KEMPER Corp

Previous wording

The Company believes that the non-GAAP financial measure of Adjusted Consolidated Net Operating Income (Loss) provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. The most directly comparable GAAP financial measure is Net Income (Loss) attributable to Kemper Corporation.

Current wording

The Company believes that the non-GAAP financial measure of Adjusted Consolidated Net Operating Income provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. The most directly comparable GAAP financial measure is Net Income attributable to Kemper Corporation.

Previous wording

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

Current wording

Adjusted Consolidated Net Operating Income is an after-tax, non-GAAP financial measure and is computed by excluding from Net Income attributable to Kemper Corporation the after-tax impact of:

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. 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 nine months ended September 30, 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. There were no applicable significant non-recurring items that the Company excluded from the calculation of Adjusted Consolidated Net Operating Income for the three months ended March 31, 2025 or 2024.

Previous 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.

Current 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.

Previous wording

The following discussion 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.

Current wording

The following discussion 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

Previous wording

Net Income Attributable to Kemper Corporation was $73.7 million ($1.15 per unrestricted common share) for the three months ended September 30, 2024, compared to Net Loss Attributable to Kemper Corporation of $146.3 million ($(2.28) per unrestricted common share) for the same period in 2023.

Current wording

Net Income attributable to Kemper Corporation was $99.7 million ($1.56 per unrestricted common share) for the three months ended March 31, 2025, compared to Net Income attributable to Kemper Corporation of $71.3 million ($1.11 per unrestricted common share) for the same period in 2024.

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 and nine months ended September 30, 2024 and 2023 is presented below.

Current wording

A reconciliation of Net Income attributable to Kemper Corporation to Adjusted Consolidated Net Operating Income (a non-GAAP financial measure) for the three months ended March 31, 2025 and 2024 is presented below.

Previous wording

Net Income (Loss) attributable to Kemper Corporation increased by $220.0 million for the three months ended September 30, 2024, compared to the same period in 2023, due primarily to higher Adjusted Consolidated Net Operating Income, 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 lower Acquisition and Disposition Related Transaction, Integration, Restructuring and Other Costs from the completion of certain strategic initiatives.

Current wording

Net Income attributable to Kemper Corporation increased by $28.4 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to higher Adjusted Consolidated Net Operating Income.

Previous wording

Adjusted Consolidated Net Operating Income (Loss) increased by $132.8 million for the three months ended September 30, 2024, compared to the same period in 2023, due primarily to an improvement in the Specialty Property & Casualty Insurance segment profitability driven by lower adverse prior year development, higher average earned premiums per exposure as a result of rate increases, and lower underlying claim frequency.

Current wording

Adjusted Consolidated Net Operating Income increased by $36.7 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to an improvement in the Specialty Property & Casualty Insurance segment profitability driven higher average earned premiums per exposure resulting from rate increases and higher business volumes, partially offset by higher underlying claim severity.

Previous wording

The loss from Non-Core Operations increased by $10.1 million for the three months ended September 30, 2024 compared to the same period in 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 wording

The loss from Non-Core Operations increased by $8.9 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to reduced earned premiums outpacing reduced expenses as well as a reduction in net investment income due to lower levels of Fixed Income securities related to the run-off of the business.

Previous wording

Corporate and Other Adjusted Net Operating Loss increased by $5.7 million for the three months ended September 30, 2024 compared to the same period in 2023, due primarily to increased overhead expenses, partially offset by increased investment income.

Current wording

Corporate and Other Adjusted Net Operating Loss decreased by $1.1 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily driven by lower interest expense due to the redemption of $450 million of 4.350% senior notes.

Previous wording

Earned Premiums decreased by $49.3 million to $1,068.5 million for the three months ended September 30, 2024 compared to $1,117.8 for the same period in 2023, primarily driven by $76.4 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. The decrease was partially offset by a $28.6 million increase from the Specialty Property & Casualty Insurance segment due to higher new business volumes and higher average earned premium per exposure resulting from rate increases.

