KEMPER Corp
For the period ended Dec 31, 2024. Filed Feb 7, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 7, 2025
KMPR$33.39-5.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-07.
0000860748-24-000046
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-07.
0000860748-25-000053
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—(Continued)The baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 205 previous paragraphs and 235 current paragraphs.
46 unchanged; 39 reworded; 148 added; 113 removed; 7 previous and 2 current paragraphs rearranged.
Tables are not compared: 26 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (148)
Current report
Net Income (Loss) attributable to Kemper Corporation
Current report
Adjusted Consolidated Net Operating Income (Loss) increased by $428.7 million in 2024, compared to 2023, due primarily to an improvement in the Specialty Property & Casualty Insurance segment profitability driven by higher average earned premiums per exposure resulting from rate increases, lower underlying claim frequency, and lower adverse prior year development.
Current report
The loss from Non-Core Operations increased by $11.2 million in 2024, compared to 2023, primarily due to reduced earned premiums during the run-off period and increasing claim severity, partially offset by reduced claim frequency and increased average earned premium as a result of rate increases.
Current report
Corporate and Other Adjusted Net Operating Loss increased $8.2 million in 2024, compared to 2023, due primarily to increased overhead expenses, partially offset by increased investment income.
Current report
Total Revenues decreased by $305.6 million to $4,638.6 million in 2024, compared to $4,944.2 million in 2023. The decrease was primarily driven by a reduction in earned premiums.
Current report
Earned Premiums decreased by $313.5 million to $4,215.9 million in 2024, compared to $4,529.4 million in 2023, primarily driven by a $263.7 million reduction from our Non-Core Operations, due primarily to lower volumes resulting from the exit and run-off of the Preferred Insurance business. The decrease was also due to $56.1 million lower earned premiums from the Specialty Property & Casualty Insurance segment due to lower average business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.
Current report
Net Investment Income decreased by $12.2 million in 2024, compared to 2023, mostly driven by lower earnings from equity method investments, which included a $15.1 million loss from an investment valuation adjustment of one real estate investment in our alternative investment portfolio, and lower levels of fixed income securities, partially offset by higher levels of Short-term Investments.
Current report
Net Realized Investment Gains (Losses) increased by $31.8 million in 2024, compared to 2023, due primarily to the absence of net realized losses on ultra-long treasury future derivative transactions recorded in 2023 and increased gains on sales of fixed maturity investments.
Current report
Net Investment Income in the Specialty Property & Casualty Insurance segment increased by $21.3 million in 2024, compared to 2023, due primarily to higher levels of Fixed Income Securities, higher rates earned on and level of Short-term investments and Company-Owned Life Insurance.
Current report
Incurred Loss and LAE were $2,541.7 million or 71.1% of earned premiums for the year ended December 31, 2024 compared to $3,141.9 million or 86.5% 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 and LAE ratio, lower adverse prior year development and lower catastrophe losses. Underlying losses and LAE as a percentage of earned premiums were 70.3% in 2024, an improvement of 11.7 percentage points, compared to 2023, driven by higher average earned premium per exposure (21.7% increase year over year) resulting from rate increases and lower underlying claims frequency, partially offset by higher claims average severity. 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 $7.0 million for 2024 compared to adverse development of $132.9 million for 2023 due primarily to normalization in loss patterns within personal injury protection, physical damage, and bodily injury coverages. Catastrophe losses and LAE (excluding reserve development) were $19.9 million for 2024 compared to $34.5 million for 2023, a decrease of $14.6 million due to lower average severity per catastrophe event.
Current report
Insurance Expenses were $759.5 million, or 21.2% of earned premiums, for the year ended December 31, 2024, compared to $741.3 million, or 20.4% of earned premiums in 2023. Insurance Expenses increased $18.2 million due to higher volume-related expenses associated with increased new business volumes. As a percentage of earned premiums, Insurance Expenses increased 0.8% as expense increases outpaced earned premium growth.
Current report
Earned premiums from commercial automobile insurance increased by $70.3 million in 2024, compared to 2023, due primarily to higher average earned premium per exposure resulting from rate increases and targeted mix shifts. Incurred losses and LAE were $542.7 million, or 74.9% of earned premiums, in 2024, compared to $539.6 million, or 82.4% 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 73.2% in 2024, compared to 78.0% in 2023, an improvement of 4.8 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. Adverse loss and LAE reserve development was $7.2 million in 2024, compared to adverse development of $24.2 million in 2023, an improvement of $17.0 million due primarily to stabilization of loss patterns.
Current report
The Life Insurance Segment reported Total Segment Adjusted Net Operating Income of $50.2 million in 2024, compared to $51.8 million in 2023. The decrease in segment net operating results was primarily due to a reduction in net investment income, partially offset by favorable mortality experience from life insurance products.
Current report
Net Investment Income decreased by $22.8 million in 2024, compared to 2023, due primarily to lower earnings from alternative investments, which included a $15.1 million loss from an investment valuation adjustment of one real estate investment, and lower levels of fixed income securities.
