KEMPER Corp

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation and Accounting Policies

The unaudited Condensed Consolidated Financial Statements include the accounts of Kemper Corporation (“Kemper”) and its subsidiaries which include property and casualty insurance subsidiaries and life insurance subsidiaries (collectively referred to herein as the “Company”), and a variable interest entity (“VIE”) in which the Company is considered the primary beneficiary.

The unaudited Condensed Consolidated Financial Statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) on a basis consistent with reporting interim financial information pursuant to the rules and regulations for Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and include the accounts of Kemper Corporation, its subsidiaries, and a VIE in which the Company is considered the primary beneficiary. All intercompany accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation.

Certain financial information that is included in the annual financial statements, including certain financial statement footnote disclosures prepared in accordance with GAAP, is not required by the rules and regulations of the SEC for interim financial reporting and has been condensed or omitted. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements include all adjustments necessary to fairly present the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements requires significant management estimates. Due to this factor and other factors, such as the seasonal nature of some portions of the insurance business, annualizing the results of operations for the nine months ended September 30, 2026 would not necessarily be indicative of the results expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Consolidated Financial Statements and related notes included in Kemper’s Annual Report for the year ended December 31, 2025.

Adoption of New Accounting Guidance

The Company has adopted all recently issued accounting pronouncements with effective dates prior to October 1, 2026. There were no adoptions of such accounting pronouncements during the nine months ended September 30, 2026 that had a material impact on the Company’s interim Condensed Consolidated Financial Statements.

Guidance Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. For SEC registrants, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but does not anticipate the adoption of the new guidance will have a material impact on the Company’s Condensed Consolidated Financial Statements. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 Disaggregation of Income Statement Expenses, which requires companies to disclose, within the financial statement footnotes, the amount of inventory purchases, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities that contribute to each income statement expense line item, as well as the amount of selling expenses incurred during each reporting period. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06 Targeted Improvements to the Accounting for Internal-Use Software, which replaces the existing project stage model with a principles-based approach. Software costs are capitalized when management has committed funding, and it is probable the project will be completed and used as intended. ASU 2025-06 also aligns disclosure requirements with those for property, plant, and equipment, eliminates separate intangible asset disclosures, and supersedes guidance on website development costs. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

Note 1 - Basis of Presentation and Accounting Policies (Continued)

In December 2025, the FASB issued ASU 2025-11 Narrow-Scope Improvements, which clarifies the scope and application of interim reporting requirements. The amendments enhance guidance on the form and content of interim financial statements, and consolidate required interim disclosures across the Codification, including a new disclosure principle requiring entities to describe events or changes since the last annual reporting period that have a material impact on interim results. ASU 2025-11 is effective for interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this guidance on its interim condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-12 Codification Improvements, which include technical corrections, clarifications, and other minor amendments intended to improve the consistency and usability of the FASB Accounting Standards Codification. The Amendments address a variety of topics and are not intended to change existing accounting conclusions. ASU 2025-12 is effective for annual periods beginning after December 15, 2026, and interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

Note 2 - Net Income (Loss) Per Unrestricted Share

A reconciliation of the numerator and denominator used in the calculation of Basic Net Income (Loss) Per Unrestricted Share and Diluted Net Income (Loss) Per Unrestricted Share for the three and nine months ended September 30, 2026 and 2025 is presented below.

The number of shares of Kemper common stock that were excluded from the calculations of Equity-based Compensation Equivalent Shares and Weighted-average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution because the effect of inclusion would be anti-dilutive was 1.8 million and 2.0 million for the three months ended September 30, 2026 and 2025, respectively, and 1.9 million and 1.4 million for the nine months ended September 30, 2026 and 2025, respectively.

Note 3 - Goodwill

Goodwill balances by business segment at September 30, 2026 and December 31, 2025 were:

Note 3 - Goodwill (Continued)

During the second quarter of 2026, the Company concluded that recent operational challenges within the Specialty Property & Casualty reporting unit and the sustained decline in the Company’s share price were triggering events requiring a goodwill impairment assessment for all reporting units. As a result, the fair value of each reporting unit was determined using a combination of available market information, market comparisons and a discounted cash flow valuation method based on the present value of future earnings. To corroborate each reporting unit's valuation, the Company performed a reconciliation of the estimated aggregate fair value of all reporting units to the Company's market capitalization, including consideration of a control premium. This reconciliation provided an indication that, in total, assumptions and estimates were reasonable. The fair value calculated in the second quarter of 2026 for the Specialty Property & Casualty business was lower than the carrying value of the reporting unit, resulting in an impairment of $460.0 million. All the goodwill that was impaired was not tax deductible. The impairment was primarily due to the market’s perceived risk of the Company’s ability to achieve its future cash flow projections. Future sustained declines in the overall market value of the Company’s share price and a continued decline in operational performance may provide an indication that the fair value of one or more reporting units has declined below its carrying value.