Current wording

Earned Premiums increased by $56.0 million to $1,087.9 million for the three months ended March 31, 2025, compared to $1,031.9 million for the same period in 2024, primarily driven by a $122.2 million increase from the Specialty Property & Casualty Insurance segment due to higher average earned premium per exposure resulting from rate increases and higher business volumes. This was partially offset by a $68.6 million reduction in premiums from our Preferred Insurance business, reported as Non-Core Operations, due primarily to lower volumes resulting from the exit and run-off of the business.

Previous wording

Net Investment Income decreased by $10.6 million for the nine months ended September 30, 2024, compared to the same period in 2023, 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 wording

Net Investment Income increased by $0.8 million to $101.2 million for the three months ended March 31, 2025, compared to $100.4 million for the same period in 2024, mostly driven by higher rate earned on Company-Owned Life Insurance and higher average levels of Short-term Investments, partially offset by lower levels and a decrease in yields from Fixed Income securities.

Previous wording

Net Realized Investment Gains (Losses) increased by $47.5 million for the nine months ended September 30, 2024, compared to the same period in 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 wording

Net Realized Investment Gains decreased by $5.7 million to $0.9 million for the three months ended March 31, 2025, compared to $6.6 million for the same period in 2024, due primarily to decreased gains on sales of fixed maturity investments, partially offset by the absence of net realized losses on ultra-long treasury future derivative transactions that did not qualify for hedge accounting.

Previous wording

The Specialty Property & Casualty Insurance segment reported a Total Segment Adjusted Net Operating Income of $103.6 million for the three months ended September 30, 2024, compared to Total Segment Adjusted Net Operating Loss of $33.2 million for the same period in 2023. Segment adjusted net operating results increased by $136.8 million that included a $123.3 million and $13.5 million increase from personal automobile and commercial vehicle insurance, respectively, due primarily to lower adverse prior year development, higher average earned premiums per exposure resulting from rate increases, and lower underlying claim frequency.

Current wording

The Specialty Property & Casualty Insurance segment reported Total Segment Adjusted Net Operating Income of $97.9 million for the three months ended March 31, 2025, compared to Total Segment Adjusted Net Operating Income of $69.2 million for the same period in 2024. Segment adjusted net operating results improved by $28.7 million that included a $25.4 million and $3.3 million increase from personal automobile and commercial vehicle insurance, respectively, due primarily to higher average earned premiums per exposure resulting from rate increases, partially offset by increased underlying claim severity.

Previous wording

Net Investment Income in the Specialty Property & Casualty Insurance segment increased by $9.3 million for the three months ended September 30, 2024, compared to the same period in 2023, due primarily to higher levels of Fixed Income Securities and higher rate earned on Company-Owned Life Insurance.

Current wording

Net Investment Income in the Specialty Property & Casualty Insurance segment increased by $9.4 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to higher levels of Fixed Income securities, higher rate earned on Company-Owned Life Insurance, and higher average levels of Short-term Investments.

Previous wording

Incurred Loss and LAE were $1,869.2 million or 71.3% of earned premiums for the nine months ended September 30, 2024 compared to $2,466.4 million or 89.1% 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 70.4% for the nine months ended September 30, 2024, an improvement of 12.7 percentage points, compared to the same period in 2023 driven by higher average earned premium per exposure (23.2% increase year over year) resulting from rate increases and lower underlying claims frequency, partially offset by higher claims average severity trends. 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 $5.2 million for the nine months ended September 30, 2024, compared to adverse development of $133.0 million for the same period in 2023 an improvement of $127.8 million due primarily to normalization in loss patterns within bodily injury and physical damage coverages. Catastrophe losses and LAE (excluding reserve development) were $18.0 million for the nine months ended September 30, 2024 compared to $32.0 million for the same period in 2023, an improvement of $14.0 million due to lower average severity per catastrophe event.

