KEMPER Corp

Previous wording

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) attributable to Kemper Corporation. There were no applicable significant non-recurring items that the Company excluded from the calculation of Adjusted Consolidated Net Operating Income (Loss) for the three months ended March 31, 2024 or 2023.

Current wording

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) attributable to Kemper Corporation. There were no applicable significant non-recurring items that the Company excluded from the calculation of Adjusted Consolidated Net Operating Income (Loss) for the three and six months ended June 30, 2024 or 2023.

Previous wording

Change in Fair Value of Equity and Convertible Securities, Net Realized Investment Gains and Impairment Losses related to investments included in the Company’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the insurance underwriting process. Acquisition and Disposition Related Transaction Costs, Integration Costs, and 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 Settlement and Other Charges relate to (i) loss from early extinguishment of debt, which is driven by the Company’s financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process; (ii) settlement of pension plan obligations which are business decisions made by the Company, the timing of which is unrelated to the underwriting process; and (iii) other charges that are non-standard, not part of the ordinary course of business, and unrelated to the insurance underwriting process. Goodwill Impairment Charges are excluded because they are infrequent and non-recurring charges. Non-Core Operations includes the results of our Preferred Insurance business which we expect to fully exit. These results are excluded because they are irrelevant to our ongoing operations and do not qualify for Discontinued Operations under GAAP. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.

Current wording

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 Costs, Integration Costs, and 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 Settlement and Other Charges relate to (i) loss from early extinguishment of debt, which is driven by the Company’s financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process; (ii) settlement of pension plan obligations which are business decisions made by the Company, the timing of which is unrelated to the underwriting process; and (iii) other charges that are non-standard, not part of the ordinary course of business, and unrelated to the insurance underwriting process. Goodwill Impairment Charges are excluded because they are infrequent and non-recurring charges. Non-Core Operations includes the results of our Preferred Insurance business which we expect to fully exit. These results are excluded because they are irrelevant to our ongoing operations and do not qualify for Discontinued Operations under GAAP. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.

Previous wording

Net Income (Loss) attributable to Kemper Corporation was $71.3 million ($1.11 per unrestricted common share) for the three months ended March 31, 2024, compared to Net Loss attributable to Kemper Corporation of $80.1 million ($(1.25) per unrestricted common share) for the same period in 2023.

Current wording

Net Income Attributable to Kemper Corporation was $75.4 million ($1.17 per unrestricted common share) for the three months ended June 30, 2024, compared to Net Loss Attributable to Kemper Corporation of $97.1 million ($(1.52) per unrestricted common share) for the same period in 2023.

Previous wording

A reconciliation of Net Income (Loss) attributable to Kemper Corporation to Adjusted Consolidated Net Operating Income (Loss) (a non-GAAP financial measure) for the three months ended March 31, 2024 and 2023 is presented below.

Current wording

A reconciliation of Net Income (Loss) attributable to Kemper Corporation to Adjusted Consolidated Net Operating Income (Loss) (a non-GAAP financial measure) for the three and six months ended June 30, 2024 and 2023 is presented below.

Previous wording

Adjusted Consolidated Net Operating Income (Loss) increased by $125.4 million for the three months ended March 31, 2024, compared to the same period in 2023, due primarily to an improvement in the Specialty Property & Casualty Insurance segment profitability driven by higher average earned premiums per exposure, lower underlying claim frequency and moderating increases in claim severity.

Current wording

Adjusted Consolidated Net Operating Income (Loss) increased by $105.9 million for the three months ended June 30, 2024, compared to the same period in 2023, due primarily to an improvement in the Specialty Property & Casualty Insurance segment profitability driven by higher average earned premiums per exposure and lower underlying claim frequency. This was partially offset by a decrease in results from our Life Insurance segment driven by a reduction in net investment income due to an investment valuation adjustment of one real estate investment in our alternative investment portfolio.

Previous wording

The income from Non-Core Operations increased by $14.5 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to an improvement in the underlying combined ratio driven by higher average earned premiums per exposure resulting from rate increases and a lower frequency of claims, lower catastrophe losses and a reduction in prior accident year losses due to normalization of loss patterns.