The goodwill impairment is reported separately in the Condensed Consolidated Statement of Income (Loss) for the nine months ended September 30, 2026, with a corresponding reduction to Goodwill in the Condensed Consolidated Balance Sheet as of September 30, 2026.

On April 1, 2026, the Company completed the sale of Newins Insurance Agency Holdings, LLC and its subsidiaries (“Newins”), a small distribution business within its Specialty Property & Casualty Insurance segment to Freeway Insurance Services America, LLC. The sale included approximately $14.9 million of assets, of which $7.2 million related to goodwill. In connection with the sale, a pre-tax gain of $7.5 million was recorded during the second quarter of 2026, subject to final closing adjustments. During the third quarter of 2026, the Company recorded an additional pre-tax gain of $1.1 million related to certain closing adjustments. The gain is reflected in Insurance and Other Expenses in the Condensed Consolidated Statements of Income (Loss).

Note 4 - Business Segments

The Company is engaged, through its subsidiaries, in the property and casualty insurance and life and health insurance businesses. The Company conducts its operations throughtwo operating segments: Specialty Property & Casualty Insurance (“Specialty”) and Life Insurance (“Life”).

The Specialty Property & Casualty Insurance segment’s principal products are specialty personal automobile and commercial automobile insurance. These products are distributed primarily through independent agents and brokers. The Life Insurance segment’s principal products are individual life, accident, supplemental health and property insurance. Career agents employed by the Company distribute these products. Corporate and Other operations include interest expense, board of directors’ fees, general corporate expenses incurred by the Company which are not allocated to other businesses, and eliminations of certain inter-segment amounts. Non-Core Operations includes the results of the Preferred Insurance business which the Company expects to fully exit.

Segment Adjusted Net Operating Income

The Company analyzes the operating performance of each segment using segment adjusted net operating income. Segment adjusted net operating income does not equate to “net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss used by the Company’s Chief Operating Decision Maker (“CODM”), our President and CEO, to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is the measure of segment performance presented below. Segment adjusted netoperating income is calculated by adjusting each segment’s income after income taxes for the following items:

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

(ii) Net Realized Investment (Losses) Gains;

(iii) Impairment Losses;

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

(v) Debt Extinguishment and Other Charges;

(vi) Goodwill Impairment;

(vii) Non-Core Operations; and

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

These items are important to an understanding of overall results of operations. Segment adjusted netoperating income is not a substitute for income determined in accordance with U.S. GAAP, and the Company’s definition of segment adjusted netoperating income may differ from that used by other companies. The Company, however, believes that the presentation of segment adjusted netoperating income, as measured for management purposes, enhances the understanding of results of operations by highlighting the underlying profitability factors of its businesses.

Total Segment, Corporate and Other, and Non-Core Operations assets at September 30, 2026 and December 31, 2025 were:

Earned Premiums by product line, including a reconciliation to Total Earned Premiums, for the three and nine months ended September 30, 2026 and 2025 were:

Segment Revenues, including a reconciliation to Total Revenues, for the three and nine months ended September 30, 2026 and 2025 were:

Significant Segment Expenses that were regularly provided to the CODM for the three and nine months ended September 30, 2026 and 2025 were:

Total Segment Adjusted Net Operating Income, including a reconciliation to Net Income (Loss) attributable to Kemper Corporation, for the three and nine months ended September 30, 2026 and 2025 was:

Note 5 - Property and Casualty Insurance Reserves

Property and Casualty Insurance Reserve activity for the nine months ended September 30, 2026 and 2025 was:

Property and Casualty Insurance Reserves are estimated based on historical experience patterns and current economic trends. Actual loss experience and loss trends may differ from these historical experience patterns and economic conditions. Loss experience and loss trends emerge over several years from the dates of loss inception. The Company monitors such emerging loss trends on a quarterly basis. Changes in such estimates are included in the Condensed Consolidated Statements of Income (Loss) in the period of change. Additionally, the Company reviews if any premium revisions are appropriate as a result of any incurred losses and loss adjustment expenses (“LAE”) related to prior years recorded in the current period. For the nine months ended September 30, 2026 and 2025, no premium revisions were deemed necessary solely as a result of any incurred losses or LAE related to prior years recorded in the current year.

