other Equity Interests:
Exchange Traded Funds                                               (52.1)               50.1                 (6.6)                (7.1)
Limited Liability Companies and Limited Partnerships                (14.5)               35.5                 (2.3)                 7.9
Total Other Equity Interests                                        (66.6)               85.6                 (8.9)                 0.8
Income (Loss) from Change in Fair Value of Equity
Securities                                                          (75.5)               90.6                (10.6)                (0.2)

Income (Loss) from Change in Fair Value of Convertible
Securities

                                                           (4.4)                1.8                 (0.6)                (0.4)
Income (Loss) from Change in Fair Value of Equity and
Convertible Securities                                         $    (79.9)            $  92.4          $     (11.2)             $  (0.6)


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Investment Results (Continued)

Net Realized Investment Gains (Losses)

The components of Net Realized Investment Gains (Losses) for the nine and three
months ended September 30, 2022 and 2021 were:

                                                                       Nine Months Ended                        Three Months Ended
                                                                    Sep 30,             Sep 30,              Sep 30,              Sep 30,
(Dollars in Millions)                                                2022                 2021                 2022                 2021
Fixed Maturities:
Gains on Sales                                                 $     28.0              $  42.7          $      14.2              $  10.3
Losses on Sales                                                     (27.5)                (1.7)               (23.9)                (0.4)
Gains (Losses) on Hedging Activity                                      -                    -                 (0.3)                   -
Equity Securities:
Gains on Sales                                                        6.6                  1.8                  4.5                  0.1
Losses on Sales                                                      (6.7)                (0.2)                (6.6)                (0.2)
Equity Method Limited Liability Investments:
Gains on Sales                                                          -                  0.4                    -                  0.4

Real Estate:
Gains on Sales                                                          -                  0.1                    -                 (0.1)

Net Realized Investment Gains (Losses)                         $      0.4              $  43.1          $     (12.1)             $  10.1

Gross Gains on Sales                                           $     34.6              $  45.0          $      18.7              $  10.7
Gross Losses on Sales                                               (34.2)                (1.9)               (30.5)                (0.6)
Gains (Losses) on Hedging Activity                                      -                    -                 (0.3)                   -
Net Realized Investment Gains (Losses)                         $      0.4              $  43.1          $     (12.1)             $  10.1


Impairment Losses

The Company regularly reviews its investment portfolio to determine whether a
decline in the fair value of an investment has 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
support the entire amortized cost basis, the credit loss is reported in the
Condensed Consolidated Statements of Income in the period that the declines are
evaluated. The components of Impairment Losses in the Condensed Consolidated
Statements of Income for the nine and three months ended September 30, 2022 and
2021 were:

                                                                      Nine Months Ended                                                                                   Three Months Ended
                                                Sep 30, 2022                                      Sep 30, 2021                                      Sep 30, 2022                                       Sep 30, 2021
(Dollars in Millions)                 Amount             Number of Issuers             Amount             Number of Issuers               Amount              Number of Issuers             Amount             Number of Issuers
Fixed Maturities                 $    (22.1)                      39               $       (3.3)                   15               $     (8.3)                        34               $        0.5                     -
Equity Securities                         -                        -                       (4.1)                   13                        -                          -                       (0.7)                    2
Real Estate                               -                        -                       (0.4)                    1                        -                          -                       (0.4)                    1
Impairment Losses                $    (22.1)                                       $       (7.8)                                    $     (8.3)                                         $       (0.6)

Investment Quality and Concentrations


The Company's fixed maturity investment portfolio is comprised primarily of
high-grade corporate, municipal and agency bonds. At September 30, 2022, 95.1%
of the Company's fixed maturity investment portfolio was rated investment-grade,
which the Company defines as a security issued by a high quality obligor with at
least a relatively stable credit profile and where it is highly likely that all
contractual payments of principal and interest will timely occur and carry a
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
of more Nationally Recognized Statistical Rating Organizations and either have a
rating of AAA, AA, A or BBB

                                       67
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Investment Quality and Concentrations (Continued)

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.