Current wording

The loss from Non-Core Operations increased by $10.7 million for the three months ended June 30, 2024 compared to the same period in 2023 primarily due to an increase in the underlying combined ratio driven by increased claims severity, higher prior year development and increased catastrophe losses. These were partially offset by an increase in average earned premium as a result of rate increases.

Previous wording

Corporate and Other Adjusted Net Operating Loss increased for the three months ended March 31, 2024 compared to the same periods in 2023, due primarily to increased overhead expenses.

Current wording

Corporate and Other Adjusted Net Operating Loss decreased by $0.9 million for the three months ended June 30, 2024 compared to the same period in 2023, due primarily to increased investment income.

Previous wording

Net Income (Loss) attributable to Kemper Corporation increased by $151.4 million for the three months ended March 31, 2024, compared to the same period in 2023, due primarily to higher Adjusted Consolidated Net Operating Income (Loss), an increase in net income from Non-Core Operations and lower Acquisition and Disposition Related Transaction, Integration, Restructuring

Current wording

Net Income (Loss) attributable to Kemper Corporation increased by $323.9 million for the six months ended June 30, 2024, compared to the same period in 2023, due primarily to higher Adjusted Consolidated Net Operating Income, lower goodwill impairment charges and lower Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs

Previous wording

and Other Costs from the completion of certain strategic initiatives and lower costs in connection with the 2023 cost structure optimization initiatives.

Current wording

from the completion of certain strategic initiatives and lower costs in connection with the 2023 cost structure optimization initiatives.

Previous wording

Total Revenues decreased by $151.8 million to $1,143.0 million for the three months ended March 31, 2024, compared to $1,294.8 million for the same period in 2023. The decrease was primarily driven by a reduction in earned premiums.

Current wording

Total Revenues decreased by $132.9 million to $1,129.9 million for the three months ended June 30, 2024, compared to $1,262.8 million for the same period in 2023. The decrease was primarily driven by a reduction in earned premiums.

Previous wording

Earned Premiums decreased by $149.0 million to $1,031.9 million for the three months ended March 31, 2024, compared to $1,180.9 million for the same period in 2023, primarily driven by a $104.2 million decrease from the Specialty Property & Casualty Insurance segment due to continued lower new business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases. The decrease was also due to $42.8 million in lower premiums from our Preferred Insurance business, reported as Non-Core Operations, due primarily to lower volumes resulting from the decision to exit and run-off the business as well as ongoing profit improvement actions.

Current wording

Earned Premiums decreased by $133.2 million to $1,033.7 million for the three months ended June 30, 2024 compared to $1,166.9 for the same period in 2023, primarily driven by a $69.7 million decrease from the Specialty Property & Casualty Insurance segment due to lower new business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases. The decrease was also due to $62.1 million in lower premiums from our Preferred Insurance business, reported as Non-Core Operations, due primarily to lower volumes resulting from the decision to exit and run-off the business in the third quarter of 2023 as well as ongoing profit improvement actions.

Previous wording

Earned Premiums in the Specialty Property & Casualty Insurance segment decreased by $104.2 million for the three months ended March 31, 2024, compared to the same period in 2023, due to continued lower new business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.

Current wording

Earned Premiums in the Specialty Property & Casualty Insurance segment decreased by $69.7 million for the three months ended June 30, 2024, compared to the same period in 2023, due to lower new business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.

Previous wording

Insurance Expenses were $176.9 million, or 21.1% of earned premiums, for the three months ended March 31, 2024, compared to $193.8 million, or 20.5% of earned premiums for the same period in 2023. Insurance Expenses decreased $16.9 million due to lower new business volumes as discussed above. As a percentage of earned premiums, Insurance Expenses increased 0.6% as earned premium decreases outpaced expense decreases.

Current wording

Insurance Expenses were $180.7 million, or 20.9% of earned premiums, for the three months ended June 30, 2024, compared to $187.5 million, or 20.1% of earned premiums for the same period in 2023. Insurance Expenses decreased $6.8 million due to lower new business volumes and ongoing expense actions. As a percentage of earned premiums, Insurance Expenses increased 0.8% as earned premium decreases outpaced expense decreases.