Current wording

Incurred losses and LAE were $686.8 million, or 71.4% of earned premiums for the three months ended March 31, 2025, compared to $619.1 million, or 73.7% of earned premiums, for the same period in 2024. Incurred losses and LAE as a percentage of earned premiums decreased primarily due to an improvement in the underlying loss and LAE ratio. Underlying losses and LAE as a percentage of earned premiums were 70.9% for the three months ended March 31, 2025, an improvement of 1.6 percentage points, compared to the same period in 2024, driven by higher average earned premium per exposure (12.6% 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 $0.7 million for the three months ended March 31, 2025, compared to adverse development of $6.0 million for the same period in 2024, an improvement of $5.3 million due primarily to normalization in loss patterns within property damage coverages. Catastrophe losses and LAE (excluding reserve development) were $3.8 million for the three months ended March 31, 2025 compared to $4.1 million for the same period in 2024, an improvement of $0.3 million due to fewer catastrophe events in the quarter.

Previous wording

Insurance Expenses were $552.5 million, or 21.1% of earned premiums, for the nine months ended September 30, 2024, compared to $563.6 million, or 20.4% of earned premiums for the same period in 2023. Insurance Expenses decreased $11.1 million due to lower new business volumes and ongoing expense actions. As a percentage of earned premiums, Insurance Expenses increased 0.7% as earned premium decreases outpaced expense decreases.

Current wording

Insurance Expenses were $205.1 million, or 21.3% of earned premiums, for the three months ended March 31, 2025, compared to $176.9 million, or 21.1% of earned premiums for the same period in 2024. Insurance Expenses increased $28.2 million due to higher volume-related expenses associated with increased business volumes.

Previous wording

The Specialty Property & Casualty Insurance segment’s nine months ended September 30, 2024 effective tax rate was 20.1% compared to 23.0% for the same period in 2023. The effective income tax rate for the nine months ended September 30, 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 nine months ended September 30, 2023 is due primarily to an increased benefit from tax preferred investment income.

Current wording

The Specialty Property & Casualty Insurance segment’s first quarter of 2025 effective income tax rate was 19.8% compared to 19.9% for the same period in 2024. The effective income tax rate for the first quarters of 2025 and 2024 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 the first quarter of 2024 is driven by an increased benefit from Company-Owned Life Insurance.

Previous wording

Earned Premiums in commercial automobile insurance increased by $21.3 million for the three months ended September 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 $140.6 million, or 74.9% of earned premiums in 2024, compared to $136.7 million, or 82.2% 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 lower adverse prior year development. Underlying losses and LAE as a percentage of earned premiums were 72.6% in the three months ended September 30, 2024, compared to 77.4% during the same time period 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 from elevated environmental inflation and mix shifts. Adverse loss and LAE reserve development was $2.7 million for the three months ended September 30, 2024, compared to adverse development of $6.9 million for the same period in 2023, an improvement of $4.2 million due primarily to stabilization of loss patterns.

Current wording

Earned Premiums from commercial automobile insurance increased by $43.8 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to higher average earned premium per exposure resulting from rate increases and targeted mix shifts, and higher business volumes. Incurred losses and LAE were $160.3 million, or 76.9% of earned premiums in 2025, compared to $122.8 million, or 74.6% of earned premiums in 2024. Incurred losses and LAE as a percentage of earned premiums increased primarily due to higher claims average severity trends. Underlying losses and LAE as a percentage of earned premiums were 73.9% for the three months ended March 31, 2025, compared to 74.8% during the same time period in 2024, an improvement of 0.9 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 $5.3 million for the three months ended March 31, 2025, compared to favorable development of $1.1 million for the same period in 2024, a deterioration of $6.4 million due primarily to evolving loss patterns in bodily injury coverages.

Previous wording

The Life Insurance segment reported Total Segment Adjusted Net Operating Income of $15.0 million for the three months ended September 30, 2024, compared to Net Operating Income of $14.7 million for the same period in 2023. The increase in segment net operating results was primarily due to an increase in net investment income, partially offset by lower volume on life and property insurance.

Current wording

The Life Insurance segment reported Total Segment Adjusted Net Operating Income of $17.2 million for the three months ended March 31, 2025, compared to $11.9 million for the same period in 2024. The increase in segment net operating results was primarily due to higher net investment income.