The following table summarizes the credit quality of the Company’s fixed
maturity investment portfolio at September 30, 2022 and December 31, 2021:


(Dollars in Millions)                                                        Sep 30, 2022                                  Dec 31, 2021
  NAIC
 Rating                          Rating                           Fair Value             Percentage             Fair Value             Percentage
    1           AAA, AA, A                                      $    4,717.6                    70.6  %       $    5,351.6                    67.0  %
    2           BBB                                                  1,639.2                    24.5               2,215.1                    27.7
   3-4          BB, B                                                  251.4                     3.8                 331.0                     4.2
   5-6          CCC or Lower                                            70.9                     1.1                  89.2                     1.1
Total Investments in Fixed Maturities (1)                       $    6,679.1                   100.0  %       $    7,986.9                   

100.0 %
(1) Includes securities classified as Held-for-Sale Assets on the Condensed Consolidated Balance Sheets. See Note 4, “Dispositions,” for more
information.



Gross unrealized losses on the Company's investments in below-investment-grade
fixed maturities were $33.1 million and $9.0 million at September 30, 2022 and
December 31, 2021, respectively.

The following table summarizes the fair value of the Company’s investments in
governmental fixed maturities at September 30, 2022 and December 31, 2021:

                                                                       Sep 30, 2022                                   Dec 31, 2021
                                                                                   Percentage                                     Percentage
                                                                                    of Total                                       of Total
(Dollars in Millions)                                      Fair Value             Investments             Fair Value             Investments
U.S. Government and Government Agencies and
Authorities                                              $      526.8                      6.1  %       $      637.4                      6.1  %

States and Political Subdivisions:

Revenue Bonds                                                 1,240.4                     14.4               1,516.1                     14.6
States                                                          200.8                      2.3                 235.8                      2.3
Political Subdivisions                                          110.9                      1.3                 138.2                      1.3
Foreign Governments                                               3.7                        -                   5.5                      0.1

Total Investments in Governmental Fixed Maturities $ 2,082.6

               24.1  %       $    2,533.0                     24.4  %


The following table summarizes the fair value of the Company's investments in
non-governmental fixed maturities by industry at September 30, 2022 and
December 31, 2021.

                                                                         Sep 30, 2022                                   Dec 31, 2021
                                                                                     Percentage                                     Percentage
                                                                                      of Total                                       of Total
(Dollars in Millions)                                        Fair Value             Investments             Fair Value             Investments
Finance, Insurance and Real Estate                         $    1,972.7                     22.8  %       $    1,996.7                     19.2  %
Manufacturing                                                   1,046.9                     12.1               1,571.0                     15.1
Transportation, Communication and Utilities                       689.8                      8.0                 815.8                      7.9
Services                                                          524.4                      6.1                 617.5                      5.9
Mining                                                            167.6                      1.9                 254.3                      2.4
Retail Trade                                                      158.7                      1.8                 171.4                      1.7
Construction                                                       21.6                      0.3                  13.1                      0.1
Other                                                              14.8                      0.2                  14.1                      0.1

Total Investments in Non-governmental Fixed
Maturities                                                 $    4,596.5                     53.2  %       $    5,453.9                     52.4  %



                                       68
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Investment Quality and Concentrations (Continued)


The following table summarizes the fair value of the Company's investments in
non-governmental fixed maturities by range of amount invested at September 30,
2022.

(Dollars in Millions)        Number of Issues       Aggregate Fair Value
Below $5                            789            $             1,504.9
$5 -$10                             193                          1,452.9
$10 - $20                            93                          1,266.6
$20 - $30                            13                            304.7
Greater Than $30                      2                             67.4
Total                             1,090            $             4,596.5


The Company's short-term investments primarily consist of money market funds and
short term bonds. At September 30, 2022, the Company had $173.6 million invested
in money market funds which primarily invest in U.S. Treasury securities and
$184.0 million invested in U.S. treasury bills and short-term bonds. The
September 30, 2022 short-term investments balance includes $0.4 million of
short-term investments classified as Held-for-Sale Assets on the Condensed
Consolidated Balance Sheets. See Note 4, "Dispositions," for more information.

The following table 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 Investments,
at September 30, 2022:

                                                                                 Percentage
                                                                     Fair         of Total
(Dollars in Millions)                                                Value       Investments
Fixed Maturities:
States including their Political Subdivisions:
Texas                                                              $ 133.3             1.5  %
California                                                            84.7             1.0
Georgia                                                               78.2             0.9
Michigan                                                              76.7             0.9
Louisiana                                                             63.5             0.7
New York                                                              61.9             0.7
Pennsylvania                                                          61.4             0.7
Florida                                                               55.2             0.6
Colorado                                                              51.5             0.6

Equity Securities at Fair Value-Other Equity Interests:


Vanguard Total World Stock ETF                                        58.4             0.7

Total                                                              $ 724.8             8.3  %



                                       69
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Investment Quality and Concentrations (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 September 30, 2022 and
December 31, 2021 is presented below.