Previous wording

The Specialty Property & Casualty Insurance segment reported Total Segment Adjusted Net Operating Income of $69.2 million for the three months ended March 31, 2024, compared to Total Segment Adjusted Net Operating Loss of $58.4 million for the same period in 2023. Segment adjusted net operating results improved by $127.6 million that included a $105.0 million and $22.6 million increase from personal automobile and commercial vehicle insurance, respectively, due primarily to higher average earned premiums per exposure resulting from rate increases, lower underlying claim frequency and moderating increases in claim severity.

Current wording

The Specialty Property & Casualty Insurance segment reported a Total Segment Adjusted Net Operating Income of $171.5 million for the six months ended June 30, 2024, compared to Total Segment Adjusted Net Operating Loss of $69.2 million for the same period in 2023. Segment adjusted net operating results improved by $240.7 million that included a $201.1 million and $39.6 million increase from personal automobile and commercial vehicle insurance, respectively, due primarily to higher average earned premiums per exposure resulting from rate increases and lower underlying claim frequency.

Previous wording

Net Investment Income in the Specialty Property & Casualty Insurance segment increased by $2.6 million for the three months ended March 31, 2024, compared to the same period in 2023, due primarily to higher rates on and levels of Short-term Investments.

Current wording

Net Investment Income in the Specialty Property & Casualty Insurance segment increased by $4.7 million for the six months ended June 30, 2024, compared to the same period in 2023, due primarily to higher rates earned on Short-term Investments and Equity Securities and partially offset by lower rate earned on Equity Method securities and lower amount of other income.

Previous wording

Incurred losses and LAE were $619.1 million, or 73.7% of earned premiums for the three months ended March 31, 2024, compared to $864.9 million, or 91.6% of earned premiums, for the same period in 2023. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss and LAE ratio and lower adverse prior year development. Underlying losses and LAE as a percentage of earned premiums were 72.5% for the three months ended March 31, 2024, an improvement of 15.0 percentage points, compared to the same period in 2023, driven by higher average earned premium per exposure (25.6% increase year over year) resulting from rate increases and lower underlying claims frequency, partially offset by moderating higher claims average severity trends from elevated inflation. Underlying losses and LAE exclude the impact of catastrophes and loss and LAE reserve development. Adverse loss and LAE reserve development (including catastrophe reserve development) was $6.0 million for the three months ended March 31, 2024, compared to adverse development of $31.1 million for the same period in 2023, an improvement of $25.1 million due primarily to normalization in loss patterns. Catastrophe losses and LAE (excluding reserve development) were $4.1 million for the three months ended March 31, 2024 compared to $8.4 million for the same period in 2023, an improvement of $4.3 million due to lower wind and hail losses.

Current wording

Incurred Loss and LAE were $1,221.3 million or 71.7% of earned premiums for the six months ended June 30, 2024 compared to $1,670.3 million or 89.0% of earned premiums, for the same period in 2023. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss and LAE ratio, lower adverse prior year development, and lower catastrophe losses. Underlying losses and LAE as a percentage of earned premiums were 70.6% for the six months ended June 30, 2024, an improvement of 14.1 percentage points, compared to the same period in 2023 driven by higher average earned premium per exposure (24.0% increase year over year) resulting from rate increases and lower underlying claims frequency, partially offset by higher claims average severity trends from elevated environmental and social inflation. Underlying losses and LAE exclude the impact of catastrophes and loss and LAE reserve development. Adverse loss and LAE reserve development (including catastrophe reserve development) was $5.1 million for the six months ended June 30, 2024, compared to adverse development of $55.2 million for the same period in 2023 an improvement of $50.1 million due primarily to normalization in loss patterns. Catastrophe losses and LAE (excluding reserve development) were $14.4 million for the six months ended June 30, 2024 compared to $25.8 million for the same period in 2023, an improvement of $11.4 million due to lower average severity per catastrophe event.