Current report
Policyholders’ Benefits and Incurred Losses and LAE decreased by $8.9 million in 2024, compared to 2023. Changes in assumptions from the annual assumption update reduced policyholders’ benefits and incurred losses and LAE by $11.9 million and $23.3 million in 2024 and 2023, respectively. Excluding this impact, Policyholders’ Benefits and Incurred Losses and LAE
Current report
LIFE INSURANCE (Continued)
Current report
decreased $20.3 million due primarily to improved mortality experience in life insurance products and lower Policyholders’ Benefits in accident and health products.
Current report
Net Investment Income was $407.5 million and $419.7 million for the years ended December 31, 2024 and 2023, respectively. Net Investment Income decreased by $12.2 million in 2024 mostly driven by lower earnings from equity method securities, which included a $15.1 million loss from an investment valuation adjustment of one real estate investment in our alternative investment portfolio, and lower levels of fixed income securities, partially offset by higher levels of Short-term Investments.
Current report
Change in Unrealized Gains and Losses on Investments
Current report
The change in unrealized losses on investments for the year ended December 31, 2024 was an increase of $200.0 million, primarily attributable to increases in interest rates.
Current report
The components of Change in Fair Value of Equity and Convertible Securities for the years ended December 31, 2024 and 2023 are presented below.
Current report
Net Realized Gains (Losses) on Sales of Investments
Current report
Net realized gains and losses on sales of fixed maturities for the year ended December 31, 2024 primarily relate to normal portfolio management. The net realized losses on hedging activity for the year ended December 31, 2024 related to treasury futures that did not qualify for hedge accounting treatment.
Current report
Net realized gains and losses on sales of fixed maturities for the year ended December 31, 2023 primarily relate to normal portfolio management.
Current report
Insurance and Other Expenses
Current report
Other Expenses decreased by $135.7 million in 2024, compared to 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, and lower Pension Settlement costs.
Current report
Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs for the year ended December 31, 2024 included $35.9 million of integration expenses due to continued investments in information technology. These expenses for the year ended December 31, 2023 included $60.4 million of integration expenses due to continued investments in information technology, $34.6 million of real estate exit costs resulting from impairments on operating leases and real estate owned and $9.9 million of accrued severance.
Current report
Other Corporate Costs for the year ended December 31, 2024 included $7.3 million of expense related to the reversion of assets within the pension trust. This activity included $4.7 million distributed to eligible participants in the Company’s defined contribution benefit plans and $2.6 million of excise taxes paid by the Company upon the reversion of the remaining assets.
Current report
Interest Expense
Current report
LIQUIDITY AND CAPITAL RESOURCES
Current report
Shelf Registration Statement
Current report
The Company filed a universal shelf registration statement with the Securities and Exchange Commission in the first quarter of 2023. Under this shelf registration, the Company may issue an undetermined amount of securities including common stock, preferred stock, depository shares, debt securities, warrants, subscription rights, purchase contracts, and purchase units. Specific terms of any securities issued under this registration will be included in each applicable prospectus supplement.
Current report
Amended and Extended Credit Agreement
Current report
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 an additional $200.0 million for a total of maximum capacity of $800.0 million. Financial covenants within the agreement limit the Company from accessing the maximum capacity. The amount available as of December 31, 2024 was $512.0 million. There wereno outstanding borrowings under the credit agreement on either December 31, 2024 or December 31, 2023.
Current report
Common Stock Offering
Current report
Kemper is authorized to issue 20 million shares of $0.10 par value preferred stock and 100 million shares of $0.10 par value common stock. No preferred shares were issued or outstanding at December 31, 2024 and 2023. There were 63,840,442 shares and 64,111,555 shares of common stock outstanding at December 31, 2024 and 2023, respectively.
Current report
Long-term Debt
Current report
The Company designates debt obligations as either short-term or long-term based on maturity date at issuance. Total amortized cost of Long-term Debt, Current and Non-Current, outstanding at December 31, 2024 and December 31, 2023 was:
Current report
See Note 24, “Debt,” to the Consolidated Financial Statements for more information regarding the Company’s long-term debt.
Current report
Federal Home Loan Bank Agreements
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Removed paragraphs (113)
Previous report
SUMMARY OF RESULTS
Previous report
As discussed in Note 2, “Summary of Accounting Policies and Accounting Changes”, to the Consolidated Financial Statements effective January 1, 2023, the Company adopted Accounting Standards Update No. 2018-12, “Targeted Improvements to the Accounting for Long-Duration Contracts and related amendments” (“LDTI”) under the modified retrospective method. Prior period amounts in the financial statements have been adjusted to reflect application of the new guidance. Related financial data shown in Management's Discussion and Analysis of Financial Condition and Results of Operations also have been adjusted.