                                                                               Unfunded
                                                                              Commitment                Reported Value
                                                                               Sep 30,             Sep 30,           Dec 31,
(Dollars in Millions)                                                            2022               2022              2021
Reported as Equity Method Limited Liability Investments:
Mezzanine Debt                                                              $      36.7          $  121.0          $  120.0
Senior Debt                                                                        44.7              23.8              27.5
Distressed Debt                                                                       -               4.4              21.7
Secondary Transactions                                                              1.7              11.1              11.7
Leveraged Buyout                                                                    0.6               9.2               8.7
Growth Equity                                                                         -               1.3               0.7
Real Estate                                                                           -              43.4              29.9
Hedge Fund                                                                            -               0.5               8.7
Other                                                                                 -              11.3              13.0
Total Equity Method Limited Liability Investments                                  83.7             226.0             241.9

Alternative Energy Partnership Investments                                            -              16.9              39.6

Reported as Other Equity Interests at Fair Value:
Mezzanine Debt                                                                     48.2             107.3             129.3
Senior Debt                                                                         6.2              21.7              29.9
Distressed Debt                                                                    19.3              29.0              44.9
Secondary Transactions                                                              4.2               3.6               4.0
Hedge Funds                                                                           -              21.4              82.7
Leveraged Buyout                                                                    6.4              20.6              32.2
Growth Equity                                                                       8.2               5.1               2.0

Total Reported as Other Equity Interests at Fair Value                             92.5             208.7             325.0

Reported as Equity Securities at Modified Cost:


Other                                                                                 -               8.3               7.7
Total Reported as Equity Securities at Modified Cost                                  -               8.3               7.7

Total Investments in Limited Liability Companies and Limited
Partnerships

$ 176.2 $ 459.9 $ 614.2



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.


                                       70
--------------------------------------------------------------------------------

Expenses


Expenses for the nine and three months ended September 30, 2022 and 2021 were:

                                                                        Nine Months Ended                     Three Months Ended
                                                                   Sep 30,            Sep 30,              Sep 30,             Sep 30,
(Dollars in Millions)                                                2022               2021                 2022                2021
Insurance Expenses:
Commissions                                                      $   559.1          $   625.3          $    176.3             $ 210.0
General Expenses                                                     272.0              252.0                93.5                85.1
Taxes, Licenses and Fees                                              74.2               79.1                23.6                26.5
Total Costs Incurred                                                 905.3              956.4               293.4               321.6
Net Policy Acquisition Costs Amortized (Deferred)                      4.3              (87.3)                7.3               (23.8)
Amortization of Value of Business Acquired ("VOBA")                    3.4               39.9                 0.6                13.5

Insurance Expenses                                                   913.0              909.0               301.3               311.3
Loss from Early Extinguishment of Debt                                 3.7                  -                   -                   -
Interest and Other Expenses:
Interest Expense                                                      41.0               33.0                14.3                10.7
Other Expenses:

Acquisition and Disposition Related Transaction,
Integration, Restructuring and Other Costs                            27.3               34.7                12.7                 8.0
Other                                                                102.8              111.5                36.5                44.0
Other Expenses                                                       130.1              146.2                49.2                52.0
Interest and Other Expenses                                          171.1              179.2                63.5                62.7
Total Expenses                                                   $ 1,087.8          $ 1,088.2          $    364.8             $ 374.0


Insurance Expenses

Insurance Expenses were $913.0 million for the nine months ended September 30,
2022, compared to $909.0 million for the same period in 2021. Insurance Expenses
increased by $4.0 million in 2022 due primarily to net amortization of policy
acquisition costs as the acquisition of AAC led to higher deferrals in 2021.
This is partially offset by a corresponding decrease in the amortization of VOBA
from the acquisition of AAC and lower commissions as premium growth has slowed
due to ongoing profit improvement actions.