For the nine months ended September 30, 2026, the net favorable prior year development of $5.8 million included favorable development of $37.0 million from Specialty Personal Automobile primarily related to bodily injury and physical damage coverages and $26.6 million of adverse development on prior accident years attributable to evolving loss patterns and higher defense costs associated with attorney-represented bodily injury coverages in the Commercial Automobile product line.

For the nine months ended September 30, 2025, the net adverse prior year development of $66.2 million included $67.5 million of adverse development on prior accident years attributable to evolving loss patterns and higher defense costs associated with attorney-represented bodily injury coverages in the Commercial Automobile product line.

The Company cannot predict whether loss and LAE reserves will develop favorably or unfavorably from the amounts reported in the Condensed Consolidated Financial Statements. Any such development could have a material effect on the Company’s consolidated financial results for a given period.

Note 6 - Liability for Future Policyholder Benefits

The Company’s Life Insurance Reserves are reported using the Company’s estimate of its liability for future policyholder benefits. The liability for future policyholder benefits is grouped by contract type and issue year into cohorts consistent with the grouping used in estimating the associated liability. Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current). The liability is adjusted for differences between actual and expected experience. In 2026, the Company changed the timing of its annual assumption update from the fourth quarter to the third quarter to better align with the Company’s annual planning process and be consistent with industry practice. The impact of the change in timing has been recognized in Life and Health Reserves within the Condensed Consolidated Balance Sheet and in Earned Premiums and Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses within the Condensed Consolidated Statement of Income (Loss) and has been applied prospectively given the immateriality of these updates.

The following tables summarize balances and changes in the present value of expected net premiums, present value of expected future policyholder benefits and net liability for future policyholder benefits as of and for the three and nine months ended September 30, 2026 and 2025:

Note 6 - Liability for Future Policyholder Benefits (Continued)

The weighted-average liability duration of the liability for future policyholder benefits as calculated under current rates is as follows:

The reconciliation of the net liability for future policyholder benefits to Life and Health Insurance Reserves in the Condensed Consolidated Balance Sheets is as follows:

The amounts of expected undiscounted future benefit payments, expected undiscounted future gross premiums and expected discounted future gross premiums, are as follows:

The amount of revenue and interest recognized on life insurance products in the Condensed Consolidated Statements of Income (Loss) is as follows:

The weighted-average interest rate is as follows:

Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current). The Company reviewed and updated mortality and lapse assumptions during the third quarter of 2026. The Company did not make any changes to mortality and lapse assumptions during the nine months ended September 30, 2025. Market data that underlies current discount rates was updated as of September 30, 2026.

The balances of and changes in Deferred Profit Liability as of and for the periods indicated are as follows:

Note 7 - Investments

Fixed Maturities

The amortized cost and fair values of the Company’s Investments in Fixed Maturities at September 30, 2026 and December 31, 2025 were:

Accrued interest excluded from the amortized cost of fixed maturities total $70.4 million and $75.3 million as of September 30, 2026 and December 31, 2025, respectively, and is reported within Other Receivables on the Condensed Consolidated Balance Sheets. The Company monitors accrued interest and writes off amounts when they are not expected to be received.

There were $4.0 million and $1.6 million of unsettled sales of Investments in Fixed Maturities included in Other Receivables at September 30, 2026 and December 31, 2025, respectively. Accrued Expenses and Other Liabilities included $33.1 million and $42.7 million of unsettled purchases of Investments in Fixed Maturities as of September 30, 2026 and December 31, 2025, respectively.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at September 30, 2026 by contractual maturity were:

The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Investments in Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date at September 30, 2026 consisted of securities issued by the Government National Mortgage Association with a fair value of $463.9 million, securities issued by the Federal National Mortgage Association with a fair value of $38.1 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $20.5 million and securities of other non-governmental issuers with a fair value of $1,078.7 million.

An aging of unrealized losses on the Company’s Investments in Fixed Maturities at September 30, 2026 is presented below.

Investment-grade fixed maturity investments comprised $1,108.9 million and below-investment-grade fixed maturity investments comprised $16.4 million of the unrealized losses on investments in fixed maturities at September 30, 2026. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 3.5% of the amortized cost basis of the investment.

An aging of unrealized losses on the Company’s Investments in Fixed Maturities at December 31, 2025 is presented below.

Investment-grade fixed maturity investments comprised $719.6 million and below-investment-grade fixed maturity investments comprised $13.6 million of the unrealized losses on investments in fixed maturities at December 31, 2025. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 3.3% of the amortized cost basis of the investment.

Fixed Maturities - Expected Credit Losses

The following tables set forth the change in allowance for credit losses on fixed maturities available-for-sale by major security type for the nine months ended September 30, 2026 and 2025.