Previous report
In the third quarter of 2023, the Company announced that it will exit the Preferred Property and Casualty Insurance business and will actively reduce the business beginning in third quarter 2023, with all policies being non-renewed or canceled in accordance with applicable state regulations. In connection with the exit, the Company changed its calculation of Adjusted Consolidated Net Loss to exclude the results of the Preferred Property and Casualty Insurance business effective July 1, 2023, since the results are irrelevant to ongoing operations of the Company and do not qualify for discontinued operations under U.S. GAAP. The results of this business, previously reported as a reportable segment, are now reflected as Non-Core Operations and presented as a reconciling item between Segment Adjusted Operating Net Loss and Net Loss. Prior period amounts have been recast to reflect the change in reportable segments and the segment measure of performance.
Previous report
Net Loss Attributable to Kemper Corporation was $272.1 million ($(4.25) per unrestricted common share) for the year ended December 31, 2023, compared to Net Loss Attributable to Kemper Corporation of $286.6 million ($(4.50) per unrestricted common share) for the year ended December 31, 2022.
Previous report
Net Loss attributable to Kemper Corporation
Previous report
Adjusted Consolidated Net Operating Loss decreased by $69.2 million in 2023, compared to 2022, due primarily to an improvement in the Specialty Property & Casualty Segment mostly due to personal automobile insurance driven by higher average earned premiums per exposure resulting from rate increases and lower underlying claim frequency that was partially offset by unfavorable prior year loss and LAE development. The Life Insurance Segment also contributed to the decrease in Adjusted Consolidated Net Operating Loss due primarily to a decrease in net investment income driven by lower returns from equity method limited liability investments.
Previous report
See MD&A, “Specialty Property & Casualty Insurance” and “Life Insurance,” for discussion of each respective segment’s results. Corporate and Other Adjusted Net Operating Loss increased in 2023, compared to 2022, due primarily to a decrease in Net Investment Income. The loss from Non-Core Operations decreased by $8.9 million in 2023, compared to 2022, mostly due to improvements from Homeowners Insurance that were impacted by higher average earned premium per exposure resulting from rate increases and lower underlying claim frequency.
Previous report
Net Loss attributable to Kemper Corporation increased by $162.9 million in 2022, compared to 2021, due primarily to increased losses from Change in Fair Value of Equity and Convertible Securities, decreased Net Realized Investment Gains, and increased Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs, partially offset by lower Adjusted Consolidated Net Operating Losses.
Previous report
Adjusted Consolidated Net Operating Loss decreased by $93.1 million in 2022, compared to 2021, due primarily to lower Specialty Property & Casualty Segment Insurance Net Operating Loss and higher Life Insurance Segment Net Operating Income, partially offset by higher Non-Core Operations Net Operating Losses.
Previous report
See MD&A, “Specialty Property & Casualty Insurance” and “Life Insurance,” for discussion of each respective segment’s results. Corporate and Other Net Operating Loss decreased due primarily to increased Net Investment Income. The loss from Non-Core Operations increased by $13.4 million due primarily to higher underlying losses and LAE as a percentage of earned premiums and lower net investment income, partially offset by lower catastrophe losses and lower levels of adverse prior year reserve development.
Previous report
Earned Premiums were $4,529.4 million in 2023, compared to $5,213.4 million in 2022, a decrease of $684.0 million. Earned Premiums in the Specialty Property & Casualty Insurance segment decreased by $413.9 million for the year ended December 31, 2023. Earned Premiums in the Life segment decreased by $183.9 million for the year ended December 31, 2023. Earned Premiums from Non-Core operations decreased by $86.2 million due primarily to lower volumes resulting from the decision to exit and run-off the business in third quarter 2023 as well as ongoing profit improvement actions. See MD&A, “Specialty Property & Casualty Insurance” and “Life Insurance” for discussion of the changes in each segment’s earned premiums.
Previous report
Net Investment Income decreased by $2.9 million in 2023 due primarily to lower returns on Equity Method Limited Liability Investments and Equity Securities offset by higher rate earned on Fixed Income Securities.
Previous report
Income related to Changes in Value of Alternative Energy Partnership Investments was $2.9 million for the year ended December 31, 2023, compared to a net loss of $19.9 million for the same period in 2022. Tax expense related to the Alternative
Previous report
Energy Partnership Investments were $0.5 million, compared to tax benefit of $8.0 million for the year ended December 31, 2023 and 2022, respectively. This resulted in a net income of $2.4 million and a net loss of $11.9 million attributable to Alternative Energy Partnership Investments for the year ended December 31, 2023 and 2022, respectively.
Previous report
Revenues for 2023 included $3.7 million of Income from Change in Fair Value of Equity and Convertible Securities compared to a loss of $63.1 million from Change in Fair Value of Equity and Convertible Securities in 2022. The improvement was due primarily to the absence of unrealized losses from equity securities.
Previous report
Net Realized Investment Losses were $18.6 million in 2023, compared to Net Realized Investment Gains of $4.3 million for the same period in 2022 primarily due to fair value changes on derivative transactions.