Insurance Expenses were $301.3 million for the three months ended September 30,
2022, compared to $311.3 million for the same period in 2021. Insurance Expenses
decreased by $10.0 million in 2022 due primarily to lower commissions as premium
growth has slowed due to ongoing profit improvement actions and a decrease in
the amortization of the VOBA asset established as a result of the acquisition of
AAC in 2021. This is partially offset by net amortization of policy acquisition
costs due to the slowing of premium growth as part of the ongoing profit
improvement actions.

Interest and Other Expenses


Interest and Other Expenses was $171.1 million for the nine months ended
September 30, 2022, compared to $179.2 million for the same period in 2021.
Interest expense increased by $8.0 million in 2022 due primarily to the addition
of the 2032 Senior Notes and the 2062 Junior Debentures in 2022. Other expenses
decreased by $16.1 million in 2022 due primarily to lower acquisition and
integration costs, partially offset by the loss on the sale of RNIC and goodwill
impairment.

Interest and Other Expenses was $63.5 million for the three months ended
September 30, 2022, compared to $62.7 million for the same period in 2021.
Interest expense increased by $3.6 million in 2022 due primarily to the addition
of the 2032 Senior Notes and the 2062 Junior Debentures in 2022. Other expenses
decreased by $2.8 million in 2022 due primarily to lower overhead expenses,
partially offset by the loss on the sale of RNIC and goodwill impairment.




                                       71
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Income Taxes


The federal corporate statutory income tax rate was 21% for the nine months
ended September 30, 2022 and September 30, 2021. The Company's effective income
tax rate differs from the federal corporate income tax rate due primarily to (1)
the effects 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 tax credits, (4) a permanent
difference between the amount of long-term equity-based compensation expense
recognized under GAAP and the amount deductible in the computation of Federal
taxable income, (5) a permanent difference associated with nondeductible
executive compensation, and (6) taxes related to sold and available for sale
subsidiaries.

The Inflation Reduction Act (the "Law") was signed into law on August 16, 2022,
which will become generally effective on January 1, 2023. Included in the
provisions of the Law are various changes to the tax code, including the
establishment of a Corporate Alternative Minimum tax. Kemper has evaluated the
the provisions of the Law and do not expect a material impact. The Company will
continue to monitor guidance released by the IRS and Treasury.

Tax-exempt investment income and dividends received deductions collectively were
$17.9 million for the nine months ended September 30, 2022, compared to $16.4
million for the same period in 2021. Tax-exempt investment income and dividends
received deductions collectively were $5.6 million for the three months ended
September 30, 2022, compared to $5.0 million for the same period in 2021.

The nontaxable increase in cash surrender value on Company-Owned Life Insurance
was $28.0 million for the nine months ended September 30, 2022, compared to
$18.2 million for the same period in 2021. The nontaxable increase in cash
surrender value on Company-Owned Life Insurance was $9.9 million for the three
months ended September 30, 2022, compared to $7.2 million for the same period in
2021.

The Company realized net investment and other federal income tax credits of $5.8
million and $2.3 million for the nine months ended and three months ended
September 30, 2022, respectively. The company realized net investment tax
credits of $58.0 million and $25.7 million for the nine months ended and three
months ended September 30, 2021, respectively.

The amount of expense recognized for long-term equity-based compensation expense
under GAAP was $6.1 million higher than the amount that would be deductible
under the IRC for the nine months ended September 30, 2022, compared to $1.6
million lower for the same period in 2021. The amount of expense recognized for
long-term equity-based compensation expense under GAAP was $1.0 million higher
than the amount that would be deductible under the IRC for the three months
ended September 30, 2022, compared to $0.2 million higher for the same period in
2021.

The amount of nondeductible executive compensation was $9.3 million for the nine
months ended September 30, 2022, compared to $10.5 million for the same period
in 2021. The amount of nondeductible executive compensation was $3.1 million for
the three months ended September 30, 2022, compared to $3.5 million for the same
period in 2021.

The amount of tax expense recognized related to sold and available for sale
subsidiaries was $10.5 million for the nine and three months ended September 30,
2022
, compared to none for the same periods in 2021.

Recently Issued Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements with
effective dates prior to January 1, 2022. There were no adoptions of such
accounting pronouncements during the nine months ended September 30, 2022 that
had a material impact on the Company’s Condensed Consolidated Financial
Statements.