Previous wording

Earned Premiums on personal automobile insurance decreased by $112.6 million for the three months ended March 31, 2024, compared to the same period in 2023, due to continued lower new business volumes driven by targeted underwriting actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases. Incurred losses and LAE were $496.3 million, or 73.5% of earned premiums for the three months ended March 31, 2024, compared to $728.2 million, or 92.4% of earned premiums, for the same period in 2023. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss and LAE ratio and lower adverse prior year development. Underlying losses and LAE as a percentage of related earned premiums were 71.9% for the three months ended March 31, 2024, compared to 88.5% for the same period in 2023, an improvement of 16.6 percentage points driven by higher average earned premiums per exposure resulting from rate increases and a lower frequency of claims. Adverse loss and LAE reserve development was $7.1 million for the three months ended March 31, 2024, compared to adverse development of $22.9 million for the same period in 2023, an improvement of $15.8 million due primarily to normalization of loss patterns. Catastrophe losses and LAE (excluding reserve development) were $3.5 million for the three months ended March 31, 2024, compared to $7.7 million for the same period in 2023, an improvement of $4.2 million mainly due to lower wind and hail losses.

Current wording

Earned Premiums in personal automobile insurance decreased by $75.1 million for the three months ended June 30, 2024, compared to the same period in 2023, due to lower new business volumes driven by targeted underwriting actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases and higher policy retention. Incurred losses and LAE were $480.1 million, or 69.4% of earned premiums for the three months ended June 30, 2024, compared to $670.8 million, or 87.5% of earned premiums, for the same period in 2023. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss and LAE ratio, lower adverse prior year development, and lower catastrophe losses. Underlying losses and LAE as a percentage of related earned premiums were 68.2% for the three months ended June 30, 2024, compared to 83.3% for the same period in 2023, an improvement of 15.1 percentage points driven by higher average earned premiums per exposure resulting from rate increases and a lower frequency of claims, partially offset by higher claims average severity trends from elevated environmental and social inflation. Prior year adverse loss and LAE reserve development was $0.6 million for the three months ended June 30, 2024, compared to adverse development of $17.1 million for the same period in 2023, an improvement of $16.5 million due primarily to stabilization of loss patterns. Catastrophe losses and LAE (excluding reserve development) were $7.9 million for the three months ended June 30, 2024, compared to $15.0 million for the same period in 2023, an improvement of $7.1 million mainly due to lower average severity per catastrophe event.

Previous wording

Earned Premiums from commercial automobile insurance increased by $8.4 million for the three months ended March 31, 2024, compared to the same period in 2023, due primarily to higher average earned premium per exposure resulting from rate increases. Incurred losses and LAE were $122.8 million, or 74.6% of earned premiums in 2024, compared to $136.7 million, or 87.5% of earned premiums in 2023. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss ratio and lower adverse prior year development. Underlying losses and LAE as a percentage of earned premiums were 74.8% for the three months ended March 31, 2024, compared to 81.9% during the same time period in 2023, an improvement of 7.1 percentage points due primarily to higher average earned premiums per exposure resulting from rate increases and a lower frequency of claims. Favorable loss and LAE reserve development was $1.1 million for the three months ended March 31, 2024, compared to adverse development of $8.2 million for the same period in 2023, an improvement of $9.3 million due primarily to normalization of loss patterns.

Current wording

Earned Premiums in commercial automobile insurance increased by $5.4 million for the three months ended June 30, 2024, compared to the same period in 2023, due primarily to higher average earned premium per exposure resulting from rate increases and targeted mix shifts. Incurred losses and LAE were $122.1 million, or 71.4% of earned premiums in 2024, compared to $134.6 million, or 81.2% of earned premiums in 2023. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss ratio and favorable prior year development. Underlying losses and LAE as a percentage of earned premiums were 70.9% in the three months ended June 30, 2024, compared to 75.6% during the same time period in 2023, an improvement of 4.7 percentage points due primarily to higher average earned premiums per exposure resulting from rate increases and mix shifts and a lower frequency of claims, partially offset by higher claims average severity trends from elevated environmental inflation and mix shifts. Favorable loss and LAE reserve development was $1.5 million for the three months ended June 30, 2024, compared to adverse development of $7.0 million for the same period in 2023, an improvement of $8.5 million due primarily to stabilization of loss patterns.