Previous report
Impairment Losses were $1.1 million in 2023, compared to Impairment Losses of $25.8 million for the same period in 2022.
Previous report
See MD&A, “Investment Results,” under the sub-captions captions “Net Investment Income”, “Income (Loss) from Change in Fair Value of Equity and Convertible Securities”, “Net Realized (Losses) Gains on Sales of Investments” and “Impairment Losses” for additional discussion. The Company cannot predict if or when similar investment gains or losses may occur in the future.
Previous report
Earned Premiums were $5,213.4 million in 2022, compared to $5,179.2 million in 2021, an increase of $34.2 million. Earned Premiums in the Specialty Property & Casualty Insurance segment increased by $97.9 million for the year ended December 31, 2022. Earned Premiums in the Preferred Property & Casualty Insurance segment decreased by $56.2 million for the year ended December 31, 2022. See MD&A, “Specialty Property & Casualty Insurance” and “Preferred Property & Casualty Insurance” for discussion of the changes in each segment’s earned premiums.
Previous report
Net Investment Income decreased by $4.7 million in 2022 due primarily to lower valuations on Equity Method Limited Liability Investments, lower balances in Equity Securities, and lower rate on Fixed Income Securities, partially offset by higher levels of investments in Fixed Income Securities and Company-Owned Life Insurance.
Previous report
Loss related to Changes in Value of Alternative Energy Partnership Investments was $19.9 million for the year ended December 31, 2022, compared to a net loss of $61.2 million for the same period in 2021. Tax benefits related to the Alternative Energy Partnership Investments were $8.0 million, compared to tax benefits of $79.0 million for the year ended December 31, 2022 and 2021, respectively. This resulted in a net loss of $11.9 million and net income of $17.8 million attributable to Alternative Energy Partnership Investments for the year ended December 31, 2022 and 2021, respectively.
Previous report
Other Income increased by $4.4 million for the year ended December 31, 2022, compared to the same period in 2021.
Previous report
Net Realized Gains on Sales of Investments were $4.3 million in 2022, compared to $64.8 million in 2021.
Previous report
Impairment Losses were $25.8 million in 2022, compared to $11.0 million for the same period in 2021.
Previous report
See MD&A, “Investment Results,” under the sub-captions “Net Realized (Losses) Gains on Sales of Investments” and “Impairment Losses” for additional discussion. The Company cannot predict if or when similar investment gains or losses may occur in the future.
Previous report
NON-GAAP FINANCIAL MEASURES
Previous report
Pursuant to the rules and regulations of the SEC, the Company is required to file consolidated financial statements prepared in accordance with the accounting principles generally accepted in the United States (“GAAP”). The Company is permitted to include non-GAAP financial measures in its filings provided that they are defined along with an explanation of their usefulness to investors, are no more prominent than the comparable GAAP financial measures and are reconciled to such GAAP financial measures.
Previous report
These 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.
Previous report
Underlying Losses and LAE and Underlying Combined Ratio
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Adjusted Consolidated Net Operating Loss
Previous report
Adjusted Consolidated Net Operating Loss is an after-tax, non-GAAP financial measure and is computed by excluding from Net Loss attributable to Kemper Corporation the after-tax impact of:
Previous report
(i) Income (Loss) from Change in Fair Value of Equity and Convertible Securities;
Previous report
(ii) Net Realized Investment (Losses) Gains;
Previous report
(v) Debt Extinguishment, Pension Settlement and Other Charges;
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(vi) Goodwill Impairment Charges;
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(vii) Non-Core Operations; and
Previous report
(viii) Significant non-recurring or infrequent items that may not be indicative of ongoing operations
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Reworded paragraphs (39)
Previous wording
A reconciliation of Net Loss Attributable to Kemper Corporation to Adjusted Consolidated Net Operating Loss (a non-GAAP financial measure) for the years ended December 31, 2023, 2022 and 2021 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 years ended December 31, 2024, 2023 and 2022 is presented below.
Previous wording
Net Loss attributable to Kemper Corporation decreased by $14.5 million in 2023, compared to 2022, due primarily to lower Adjusted Consolidated Net Operating Losses and favorable changes in the Change in Fair Value of Equity and Convertible Securities. These improvements were partially offset by a $55.5 million after-tax noncash charge related to the settlement of the Company’s pension obligations, a $45.5 million after-tax charge from the impairment of the goodwill asset related to the exit of the Preferred Property & Casualty Insurance business and increased Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs incurred in connection with the multi-year cost structure optimization initiatives.
Current wording
Net Income (Loss) attributable to Kemper Corporation increased by $589.9 million in 2024, compared to 2023, due primarily to higher Adjusted Consolidated Net Operating Income and 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. The increase was also due to the absence of a $55.5 million after-tax noncash charge related to the settlement of the Company’s pension obligations recorded in 2023, and the absence of a $45.5 million after-tax charge from the impairment of the goodwill asset related to the Preferred Property & Casualty Insurance business that was also recorded in 2023.