Equity Securities

Investments in Equity Securities at Fair Value were $311.0 million and $306.4 million at September 30, 2026 and December 31, 2025, respectively. Net unrealized gains arising during the nine months ended September 30, 2026 recognized in earnings, related to such investments still held as of September 30, 2026 were $1.4 million compared to net unrealized losses of $2.3 million for the same period in 2025.

There wereno unsettled purchases or sales of Investments in Equity Securities at Fair Value at September 30, 2026. As of December 31, 2025, there wereno unsettled purchases and $0.2 million in unsettled sales of Investments in Equity Securities at Fair Value.

Equity Method Limited Liability Investments

Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting. The Company’s investments in Equity Method Limited Liability Investments are generally of a passive nature in that the Company does not take an active role in the management of the investment entity.

The Company’s maximum exposure to loss at September 30, 2026 is limited to the total carrying value of $182.7 million. In addition, the Company had outstanding commitments totaling approximately $106.5 million to fund Equity Method Limited Liability Investments at September 30, 2026. At September 30, 2026,4.6% of Equity Method Limited Liability Investments were reported without a reporting lag,0.8% of the total carrying value were reported with a one-month lag, and the remainder were reported with a greater than one-month but less than or equal to three-month lag.

There wereno unsettled purchases and $1.5 million of unsettled sales of Equity Method Limited Liability Investments at September 30, 2026. As of December 31, 2025, there wereno unsettled purchases or sales of Equity Method Limited Liability Investments. Unsettled purchases and sales of Equity Method Limited Liability Investments are carried within Accrued Expenses and Other Liabilities and Other Receivables, respectively, on the Condensed Consolidated Balance Sheets.

Loans to Policyholders

Loans to Policyholders represents funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in Net Investment Income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.

The carrying values of the Company’s Loans to Policyholders at Unpaid Principal investment were $279.9 million at September 30, 2026 and December 31, 2025, respectively.

Other Investments

The carrying values of the Company’s Other Investments at September 30, 2026 and December 31, 2025 were:

Investments in Equity Securities at Modified Cost were $17.7 million and $21.7 million at September 30, 2026 and December 31, 2025, respectively. The Company performs a qualitative impairment analysis on a quarterly basis consisting of various factors such as earnings performance, current market conditions, changes in credit ratings, changes in the regulatory environment and other factors. If the qualitative analysis identifies the presence of impairment indicators, the Company estimates the fair value of the investment. If the estimated fair value is below the carrying value, the Company records an impairment in the Condensed Consolidated Statements of Income (Loss) to reduce the carrying value to the estimated fair value. When the Company identifies observable transactions of the same or similar securities to those held by the Company, the Company increases or decreases the carrying value to the observable transaction price. The Company did not recognize any changes in carrying value due to observable transactions for the nine months ended September 30, 2026 and 2025. The Company didnot recognize any impairment on Equity Securities at Modified Cost for the nine months ended September 30, 2026 and 2025 as a result of the Company’s impairment analysis. As of September 30, 2026 and December 31, 2025, the Company recognized no cumulative increases or decreases in the carrying value due to observable transactions and $1.3 million and $3.2 million, respectively, of cumulative impairments on Equity Securities at Modified Cost.

Net Investment Income

Net Investment Income for the three and nine months ended September 30, 2026 and 2025 was:

The components of Net Realized Investment (Losses) Gains for the three and nine months ended September 30, 2026 and 2025 are presented below:

Note 8 - Fair Value Measurements

The Company classifies its Investments in Fixed Maturities as available-for-sale and reports these investments at fair value. The Company reports equity investments with readily determinable fair values as Equity Securities at Fair Value. Certain investments that are measured at fair value using the net asset value (“NAV”) practical expedient are not required to be classified using the fair value hierarchy, but are presented in the following two tables to permit reconciliation of the fair value hierarchy to the amounts presented in the Condensed Consolidated Balance Sheets.

The valuation of assets and liabilities measured at fair value in the Company’s Condensed Consolidated Balance Sheet at September 30, 2026 is summarized below. The Company had no material liabilities that are measured and reported at fair value.

The valuation of assets and liabilities measured at fair value in the Company’s Condensed Consolidated Balance Sheet at December 31, 2025 is summarized below. The Company had no material liabilities that are measured and reported at fair value.