Previous wording

Earned Premiums decreased $2.0 million for the three months ended March 31, 2024, compared to the same period in 2023, due primarily to lower volume on life insurance.

Current wording

Earned Premiums decreased $1.4 million for the three months ended June 30, 2024, compared to the same period in 2023, due primarily to lower volume on property insurance.

Previous wording

Net investment income decreased by $5.5 million for the three months ended March 31, 2024, compared to the same period in 2023, due to lower levels of fixed income securities and Company-Owned Life Insurance.

Current wording

Net investment income decreased by $16.6 million for the three months ended June 30, 2024, compared to the same period in 2023, due primarily to performance of Equity Method securities that included a $15.1 million pre-tax loss from an investment valuation adjustment of a real estate investment in our alternative investment portfolio, and lower levels of Fixed Income Securities.

Previous wording

The Life Insurance segment’s first quarter 2024 effective income tax rate was 15.2% compared to 11.7% for the same period in 2023. The effective income tax rate for the first quarters of 2024 and 2023 differs from the federal statutory income tax rate due primarily to investments in Company-Owned Life Insurance, tax-exempt investment income and dividends received deductions. The increase in the effective tax rate from the first quarter of 2023 is due primarily to a decreased benefit from tax preferred investment income.

Current wording

The Life Insurance segment’s three months ended June 30, 2024 effective income tax rate was 85.0% compared to 10.7% for the same period in 2023. The effective income tax rate for the second quarter of 2024 and 2023 differs from the federal statutory income tax rate due primarily to investments in Company-Owned Life Insurance, tax-exempt investment income and dividends received deductions. The change in the effective tax rate from the three months ended of June 30, 2023 is due primarily to a consistent level of tax preferred investment income on lower segment operating results.

Previous wording

The Life Insurance segment reported Total Segment Adjusted Net Operating Income of $11.9 million for the three months ended March 31, 2024, compared to $13.2 million for the same period in 2023. The decrease in segment net operating results was primarily due to a reduction in net investment income, partially offset by changes in mortality experience from life insurance products.

Current wording

The Life Insurance segment reported Total Segment Adjusted Net Operating Income of $11.7 million for the six months ended June 30, 2024, compared to $22.1 million for the same period in 2023. The decrease in segment net operating results was primarily due to a reduction in net investment income, partially offset by changes in mortality experience from life insurance products.

Previous wording

Policyholders’ Benefits and Incurred Losses and LAE decreased by $6.9 million for the three months ended March 31, 2024, compared to the same period in 2023, due to changes in mortality experience in life insurance products.

Current wording

Policyholders’ Benefits and Incurred Losses and LAE decreased by $11.3 million for the six months ended June 30, 2024, compared to the same period in 2023, due to changes in mortality experience in life insurance products and lower Policyholders’ Benefits in accident and health products.

Previous wording

The Specialty Property & Casualty Insurance segment’s first quarter of 2024 effective income tax rate was 19.9% compared to 21.9% for the same period in 2023. The effective income tax rate for the first quarters of 2024 and 2023 differs from the federal statutory income tax rate due primarily to investments in Company-Owned Life Insurance, tax-exempt investment income and dividends received deductions. The decrease in the effective tax rate from the first quarter of 2023 is due primarily to an increased benefit from tax preferred investment income.

Current wording

The Life Insurance segment’s six months ended June 30, 2024 effective income tax rate was 7.6% compared to 11.3% for the same period in 2023. The effective income tax rate for the second quarters of 2024 and 2023 differs from the federal statutory income tax rate due primarily to investments in Company-Owned Life Insurance, tax-exempt investment income and dividends received deductions. The decrease in the effective tax rate from the six months ended of June 30, 2023 is due primarily to an increased benefit from tax preferred investment income.