Previous wording
Catastrophes and natural disasters are inherent risks of the property and casualty insurance business. These catastrophic events and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and winter storms. Such events result in insured losses that are, and will continue to be, a material factor in the results of operations and financial position of the Company’s property and casualty insurance companies. Further, because the level of these insured losses occurring in any one year cannot be accurately predicted, these losses may contribute to material year-to-year fluctuations in the results of operations and financial position of these companies. Specific types of catastrophic events are more likely to occur at certain times within the year than others. This factor adds an element of seasonality to property and casualty insurance claims. The Company has adopted the industry-wide catastrophe classifications of storms and other events promulgated by ISO to track and report losses related to catastrophes. ISO classifies a disaster as a catastrophe when the event causes $25.0 million or more in direct insured losses to property and affects a significant number of policyholders and insurers. ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry.
Current wording
Catastrophes and natural disasters are inherent risks of the property and casualty insurance business. These catastrophic events and natural disasters include, without limitation, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, high winds and winter storms. Such events result in insured losses that are and may be a material factor in the results of operations and financial position of the Company’s property and casualty insurance companies. Further, because the level of these insured losses occurring in any one year cannot be accurately predicted, these losses may contribute to material year-to-year fluctuations in the results of operations and financial position of these companies. Specific types of catastrophic events are more likely to occur at certain times within the year than others. This factor adds an element of seasonality to property and casualty insurance claims. The Company has adopted the industry-wide catastrophe classifications of storms and other events promulgated by ISO to track and report losses related to catastrophes. ISO classifies a disaster as a catastrophe when the event causes $25.0 million or more in direct insured losses to property and affects a significant number of policyholders and insurers. ISO-classified catastrophes are assigned a unique serial number recognized throughout the insurance industry.
Previous wording
See MD&A, “Specialty Property & Casualty Insurance,” MD&A, “Life Insurance,” and Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for additional information on the Company’s reserve development. See MD&A, “Critical Accounting Estimates,” of this 2023 Annual Report for additional information pertaining to the Company’s process of estimating property and casualty insurance reserves for losses and LAE, and the estimated variability
Current wording
See MD&A, “Specialty Property & Casualty Insurance,” MD&A, “Life Insurance,” and Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements for additional information on the Company’s reserve development. See MD&A, “Critical Accounting Estimates,” of this 2024 Annual Report for additional information pertaining to the Company’s process of estimating property and casualty insurance reserves for losses and LAE, and the estimated variability thereof, development of property and casualty insurance losses and LAE, and a discussion of some of the variables that may impact them.
Previous wording
The Specialty Property & Casualty Insurance segment reported Total Segment Adjusted Net Operating Loss of $57.1 million for the year ended December 31, 2023, compared to Total Segment Adjusted Net Operating Loss of $147.4 million in 2022. Total Segment Adjusted Net Operating Loss improved by $90.3 million mostly driven by a $104.4 million improvement from personal automobile insurance due primarily to higher average earned premiums per exposure resulting from rate increases and lower underlying claim frequency that was partially offset by unfavorable prior year loss and LAE development. The improvement in segment adjusted net operating loss was partially offset by a $14.1 million decrease from the commercial automobile insurance business due primarily to an increase in the underlying loss ratio from higher claim average severity and unfavorable prior year development.
Current wording
The Specialty Property & Casualty Insurance segment reported Total Segment Adjusted Net Operating Income of $376.3 million for the year ended December 31, 2024, compared to Total Segment Adjusted Net Operating Loss of $57.1 million in 2023. Segment adjusted net operating results improved by $433.4 million that included a $375.5 million and $57.9 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 lower adverse prior year development.
Previous wording
Earned Premiums in the Specialty Property & Casualty Insurance segment decreased by $413.9 million in 2023, compared to 2022 due to a decrease in new business resulting from targeted actions to improve 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 $56.1 million in 2024, compared to 2023, due to lower average business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.
Previous wording
The Specialty Property & Casualty Insurance segment’s 2022 effective income tax rate was 25.1% compared to 32.9% in 2021. The effective income tax rate for 2022 and 2021 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 between 2022 and 2021 is largely due to fewer investment tax credits generated during 2022 as compared to 2021.
Current wording
The Specialty Property & Casualty Insurance segment’s 2024 effective tax rate was 20.1%, compared to 25.3% in 2023. The effective income tax rate for 2024 and 2023 differs from the federal statutory income tax rate primarily due to investments in Company-Owned Life Insurance, Tax-Exempt Investment Income and Dividends Received Deductions. The change in the effective tax rate from 2023 is driven by an increased benefit from Company-Owned Life Insurance.