The Company’s investments in Fixed Maturities that are classified as Level 1 primarily consist of U.S. Treasury Bonds and Notes. The Company’s investments in Equity Securities that are classified as Level 1 consist of either investments in mutual funds or exchange traded funds. The Company’s investments in Fixed Maturities that are classified as Level 2 primarily consist of investments in corporate bonds, obligations of states and political subdivisions, collateralized loan obligations, and mortgage-backed securities of U.S. government agencies. The Company’s investments in Equity Securities that are classified as Level 2 consist of investments in preferred stocks. The Company uses a leading, nationally recognized provider of market data and analytics to price the vast majority of the Company’s Level 2 measurements. The provider utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information. Because many fixed maturity securities do not trade on a daily basis, the provider’s evaluated pricing applications apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. In addition, the provider uses model processes to develop prepayment and interest rate scenarios. The pricing provider’s models and processes also take into account market convention. For each asset class, teams of its evaluators gather information from market sources and integrate relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models. The Company generally validates the measurements obtained from its primary pricing provider by comparing them with measurements obtained from one additional pricing provider that provides either prices from recent market transactions, quotes in inactive markets or evaluations based on its own proprietary models.

The Company investigates significant differences related to the values provided. On completion of its investigation, management exercises judgment to determine the price selected and whether adjustments, if any, to the price obtained from the Company’s primary pricing provider would warrant classification of the price as Level 3. In instances where a measurement cannot be obtained from either pricing provider, the Company generally will evaluate bid prices from one or more binding quotes obtained from market makers to value investments in inactive markets and classified by the Company as Level 2. The Company generally classifies securities when it receives non-binding quotes or indications as Level 3 securities unless the Company can validate the quote or indication against recent transactions in the market.

The tables below present quantitative information about the significant unobservable inputs utilized by the Company in determining fair values for fixed maturity investments classified as Level 3 at September 30, 2026 and December 31, 2025. Valuations for assets presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company. The weighted average yield is calculated based on fair value.

For an investment in a fixed maturity security, an increase in the yield used to determine the fair value of the security will decrease the fair value of the security. A decrease in the yield used to determine fair value will increase the fair value of the security, but for callable securities the fair value increase is generally limited to par, unless security is currently callable at a premium.

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the three months ended September 30, 2026 and 2025 is presented below. The transfers into and out of Level 3 were due to changes in the availability of market observable inputs.

Information by security type pertaining to the changes in the fair value of the Company’s investments classified as Level 3 for the nine months ended September 30, 2026 and 2025 is presented below. The transfers into and out of Level 3 were due primarily to changes in the availability of market observable inputs.

The table below shows investments reported at fair value using NAV and their unfunded commitments by asset class as of September 30, 2026 and December 31, 2025.

The fund investments included above are not redeemable, because distributions from the funds will be received when underlying investments of the funds are liquidated. The funds are generally expected to have approximately 10 year lives at their inception, but these lives may be extended at the fund manager’s discretion, typically inone ortwo-year increments.

The following table includes information related to the Company’s investments that calculate a NAV per share:

Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value.

Loans to Policyholders are carried at unpaid principal balance which approximates fair value and are categorized as Level 3 within the fair value hierarchy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of payments, the Company believes the carrying value of policy loans approximates fair value. The fair value measurement of Short-term Investments is estimated using inputs that are considered Level 1 measurements. The Mortgage Loans fair value measurement is considered equal to amortized cost given the short-term nature of the investments. The cash surrender value of Company-Owned Life Insurance approximates fair value and is considered to be a Level 2 investment. The fair value measurement of Equity Securities at Modified Cost is estimated using inputs that are considered Level 3 measurements. The fair value of Long-term Debt is estimated using quoted prices for similar liabilities in markets that are not active. The inputs used in the valuation are considered Level 2 measurements. Policyholder Obligations presented in the preceding table consist of advances from the FHLB of Chicago, and the inputs used in the valuation are considered Level 2 measurements.

Note 9 - Variable Interest Entities

A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity's operations through voting rights or do not substantively participate in the gains and losses of the entity. The Company consolidates VIEs in which the Company is deemed the primary beneficiary. The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect that entity's economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE.

Reciprocal Exchange

The Company has formed a management company that acts as attorney-in-fact (“AIF”) for Kemper Reciprocal (the “Reciprocal Exchange” or “Exchange”), an Illinois-domiciled reciprocal insurance exchange. The Exchange principally writes specialty personal automobile policies sold to subscribers of the Exchange. The establishment of Kemper Reciprocal was completed in the third quarter of 2023.