Previous wording

Net Investment Income for the three months ended March 31, 2024 and 2023 is presented below:

Current wording

Net Investment Income for the three and six months ended June 30, 2024 and 2023 is presented below:

Previous wording

The components of Total Comprehensive Investment (Losses) Gains for the three months ended March 31, 2024 and 2023 are presented below:

Current wording

The components of Total Comprehensive Investment (Losses) Gains for the three and six months ended June 30, 2024 and 2023 are presented below:

Previous wording

Total Comprehensive Investment Losses were $98.1 million for the three months ended March 31, 2024, compared to Total Comprehensive Investment Gains of $190.0 million for the three months ended March 31, 2023. The decrease of $288.1 million in comprehensive investment results was primarily due to an increase in the Company’s unrealized loss position on the fixed income securities portfolio in the first quarter of 2024 as compared to a decrease in the Company's unrealized loss position on the fixed income securities portfolio in the first quarter of 2023.

Current wording

Total Comprehensive Investment Losses were $183.7 million for the six months ended June 30, 2024, compared to Total Comprehensive Investment Gains of $102.1 million for the six months ended June 30, 2023. The decrease of $285.8 million in comprehensive investment results was primarily due to an increase in the Company’s unrealized loss position on the fixed income securities portfolio in the first half of 2024 as compared to a decrease in the Company's unrealized loss position on the fixed income securities portfolio in the first half of 2023, driven by changes in interest rates.

Previous wording

The components of Change in Fair Value of Equity and Convertible Securities for the three months ended March 31, 2024 and 2023 are presented below:

Current wording

The components of Change in Fair Value of Equity and Convertible Securities for the three and six months ended June 30, 2024 and 2023 are presented below:

Previous wording

The components of Net Realized Investment Gains for the three months ended March 31, 2024 and 2023 are presented below:

Current wording

The components of Net Realized Investment Gains (Losses) for the three and six months ended June 30, 2024 and 2023 are presented below:

Previous wording

The components of Impairment Losses in the Condensed Consolidated Statements of Income (Loss) for the three months ended March 31, 2024 and 2023 were:

Current wording

The components of Impairment Losses in the Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2024 and 2023 were:

Previous wording

1 Includes losses from intent-to-sell securities and direct write-down securities of $1.5 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

1 Includes losses from intent-to-sell securities and direct write-down securities of $0.2 million and $1.7 million for the three and six months ended June 30, 2024, respectively, and $0.3 million and $0.4 million for the three and six months ended June 30, 2023, respectively.

Previous wording

The Company’s fixed maturity investment portfolio is comprised primarily of high-grade corporate, municipal and agency bonds. At March 31, 2024, approximately 95.8% 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 or more Nationally Recognized Statistical Rating Organizations and either have a rating of AAA, AA, A or BBB from Standard & Poor’s (“S&P”); a rating of Aaa, Aa, A or Baa from Moody’s Investors Service (“Moody’s”); or a rating of AAA, AA, A or BBB from Fitch Ratings.

Current wording

The Company’s fixed maturity investment portfolio is comprised primarily of high-grade corporate, municipal and agency bonds. At June 30, 2024, approximately 95.4% 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 or more Nationally Recognized Statistical Rating Organizations and either have a rating of AAA, AA, A or BBB from Standard & Poor’s (“S&P”); a rating of Aaa, Aa, A or Baa from Moody’s Investors Service (“Moody’s”); or a rating of AAA, AA, A or BBB from Fitch Ratings.

Previous wording

Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $19.4 million and $25.5 million at March 31, 2024 and December 31, 2023, respectively.

Current wording

Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $17.6 million and $25.5 million at June 30, 2024 and December 31, 2023, respectively.

Previous wording

The Company’s short-term investments primarily consist of money market funds and short-term bonds. At March 31, 2024, the Company had $226.6 million invested in money market funds, which primarily invest in U.S. Treasury securities and $294.1 million invested in U.S. Treasury bills and short-term bonds.

Current wording

The Company’s short-term investments primarily consist of money market funds and short-term bonds. At June 30, 2024, the Company had $159.9 million invested in money market funds, which primarily invest in U.S. Treasury securities and $379.1 million invested in U.S. Treasury bills and short-term bonds.