Previous wording
Earned Premiums on personal automobile insurance decreased by $518.9 million in 2023, compared to 2022, due to a decrease in new business driven by targeted underwriting actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases. Incurred losses and LAE were $2,602.3 million, or 87.4% of earned premiums, in 2023, compared to $3,157.0 million, or 90.3% of earned premiums, in 2022. Incurred losses and LAE as a percentage of earned premiums decreased driven by higher average earned premiums per exposure resulting from rate increases and a lower frequency of claims, partially offset by adverse prior year loss and LAE development. Underlying losses and LAE as a percentage of related earned premiums were 82.8% in 2023, compared to 90.2% in 2022, an improvement of 7.4 points. Adverse loss and LAE reserve development was $108.7 million in 2023, compared to favorable loss and LAE reserve developments of $17.6 million in 2022. The adverse loss and LAE reserve development was primarily driven by higher than expected emergence in loss patterns related to third and fourth accident quarters of 2022 within the bodily injury and physical damage coverages as well as an increase in Florida personal injury protection driven by higher than expected frequency and severity resulting from an increase in litigated claim activity, mainly from policy years 2020 through 2022. Catastrophe losses and LAE (excluding reserve development) were $29.6 million in 2023 compared to $20.7 million in 2022.
Current wording
Earned Premiums in personal automobile insurance decreased by $126.4 million in 2024, compared to 2023, due to lower average business volumes driven by targeted pricing and underwriting actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases. Incurred losses and LAE were $1,999.0 million, or 70.1% of earned premiums, in 2024, compared to $2,602.3 million, or 87.4% 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 and LAE ratio, lower adverse prior year development, and lower catastrophe losses. Underlying losses and LAE as a percentage of related earned premiums were 69.6% in 2024, compared to 82.8% in 2023, an improvement of 13.2 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. Favorable loss and LAE reserve development was $0.2 million in 2024, compared to adverse loss and LAE reserve developments of $108.7 million in 2023, an improvement of $108.9 million due primarily to stabilization of loss patterns. Catastrophe losses and LAE (excluding reserve development) were $14.5 million in 2024 compared to $29.6 million in 2023, an improvement of $15.1 million mainly due to lower average severity per catastrophe event.
Previous wording
Earned Premiums in the Life Insurance segment decreased by $183.9 million for the year ended December 31, 2023, compared to 2022 due primarily to the disposition of Reserve National in December 2022 ($146.2 million) and changes in assumptions as part of the annual assumption update for Deferred Profit Liability in 2023 ($15.0 million reduction in earned premium) as compared to 2022 ($12.7 million increase in earned premium). Excluding these impacts, Earned Premiums decreased by $10.0 million due primarily to lower volume on accident & health and property insurance products.
Current wording
Earned Premiums increased by $6.3 million for the year ended December 31, 2024, compared to 2023, due primarily to changes in assumptions as part of the annual assumption update for Deferred Profit Liability in 2024 ($4.8 million reduction in Earned Premiums) as compared to 2023 ($15.0 million reduction in Earned Premiums). Excluding this impact, Earned Premiums decreased by $3.9 million due primarily to lower volume on life and property insurance.
Previous wording
The Life Insurance segment’s 2023 effective income tax rate was 16.9% compared to 11.8% in 2022. The effective income tax rate for 2023 and 2022 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 2022 is primarily due to less tax-exempt investment income in 2023 and compared to 2022.
Current wording
The Life Insurance segment’s 2024 effective income tax rate was 14.9% compared to 16.9% in 2023. The effective income tax rate for 2024 and 2023 differs from the federal statutory income tax rate primarily due to investments in Company-Owned Life Insurance and Tax-Exempt Investment Income. The decrease in the effective tax rate from 2023 is driven by an increased benefit from Company-Owned Life Insurance.
Previous wording
The components of Net Realized Investment (Losses) Gains for the year ended December 31, 2023, 2022 and 2021 are presented below.
Current wording
The components of Net Realized Investment Gains (Losses) for the year ended December 31, 2024, 2023 and 2022 are presented below.
Previous wording
Net Realized Gains and Losses on Sale of Equity Securities for the year ended December 31, 2023 primarily related to disposals of equity securities and preferred stock.
Current wording
Net realized gains and losses on sales of equity securities for the year ended December 31, 2024 primarily related to disposals of equity securities and preferred stock.
Previous wording
Net Realized Gains and Losses on Sale of Equity Securities for the year ended December 31, 2022 primarily relate disposals of equity method limited liability investments and preferred stock.
Current wording
Net realized gains and losses on sales of equity securities for the year ended December 31, 2023 primarily related to disposals of equity securities and preferred stock.
Previous wording
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
Current wording
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 Consolidated Statements of Income (Loss) in the period that the declines are evaluated. Conversely, an increase in the fair value or disposal of an investment with a previously established credit allowance will result in the reversal of impairment losses reported in the Consolidated Statements of Income (Loss) in the period.
Previous wording
The components of Impairment Losses in the Consolidated Statements of Loss for the year ended December 31, 2023, 2022, 2021 were:
Current wording
The components of Impairment Losses in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024, 2023, 2022 were:
Previous wording
IIncludes losses from intent-to-sell securities of $(2.0) million, $(23.8) million and $(6.6) million for the years ended December 31, 2023, 2022 and 2021, respectively.