The Company consolidates the Exchange since (1) the AIF manages the business operations of the Exchange and therefore has the power to direct the activities that most significantly impact the economic performance of the Exchange and (2) the Company has provided capital to the Exchange and would absorb any expected losses that could potentially be significant to the Exchange. The Exchange’s anticipated economic performance is the product of its underwriting and investment results. The AIF receives a management fee for the services provided to the Reciprocal Exchange. The management fee revenues are based upon all premiums written or assumed by the Exchange. The AIF determines the management fee rate to be paid by the Exchange. The AIF can charge a management fee of up to 30% of the Exchange’s gross written and assumed premiums. The effects of the transactions between the Company and the Reciprocal Exchange are eliminated in consolidation to derive consolidated Net Income (Loss). However, the management fee income earned by the AIF is reported in Net Income (Loss) attributable to Kemper Corporation and is included in basic and diluted earnings per share.

The assets of the Reciprocal Exchange can be used only to settle the obligations of the Reciprocal Exchange for which creditors and other beneficial owners have no recourse to the Company. The Company has no obligation related to any underwriting and/or investment losses experienced by the Exchange. As of September 30, 2026 and December 31, 2025, the Company had contributed $36.0 million in the form of surplus notes and guarantee fund certificates to the Reciprocal Exchange. Due to ongoing operating losses and reductions in the forecasted cash flows, the Company established an allowance for credit loss of $21.0 million related to the surplus notes during the second quarter of 2026, which is reflected in Impairment Losses in the Condensed Consolidated Statement of Income (Loss) for the nine months ended September 30, 2026 and Other Assets in the Condensed Consolidated Balance Sheet as of September 30, 2026.

Noncontrolling interest is the portion of equity (net assets) not attributable, directly or indirectly, to a parent. Since the Company has no ownership interest in Kemper Reciprocal, the difference between the carrying value of the Exchange’s assets and liabilities represents noncontrolling interest and any income or loss generated by the net assets of the Exchange is presented as income or loss attributable to noncontrolling interest.

Note 10 - Deferred Policy Acquisition Costs

The following tables present the balances and changes in Deferred Policy Acquisition Costs for the nine months ended September 30, 2026 and 2025.

Costs directly associated with the successful acquisition of business, principally commissions, certain premium taxes and policy issuance costs, are deferred. Costs deferred on property and casualty insurance contracts are amortized over the period in which the related premiums are earned. Costs deferred on traditional life insurance products and other long-duration insurance contracts are amortized on a constant level basis over the expected life of the contracts in accordance with the assumptions used to estimate the liability for future policyholder benefits for nonparticipating traditional and limited-payment contracts. The underlying assumptions for deferred policy acquisition costs and the liability for future policyholder benefits are updated concurrently.

The Company made changes to future assumptions for the Life Insurance segment during the third quarter of 2026. The Company did not make any changes to future assumptions for the nine months ended 2025.

Note 11 - Receivables from Policyholders - Allowance for Expected Credit Losses

The following tables present the balances of Receivables from Policyholders, net of the allowance for expected credit losses, as of September 30, 2026 and 2025, and a roll forward of changes in the allowance for expected credit losses for the three and nine months ended September 30, 2026 and 2025.

Note 12 - Other Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

The tables below display the changes in Accumulated Other Comprehensive Loss (“AOCI”) by component for the three months ended September 30, 2026 and 2025.

Note 12 - Other Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss (Continued)

The tables below display the changes in AOCI by component for the nine months ended September 30, 2026 and 2025.

Amounts reclassified from AOCI shown above are reported in Net Income (Loss) as follows:

Note 13 - Shareholders' Equity

Common Stock Repurchases

On August 5, 2025, Kemper’s Board of Directors approved a share repurchase authorization, under which the Company can repurchase up to $500.0 million of its common stock (the “2025 Repurchase Program”). As of September 30, 2026, the remaining share repurchase authorization under the 2025 Repurchase Program was $304.2 million.

No shares were repurchased during the three and nine months ended September 30, 2026.

On August 13, 2025, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to repurchase an aggregate of $150.0 million of shares of the Company’s common stock. Under the terms of the ASR Agreement, the Company made a payment of $150.0 million to Goldman Sachs, and on August 14, 2025, received initial deliveries of an aggregate of 2,279,000 shares of the Company’s common stock, or approximately 80% of the total shares that are expected to be repurchased under the ASR Agreement, based on the closing price on August 13, 2025 of $52.65 per share.

The initial delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. The ASR Agreement was accounted for as a treasury stock transaction and forward stock purchase contract. The shares delivered were immediately retired, and the unsettled portion of the ASR Agreement was recorded in additional paid-in capital in the Company’s Condensed Consolidated Balance Sheet. The forward stock purchase contract was considered indexed to the Company’s own stock and was classified as an equity instrument.