Previous wording

Net Investment Income increased by $4.1 million for the three months ended September 30, 2024, compared to the same period in 2023, due primarily to higher rate earned on Company-Owned Life Insurance and higher level of Short-term Investments, partially offset by lower levels of Fixed Income Securities.

Current wording

Net investment income increased by $4.1 million for the three months ended March 31, 2025, compared to the same period in 2024, due primarily to lower losses on alternative investments and higher rate earned on Company-Owned Life Insurance.

Previous wording

The Life Insurance segment’s nine months ended September 30, 2024 effective income tax rate was 12.8% compared to 13.0% for the same period in 2023. The effective income tax rate for the third 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 nine months ended September 30, 2023 is due primarily to an increased benefit from tax preferred investment income.

Current wording

The Life Insurance segment’s first quarter 2025 effective income tax rate was 15.0% compared to 15.2% for the same period in 2024. The effective income tax rate for the first quarters of 2025 and 2024 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 the first quarter of 2024 is driven by an increased benefit from Company-Owned Life Insurance.

Previous wording

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

Current wording

Net Investment Income for the three months ended March 31, 2025 and 2024 is presented below:

Previous wording

Net Investment Income was $111.1 million and $107.0 million for the three months ended September 30, 2024 and 2023, respectively. Net Investment Income increased by $4.1 million in 2024 due primarily to higher rate earned on Company-Owned Life Insurance and higher level of Short-term Investments, partially offset by lower levels of Fixed Income Securities.

Current wording

Net Investment Income was $101.2 million and $100.4 million for the three months ended March 31, 2025 and 2024, respectively. Net Investment Income increased by $0.8 million in 2025 mostly driven by higher rate earned on Company-Owned Life Insurance and higher levels of Short-term Investments, partially offset by lower levels and a decrease in yields from Fixed Income securities. Net Investment Income from equity securities was $3.8 million for the three months ended March 31, 2025, compared to $4.1 million for the same period in 2024, mostly driven by a decrease from dividends, partially offset by income from alternative investments.

Previous wording

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

Current wording

The components of Change in Fair Value of Equity and Convertible Securities for the three months ended March 31, 2025 and 2024 are presented below:

Previous wording

Net realized gains and losses on sales of fixed maturities for the three months ended September 30, 2024 and 2023 primarily relate to normal portfolio management. The net realized losses on hedging activity for the three months ended September 30, 2023 related to treasury futures that did not qualify for hedge accounting treatment.

Current wording

Net realized gains and losses on sales of fixed maturities for the three months ended March 31, 2025 and 2024 primarily relate to normal portfolio management.

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 Condensed 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 Condensed Consolidated Statements of Income (Loss) in the period.

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 Condensed Consolidated Statements of Income in the period that the declines are evaluated. Conversely, an increase in the fair

Previous wording

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

Current wording

The components of Impairment Losses in the Condensed Consolidated Statements of Income for the three months ended March 31, 2025 and 2024 were:

Previous wording

1 Includes losses from intent-to-sell securities and direct write-down securities of $0.3 million and $2.0 million for the three and nine months ended September 30, 2024, respectively, and $— million and $0.4 million for the three and nine months ended September 30, 2023, respectively.

Current wording

1 Includes losses from intent-to-sell securities and direct write-down securities of $1.2 million and $1.5 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

The Company’s fixed maturity investment portfolio is comprised primarily of high-grade corporate, municipal and agency bonds. At September 30, 2024, approximately 95.5% 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 March 31, 2025, approximately 94.5% 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 $15.0 million and $25.5 million at September 30, 2024 and December 31, 2023, respectively.

Current wording

Gross unrealized losses on the Company’s investments in below-investment-grade fixed maturities were $14.0 million and $14.2 million at March 31, 2025 and December 31, 2024, respectively.

Previous wording

The Company’s short-term investments primarily consist of short-term bonds and money market funds . At September 30, 2024, the Company had $422.9 million invested in U.S. Treasury bills and short-term bonds and $274.0 million invested in money market funds, which primarily invest in U.S. Treasury securities.