Current wording
IIncludes losses from intent-to-sell securities and direct write-down securities of $3.3 million, $2.0 million and $23.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Previous wording
Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2022 related primarily to investments in Fixed Maturities where the Company established an allowance for expected credit loss.
Current wording
Impairment Losses recognized in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024 related primarily to investments in securities with direct write-downs and in Fixed Maturities where the Company established an allowance for expected credit losses.
Previous wording
Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2023 related primarily to investments in Intent-to-Sell securities.
Current wording
Impairment Losses recognized in the Consolidated Statements of Income (Loss) for the year ended December 31, 2023 related primarily to investments in Intent-to-Sell securities.
Previous wording
The Company recognized Impairment Losses in the Consolidated Statements of Loss for the year ended December 31, 2023 primarily related to investments in Equity Securities at Modified Cost where the Company has the intent or requirement to sell.
Current wording
The Company recognized Impairment Losses in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024 primarily related to investments in Equity Securities at Modified Cost where the Company has the intent or requirement to sell.
Previous wording
Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2021 primarily related to investments in Equity Securities at Modified Cost where the Company had the intent or requirement to sell.
Current wording
The Company recognized Impairment Losses in the Consolidated Statements of Income (Loss) for the year ended December 31, 2023 primarily related to investments in Equity Securities at Modified Cost where the Company has the intent or requirement to sell.
Previous wording
Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2021 related to investments in Real Estate held with the intent to sell.
Current wording
The Company recognized Impairment Losses on Real Estate Held for Investment in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024 related to properties held with the intent to sell.
Previous wording
The Company did not recognize any Impairment Losses on Real Estate Held for Investment in the Consolidated Statements of Loss for the years ended December 31, 2023 and 2022.
Current wording
The Company did not recognize any Impairment Losses on Real Estate Held for Investment in the Consolidated Statements of Income (Loss) for the year ended December 31, 2023.
Previous wording
The Company’s fixed maturity investment portfolio is comprised primarily of high-grade corporate, municipal and agency bonds. At December 31, 2023, approximately 96.2% 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 December 31, 2024, approximately 95.7% 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 $25.5 million and $32.8 million at December 31, 2023 and 2022, respectively.
Current wording
Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $14.2 million and $25.5 million at December 31, 2024 and 2023, respectively.
Previous wording
The Company’s short-term investments primarily consist of money market funds and short term bonds. At December 31, 2023, the Company had $219.5 million invested in money market funds which primarily invest in U.S. Treasury securities and $301.4 million invested in U.S. Treasury bills and short-term bonds.
Current wording
The Company’s short-term investments primarily consist of U.S. Treasury bills, short-term bonds, and money market funds. At December 31, 2024, the Company had $834.7 million invested in U.S. Treasury bills and short-term bonds and $202.4 million invested in money market funds, which primarily invest in U.S. Treasury securities.
Previous wording
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 Investment, at December 31, 2023.
Current wording
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, Government Agencies and Authorities, and Short-term Investments, at December 31, 2024.
Previous wording
The Company owns investments in various limited liability investment companies and limited partnerships that primarily invest in mezzanine debt, distressed debt, real estate and senior debt. The Company’s investments in these limited liability investment companies and limited partnerships are reported either as Equity Method Limited Liability Investments, Other Equity Interests and included in Equity Securities at Fair Value, or Equity Securities at Modified Cost, depending on the accounting method used to report the investment. Additional information pertaining to these investments at December 31, 2023 and 2022 is presented below.
Current wording
The Company owns investments in various limited liability investment companies and limited partnerships that primarily invest in mezzanine debt, senior debt, real estate and leveraged buyouts. 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 included in Equity Securities at Fair Value, or Equity Securities at Modified Cost, depending on the accounting method used to report the investment. Additional information pertaining to these investments at December 31, 2024 and 2023 is presented below.
Previous wording
Insurance Expenses were $1,052.4 million in 2023 compared to $1,201.0 million in 2022. Insurance Expenses decreased by $148.6 million in 2023 due primarily to lower expenses from less business being written.
Current wording
Insurance Expenses were $1,113.9 million in 2024 compared to $1,163.7 million in 2023. Insurance Expenses decreased by $49.8 million in 2024 due primarily to lower policies in force.
Previous wording
Interest expense increased by $1.4 million in 2023, compared to 2022, primarily due to the addition of the 2032 Senior Notes and the 2062 Junior Debentures. Interest expense increased by $11.1 million for the year ended December 31, 2022, compared to 2021, due primarily to the addition of the 2032 Senior Notes and the 2062 Junior Debentures in 2022.
Current wording
Interest expense increased by $0.8 million in 2024 compared to 2023.
Previous wording
Goodwill Impairment increased by $49.6 million in 2023, compared to 2022, due to the impairment of goodwill related to the Preferred Property & Casualty Insurance segment. See Note 14 “Goodwill and Intangibles,” to the Consolidated Financial Statements for more information.