                                       72
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Liquidity and Capital Resources

Long-term Debt


The Company designates debt obligations as either short-term or long-term based
on maturity date at issuance, or in the case of the 2022 Senior Notes, based on
the date of assumption. Total amortized cost of Long-term Debt outstanding at
September 30, 2022 and December 31, 2021 was:

                                                                             Sep 30,            Dec 31,
(Dollars in Millions)                                                          2022               2021
Senior Notes:
5.000% Senior Notes due September 19, 2022                                 $       -          $   276.7
4.350% Senior Notes due February 15, 2025                                      449.3              449.0
2.400% Senior Notes due September 30, 2030                                     396.5              396.2
3.800% Senior Notes due February 23, 2032                                      395.3                  -
5.875% Fixed-Rate Reset Junior Subordinated Debentures Due 2062                145.3                  -
Total Long-term Debt Outstanding                                           

$ 1,386.4 $ 1,121.9

See Note 15, “Debt,” to the Consolidated Financial Statements for more
information regarding the Company’s long-term debt.

Amended and Extended Credit Agreement


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 feature whereby the Company
can increase the revolving credit borrowing capacity by $200.0 million to a
total of $800.0 million. There were no outstanding borrowings under the credit
agreement at either September 30, 2022 or December 31, 2021.

Federal Home Loan Bank Agreements


Kemper's subsidiaries, United Insurance, Trinity, American Access Casualty
Company, and Alliance are members of the FHLB of Chicago, Dallas, Chicago, and
San Francisco, respectively. American Access Casualty Company became a member of
the FHLB of Chicago in May 2022. Alliance became a member of the FHLB of San
Francisco in August 2020. United Insurance and Trinity became members of the
FHLBs of Chicago and Dallas, respectively, in 2013. Under their memberships,
United, Trinity, American Access Casualty Company, and Alliance may borrow
through the advance program of their respective FHLB. As a requirement of
membership in the FHLB, United Insurance, Trinity, American Access Casualty
Company, and Alliance 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
Equity Securities at Modified Cost. The carrying value of FHLB of Chicago common
stock was $16.1 million and $11.8 million at September 30, 2022 and December 31,
2021, respectively. The carrying value of FHLB of Dallas common stock was $3.4
million and $3.4 million at September 30, 2022 and December 31, 2021,
respectively. The carrying value of FHLB of San Francisco common stock was $1.4
million and $1.7 million at September 30, 2022 and December 31, 2021,
respectively. The Company periodically uses short-term FHLB borrowings for a
combination of cash management and risk management purposes, in addition to
long-term FHLB borrowings for spread lending purposes.

During the first nine months of 2022, United Insurance received advances of
$319.1 million from the FHLB of Chicago and made repayments of $118.3 million.
United Insurance had outstanding advances from the FHLB of Chicago totaling
$602.6 million at September 30, 2022. These advances were made in connection
with the Company's spread lending program. The proceeds related to these
advances were used to purchase fixed maturity securities to earn incremental net
investment income.

With respect to these advances, United Insurance held pledged securities in a
custodial account with the FHLB of Chicago with a fair value of $686.8 million
at September 30, 2022. 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 14, "Policyholder Obligations," to the Condensed Consolidated Financial
Statements for additional information about the United Insurance advances and
related funding agreements.



                                       73
--------------------------------------------------------------------------------

Liquidity and Capital Resources (Continued)

Common Stock Repurchases


On May 6, 2020, Kemper's Board of Directors authorized the repurchase of up to
an additional $200.0 million of Kemper's common stock, in addition to
$133.3 million remaining under the August 6, 2014 authorization, bringing the
remaining share repurchase authorization to approximately $333.3 million. As of
September 30, 2022 the remaining share repurchase authorization under the
repurchase program was $171.6 million. The amount and timing of any future share
repurchases under the authorization will depend on a variety of factors,
including market conditions, the Company's financial condition, results of
operations, available liquidity, particular circumstances and other
considerations.

During the nine months ended September 30, 2022 the Company did not repurchase
any shares of its common stock. During the nine months ended September 30, 2021
the Company repurchased 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.

During the three months ended September 30, 2022 the Company did not repurchase
any shares of its common stock. During the three months ended September 30, 2021
the Company repurchased approximately 40,000 shares of its common stock under
its share repurchase authorization for an aggregate cost of $3.0 million and an
average cost per share of $74.79.

Dividends to Shareholders


Kemper paid a quarterly dividend to shareholders of $0.31 per common share in
the third quarter of 2022. Dividends and dividend equivalents paid were $59.9
million for the nine months ended September 30, 2022.