Current wording

The Company’s short-term investments primarily consist of U.S. Treasury bills, short-term bonds and money market funds . At March 31, 2025, the Company had $273.3 million invested in U.S. Treasury bills and short-term bonds and $272.1 million invested in money market funds, which primarily invest in U.S. Treasury securities.

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 September 30, 2024 and December 31, 2023 is presented below.

Current wording

The Company owns investments in various limited liability investment companies and limited partnerships that primarily invest in mezzanine debt, real estate, and senior debt. Investments in 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 Other Investments, depending on the accounting method used to report the investment. Additional information pertaining to these investments at March 31, 2025 and December 31, 2024 is presented below.

Previous wording

The federal corporate statutory income tax rate was 21% for the nine months ended September 30, 2024 and September 30, 2023. The Company’s effective income tax rate, which was 20.4% and 23.3% for the three months ended September 30, 2024 and 2023, respectively, and 19.5% and 21.2% for the nine months ended September 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.

Current wording

The federal corporate statutory income tax rate was 21% for the three months ended March 31, 2025 and March 31, 2024. The Company’s effective income tax rate, which was 19.1% for the three months ended March 31, 2025 and 2024, 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) 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 for Federal tax purposes, (5) a permanent difference associated with nondeductible executive compensation, (6) impact of deferred taxes in foreign jurisdictions, and (7) a change in valuation allowance related to foreign deferred tax assets.

Previous wording

The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $9.5 million for the three months ended September 30, 2024, compared to $6.4 million for the same period in 2023. The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $25.6 million for the nine months ended September 30, 2024, compared to $22.6 million for the same period in 2023.

Current wording

The nontaxable increase in cash surrender value on Company-Owned Life Insurance was $10.2 million for the three months ended March 31, 2025, compared to $7.1 million for the same period in 2024.

Previous wording

The Company realized investment tax credits and other federal income tax credits of $0.3 million for the three months ended September 30, 2024, compared to realized investment tax credits and other federal income tax credits of $3.2 million for the same period in 2023. The Company realized investment tax credits and other federal income tax credits of $0.9 million for the nine months ended September 30, 2024, compared to realized investment tax credits and other federal income tax credits of $3.1 million for the same period in 2023.

Current wording

The Company realized federal income tax credits of $0.3 million for the three months ended March 31, 2025 and 2024.

Previous wording

The amount of expense recognized for long-term equity-based compensation expense was $0.9 million higher than the amount that would be deductible under the IRC for the three months ended September 30, 2024, compared to $0.4 million higher for the same period in 2023. The amount of expense recognized for long-term equity-based compensation expense was $0.6 million lower than the amount that would be deductible under the IRC for the nine months ended September 30, 2024, compared to $0.9 million higher for the same period in 2023.

Current wording

The amount of expense recognized for long-term equity-based compensation expense under GAAP was $2.0 million lower than the amount that would be deductible under the IRC for the three months ended March 31, 2025, compared to $0.7 million lower for the same period in 2024.

Previous wording

The amount of nondeductible executive compensation was $4.2 million for the three months ended September 30, 2024, compared to $1.7 million for the same period in 2023. The amount of nondeductible executive compensation was $12.6 million for the nine months ended September 30, 2024, compared to $8.9 million for the same period in 2023.

Current wording

The amount of nondeductible executive compensation was $5.3 million for the three months ended March 31, 2025, compared to $4.2 million for the same period in 2024.

Previous wording

As a result of recently enacted tax legislation in foreign jurisdictions in which the Company operates, a tax benefit of $6.6 million and $17.1 million was recorded for the three and nine months ended September 30, 2024, respectively. No tax expense or benefit was recorded for the same periods in 2023.

Current wording

Tax expense of $0.8 million was recorded for the three months ended March 31, 2025, compared to a tax benefit of $12.8 million for the same period in 2024 related to income taxes imposed in the foreign jurisdiction in which the Company operates.