On October 13, 2025, as final settlement of the share repurchase transaction under the ASR Agreement, the Company received from Goldman Sachs approximately 615,000 shares of the Company’s common stock. In total, the Company repurchased 2,894,000 shares of its Common Stock under the ASR Agreement at $51.84 per share, which represents the volume-weighted average market price of the Company’s common stock during the term of the ASR Agreement less a customary discount. The shares delivered were immediately retired.

In addition to the ASR Agreement repurchases, Kemper repurchased and retired approximately 1,126,000 and 1,636,000 of its common stock in open market transactions under its share repurchase authorization during the three and nine months ended September 30, 2025, respectively. The repurchases during the three months ended September 30, 2025 were for an aggregate cost of $66.5 million and an average cost per share of $59.00 and the repurchases during the nine months ended September 30, 2025 were for an aggregate cost of $99.0 million and an average cost per share of $60.52.

Employee Stock Purchase Plan

During the three months ended September 30, 2026, the Company did not issue any shares under the Kemper Employee Stock Purchase Plan (“ESPP”). During the three months ended September 30, 2025, the Company issued 17,000 shares under the Kemper ESPP at an average discount price of $43.82 per share. Compensation costs charged against income were $0.1 million during the three months ended September 30, 2025.

During the nine months ended September 30, 2026 and 2025, the Company issued approximately 58,000 and 45,000 shares under the Kemper ESPP, respectively, at an average discounted price of $24.26 and $51.17 per share. Compensation costs charged against income were $0.2 million and $0.4 million for the nine months ended September 30, 2026 and 2025, respectively.

Note 14 - Amortization of Intangible Assets

The following table presents the amortization expense on definite life intangible assets incurred by the Company for the three and nine months ended September 30, 2026 and 2025:

Note 15 - Policyholder Obligations

Policyholder Obligations at September 30, 2026 and December 31, 2025 were as follows:

FHLB Funding Agreements

Kemper’s subsidiary, United Insurance Company of America (“United Insurance”) has entered into funding agreements with the FHLB of Chicago in exchange for cash, which it uses for spread lending purposes. During the nine months ended September 30, 2026, United Insurance received no advances from the FHLB of Chicago and made repayments of $91.4 million under the spread lending program.

When a funding agreement is issued, United Insurance is required to post collateral in the form of eligible securities including mortgage-backed, government, and agency debt instruments for each of the advances that are entered. The fair value of the collateral pledged must be maintained at certain specified levels above the borrowed amount, which can vary depending on the assets pledged. If the fair value of the collateral declines below these specified levels of the amount borrowed, United Insurance would be required to pledge additional collateral or repay outstanding borrowings. Upon any event of default by United Insurance, the FHLB’s recovery on the collateral is limited to the amount of United Insurance’s liability under the funding agreements to the FHLB of Chicago.

United Insurance’s liability under the funding agreements with the FHLB of Chicago, the amount of collateral pledged under such agreements and FHLB of Chicago common stock owned by United Insurance at September 30, 2026 and December 31, 2025 is presented below.

Note 15 - Policyholder Obligations (Continued)

Universal Life-type Policyholder Account Balances

The Company’s weighted-average crediting rate for Universal Life-type Policyholder Account Balances was 5.1% as of September 30, 2026 and 2025, respectively. Guaranteed minimum benefit amounts in excess of the current account balances for these contracts were $247.8 million and $260.3 million as of September 30, 2026 and December 31, 2025, respectively. The cash surrender value of the Company’s policyholder obligations for these contracts was $91.8 million and $94.2 million as of September 30, 2026 and December 31, 2025, respectively.

Note 16 - Debt

Amended and Extended Credit Agreement

On March 15, 2022, the Company entered into an amended and extended credit agreement. The amended and extended credit agreement increased the borrowing capacity of the existing unsecured credit agreement to $600.0 million and extended the maturity date to March 15, 2027. Furthermore, the amended and extended credit agreement provided for an accordion feature whereby the Company could increase the revolving credit borrowing capacity by an additional $200.0 million for a total maximum capacity of $800.0 million. On May 4, 2026, the Company reduced the borrowing capacity under the credit agreement from $600.0 million to $350.0 million in accordance with terms of the agreement. The accordion feature remained unchanged and permits the Company to increase total borrowing capacity up to $550.0 million. There wereno outstanding borrowings under the credit agreement at either September 30, 2026 or December 31, 2025.

On August 3, 2026, the Company entered into an amendment (the “Amendment”) to the credit agreement. The Amendment, among other things, (i) replaced the consolidated net worth financial covenant contained in the agreement with a consolidated tangible net worth financial covenant, effective as of June 29, 2026, and (ii) added a quarterly-tested financial covenant requiring each of Trinity Universal Insurance Company (“Trinity”) and United Insurance to maintain a minimum risk-based capital ratio.