Subsidiary Dividends and Capital Contributions


Various state insurance laws restrict the ability of Kemper's insurance
subsidiaries to pay dividends without regulatory approval. Such insurance laws
generally restrict the amount of dividends paid in an annual period to the
greater of statutory net income from the previous year or 10% of statutory
capital and surplus. Kemper's insurance subsidiaries collectively paid $300.0
million in dividends to Kemper during the first nine months of 2022. Kemper
estimates that its direct insurance subsidiaries would be able to pay
approximately $31.4 million in additional dividends to Kemper during the
remainder of 2022 without prior regulatory approval.

Sources and Uses of Funds

Kemper and its direct non-insurance subsidiaries directly held cash and
investments totaling $449.8 million at September 30, 2022, compared to $233.9
million
at December 31, 2021.


The primary sources of funds available for repayment of Kemper's indebtedness,
repurchases of common stock, future shareholder dividend payments, and the
payment of interest on Kemper's senior notes and term loan, include cash and
investments directly held by Kemper, receipt of dividends from Kemper's
insurance subsidiaries and borrowings under the credit agreement and from
subsidiaries.

The primary sources of funds for Kemper's insurance subsidiaries are premiums,
investment income, proceeds from the sales, and maturity of investments,
advances from the FHLBs of Chicago, Dallas and San Francisco, 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, Dallas and San Francisco.

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 are able to 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 subsidiaries experience several significant catastrophic events over a
relatively short period of time, investments may have to be sold in advance of
their maturity dates to fund payments, which could result in either investment
gains or losses. Management believes that its property and casualty insurance
subsidiaries maintain adequate levels of liquidity in the event that they were
to experience several future catastrophic events over a relatively short period
of time.



                                       74
--------------------------------------------------------------------------------

Liquidity and Capital Resources (Continued)

Information about the Company’s cash flows for nine months ended September 30,
2022
and 2021 is presented below.


DOLLARS IN MILLIONS                                          Sep 30, 2022       Sep 30, 2021
Net Cash Provided by (Used in) Operating Activities         $      (170.1)     $       307.6
Net Cash Provided by (Used in) Investing Activities                (129.6)             (99.0)
Net Cash Provided by (Used in) Financing Activities                 403.8   

(294.9)



Cash available for investment activities in total is dependent on cash flow from
Operating Activities and Financing Activities and the level of cash the Company
elects to maintain.

Cash Provided by (Used in) Operating Activities


Net cash used in Operating Activities was $170.1 million for the nine months
ended September 30, 2022, compared to net cash provided of $307.6 million for
the same period in 2021, a decrease of $477.7 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 supply chain constraints.

Cash Provided by (Used in) Investing Activities


Net cash used in Investing Activities for the nine months ended September 30,
2022 was $129.6 million, compared to $99.0 million for the same period in 2021,
a decrease of $30.6 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 shifted its
investment portfolio more heavily to fixed maturities. This is partially offset
by higher proceeds from the sale of equity securities.

Cash Provided by (Used in) Financing Activities


Net cash provided by Financing Activities for the nine months ended
September 30, 2022 was $403.8 million, compared to cash used of $294.9 million
for the same period in 2021, an increase of $698.7 million. This was primarily
due to the issuance of the 2032 Senior Notes and 2062 Junior Debentures, 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 offset by the redemption of the 2022 Senior Notes.

Critical Accounting Estimates


Kemper's subsidiaries conduct their operations in two industries: property and
casualty insurance and life and health insurance. Accordingly, the Company is
subject to several industry-specific accounting principles under GAAP. The
preparation of financial statements in accordance with GAAP requires the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities, 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, actual results could ultimately differ materially from the
estimated amounts reported in a company's financial statements. Different
assumptions are likely to result in different estimates of reported amounts.

The Company's critical accounting policies most sensitive to estimates include
the valuation of investments, the valuation of reserves for property and
casualty insurance incurred losses and LAE, the assessment of recoverability of
goodwill and the valuation of pension benefit obligations. The Company's
critical accounting policies are described in the MD&A included in the 2021
Annual Report. There have been no material changes to the information disclosed
in the 2021 Annual Report with respect to these critical accounting estimates
and the Company's critical accounting policies.

© Edgar Online, source Glimpses

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