Current wording
Goodwill Impairment for the year ended December 31, 2023 was due to the impairment of goodwill related to the decision to exit the Preferred Property & Casualty Insurance segment in the third quarter of 2023. See Note 15 “Goodwill and Intangibles,” to the Consolidated Financial Statements for more information.
Previous wording
The federal corporate statutory income tax rate was 21% for the year ended December 31, 2023, 2022 and 2021. The Company’s effective income tax rate, which was 21.6%, 22.7% and 50.9% for 2023, 2022, and 2021 respectively, differs from the federal corporate income tax rate due primarily to (1) the 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) an impairment of non-tax deductible goodwill, (7) impact of tax legislation in foreign jurisdictions, and (8) a change in valuation allowance.
Current wording
The federal corporate statutory income tax rate was 21% for the year ended December 31, 2024, 2023 and 2022. The Company’s effective income tax rate, which was 19.6%, 21.6% and 22.7% for 2024, 2023, and 2022 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) an impairment of non-tax deductible goodwill, (7) impact of deferred taxes in foreign jurisdictions, and (8) a change in valuation allowance.
Previous wording
Tax-exempt investment income and dividends received deductions were $22.7 million in 2023, compared to $25.1 million in 2022, and $21.8 million in 2021.
Current wording
Tax-exempt investment income and dividends received deductions were $16.0 million in 2024, compared to $22.7 million in 2023.
Previous wording
The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $29.2 million in 2023, compared to $37.9 million in 2022, and $25.7 million in 2021.
Current wording
The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $35.6 million in 2024, compared to $29.2 million in 2023.
Previous wording
The Company realized investment tax credits and other federal income tax credits of $3.1 million in 2023, compared to realized investment tax credits and other federal tax credits of $6.5 million for the same period in 2022, and $66.1 million in 2021.
Current wording
The Company realized investment tax credits and other federal income tax credits of $12.0 million in 2024, compared to realized investment tax credits and other federal tax credits of $3.1 million in 2023.
Previous wording
The amount of expense recognized for long-term equity-based compensation expense under GAAP was $1.4 million higher than the amount that would be deductible under the IRC in 2023, compared to $6.3 million higher in 2022 and $1.3 million lower in 2021.
Current wording
The amount of expense recognized for long-term equity-based compensation expense under GAAP was $0.5 million lower than the amount that would be deductible under the IRC in 2024, compared to $1.4 million higher in 2023.
Previous wording
The amount of nondeductible executive compensation was $8.5 million in 2023, compared to $7.3 million in 2022, and $13.0 million in 2021.
Current wording
The amount of nondeductible executive compensation was $16.8 million in 2024, compared to $8.5 million in 2023.
Previous wording
The total impairment of non-tax-deductible goodwill was $30.0 million in 2023, compared to none in 2022 and 2021.
Current wording
The total impairment of non-tax-deductible goodwill was zero in 2024, compared to $30.0 million in 2023.
Previous wording
As a result of recently enacted tax legislation in jurisdictions in which the Company operates, a tax benefit of $27.4 million was recorded. No tax expense or benefit was recorded in 2022 or 2021 as a result of enacted tax legislation.
Current wording
As a result of recently enacted tax legislation in jurisdictions in which the Company operates, a tax benefit of $11.3 million was recorded in 2024, compared to a tax benefit of $27.4 million in 2023.
Previous wording
The Company recorded a change in valuation allowance of $27.4 million in 2023 for those foreign deferred tax assets it determined were not more-likely-than-not to be realized. No valuation allowance was recorded in 2022 or 2021.
Current wording
The Company recorded an increase in valuation allowance of $11.3 million in 2024, compared to $27.4 million in 2023 for those foreign deferred tax assets it determined were not more-likely-than-not to be realized.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Change in Fair Value of Equity and Convertible Securities
Current report — wording carried from elsewhere
Property and Casualty Insurance Reserves for Losses and Loss Adjustment Expenses
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
thereof, development of property and casualty insurance losses and LAE, and a discussion of some of the variables that may impact them.
Previous report — wording carried elsewhere
(iv) Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs;
Previous report — wording carried elsewhere
The components of Total Comprehensive Investment Gains (Losses) for the years ended December 31, 2023, 2022 and 2021 are presented below.
Previous report — wording carried elsewhere
Consolidated Statements of Loss in the period that the declines are evaluated. Conversely, an increase in the fair value or disposal of an investment with a previously established credit allowance will result in the reversal of impairment losses reported in the Consolidated Statements of Loss in the period.
Previous report — wording carried elsewhere
Impairment Losses recognized in the Consolidated Statements of Loss for the year ended December 31, 2021 related primarily to investments in Fixed Maturities where the Company established an allowance for expected credit loss.
Previous report — wording carried elsewhere
The Company did not recognize any Impairment Losses in the Consolidated Statements of Loss for the year ended December 31, 2022.
Previous report — wording carried elsewhere
INSURANCE, INTEREST AND OTHER EXPENSES (Continued)