Previous wording

Other Expenses decreased by $17.6 million for the three months ended March 31, 2024, compared to the same period in 2023, due primarily to lower Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs from the completion of certain strategic initiatives and lower costs in connection with the 2023 cost structure optimization initiatives. These expenses for the three months ended March 31, 2024 were primarily driven by $12.1 million of integration expenses due to continued investments in information technology. These expenses for the three months ended March 31, 2023, were primarily driven by $19.5 million of integration expenses due to continued investments in information technology, $3.2 million of real estate exit costs resulting from impairments on operating leases and $2.8 million of accrued severance.

Current wording

Other expenses decreased by $28.9 million for the three months ended June 30, 2024, compared to the same period in 2023, due primarily to lower Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs from the completion of certain strategic initiatives and lower costs in connection with the 2023 cost structure optimization initiatives. These expenses for the three months ended June 30, 2024 included $9.2 million of integration expenses due to continued investments in information technology, partially offset by a $5.1 million gain on the sale of a company owned and occupied property. These expenses for the three months ended June 30, 2023 included $12.3 million of integration expenses due to continued investments in information technology, $16.0 million of real estate exit costs resulting from impairments on operating leases and real estate owned.

Previous wording

The federal corporate statutory income tax rate was 21% for the three months ended March 31, 2024 and March 31, 2023. The Company’s effective income tax rate, which was 19.1% and 22.9% for the three months ended March 31, 2024 and 2023, respectively, 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 and general business 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, (6) impact of deferred taxes in foreign jurisdictions, and (7) a change in valuation allowance.

Current wording

The federal corporate statutory income tax rate was 21% for the six months ended June 30, 2024 and June 30, 2023. The Company’s effective income tax rate, which was 19.0% and 19.4% for the six months ended June 30, 2024 and 2023, respectively, 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 and general business 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, (6) impact of deferred taxes in foreign jurisdictions, and (7) a change in valuation allowance.

Previous wording

The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $7.1 million for the three months ended March 31, 2024, compared to $8.9 million for the same period in 2023.

Current wording

The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $9.0 million for the three months ended June 30, 2024, compared to $7.3 million for the same period in 2023. The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $16.1 million for the six months ended June 30, 2024, compared to $16.2 million for the same period in 2023.

Previous wording

The Company realized investment tax credits and other federal income tax credits of $0.3 million for the three months ended March 31, 2024, compared to recaptured investment tax credits and other federal tax credits of $0.1 million for the same period in 2023.

Current wording

The Company realized investment tax credits and other federal income tax credits of $0.3 million for the three months ended June 30, 2024. The Company did not realize or recapture any investment tax credits or other federal income tax credits for the same period in 2023. The Company realized investment tax credits and other federal income tax credits of $0.6 million for the six months ended June 30, 2024, compared to recaptured investment tax credits and other federal income tax credits of $0.1 million for the same period in 2023.

Previous wording

The amount of expense recognized for long-term equity-based compensation expense under GAAP was $0.7 million lower than the amount that would be deductible under the IRC for the three months ended March 31, 2024, compared to the amount of expense recognized for long-term equity-based compensation expense under GAAP not differing from the amount that would be deductible under the IRC for the same period in 2023.

Current wording

The amount of expense recognized for long-term equity-based compensation expense under GAAP was $0.8 million lower than the amount that would be deductible under the IRC for the three months ended June 30, 2024, compared to $0.5 million higher for the same period in 2023. The amount of expense recognized for long-term equity-based compensation expense under GAAP was $1.5 million lower than the amount that would be deductible under the IRC for the six months ended June 30, 2024, compared to $0.5 million higher for the same period in 2023.

Previous wording

The amount of nondeductible executive compensation was $4.2 million for the three months ended March 31, 2024, compared to $4.9 million for the same period in 2023.

Current wording

The amount of nondeductible executive compensation was $4.2 million for the three months ended June 30, 2024, compared to $2.3 million for the same period in 2023. The amount of nondeductible executive compensation was $8.4 million for the six months ended June 30, 2024, compared to $7.2 million for the same period in 2023.