Long-term Debt

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, Non-Current outstanding at September 30, 2026 and December 31, 2025 was:

Redemption of 4.350% Senior Notes Due 2025

On January 15, 2025, Kemper issued a notice of redemption for the entire $450.0 million aggregate principal of 4.350% senior notes originally due February 15, 2025 (the “2025 Senior Notes”) at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest on the redemption date. On February 11, 2025, Kemper completed the redemption and the 2025 Senior Notes were repaid in full.

2.400% Senior Notes Due 2030

Kemper has $400.0 million aggregate principal of 2.400% senior notes due September 30, 2030 (the “2030 Senior Notes”). The net proceeds of issuance were $395.8 million, net of discount and transaction costs, for an effective yield of 2.52%. The 2030 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time, at Kemper’s option, at specified redemption prices.

Note 16 - Debt (Continued)

3.800% Senior Notes Due 2032

On February 15, 2022, Kemper offered and sold $400.0 million aggregate principal of 3.800% senior notes due February 23, 2032 (the “2032 Senior Notes”). The net proceeds of issuance were $395.1 million, net of discount and transaction costs, for an effective yield of 3.950%. The 2032 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time, at Kemper’s option, at specified redemption prices.

5.875% Fixed-Rate Reset Junior Subordinated Debentures Due 2062

On March 10, 2022, Kemper issued $150.0 million aggregate principal amount of 5.875% Fixed-Rate Reset Junior Subordinated Debentures due March 15, 2062 (the “2062 Junior Debentures”). The net proceeds from issuance were $144.7 million, net of discount and transaction costs. The 2062 Junior Debentures will bear interest from and including the date of original issue to, but excluding, March 15, 2027 (the “First Reset Date”) at the fixed rate of 5.875% per annum. The interest rate on the First Reset Date, and subsequent Reset Dates, will be equal to the Five-Year Treasury Rate as of the most recent Reset Date plus 4.140% to be reset on each Reset Date. Interest is due quarterly in arrears beginning on June 15, 2022. The Company has the option to defer interest payments forone or more optional deferral periods of up tofive consecutive years, provided that no optional deferral period shall extend beyond March 15, 2062, or any earlier accelerated maturity date arising from an event of default or any earlier redemption of the 2062 Junior Debentures.

The 2062 Junior Debentures are unsecured and may be redeemed in whole or in part on the First Reset Date or any time thereafter, at a redemption price equal to the principal amount of the debentures being redeemed plus any accrued and unpaid interest.

Short-term Debt

Kemper’s subsidiaries, United Insurance, Trinity and American Access Casualty Company (“AAC”), are members of the FHLBs of Chicago, Dallas and Chicago, respectively. The Company periodically uses short-term FHLB borrowings for cash management and risk management purposes, in addition to long-term FHLB borrowings for the spread lending program. The Company did not receive advances or make repayments of short-term debt during the three and nine months ended September 30, 2026 and 2025 for cash and risk management purposes. There were no short-term debt advances from the FHLBs of Chicago or Dallas outstanding at September 30, 2026 or December 31, 2025. For information on United Insurance’s funding agreement with the FHLB of Chicago in connection with the spread lending program, see Note 15, "Policyholder Obligations" to the Condensed Consolidated Financial Statements.

Note 17 - Income Taxes

The statute of limitations related to Kemper and its eligible subsidiaries’ consolidated Federal income tax returns is closed for all tax years up to and including 2011 as well as 2018, 2019 and 2021. As a result of the Company filing amended federal income tax returns, tax years 2012 and 2013 are under limited examination with respect to carryback adjustments associated with the amended returns. The statute of limitations related to tax years 2014, 2015, 2016, and 2017 has been extended to December 31, 2027. Tax years 2020, 2022, 2023 are currently under examination and will remain open until the examinations are complete. The statute of limitations for tax years 2020 and 2022 are open until December 31, 2027. Tax years 2023 and 2024 are subject to statute of limitations of three years from their extended due dates of October 15, 2024, and 2025, respectively.

The expiration of the statute of limitations related to the various state income tax returns that Kemper and its subsidiaries file varies by state.

The interim period tax expense or benefit is the difference between the year-to-date income tax provision and the amounts reported for the previous interim periods of the fiscal year. For the three months ended September 30, 2026, the income tax expense attributable to Kemper Corporation was $10.1 million, or 16.1% of income before income taxes, compared to an income tax benefit of $7.9 million, or 27.3% of loss before income taxes for the three months ended September 30, 2025. For the nine months ended September 30, 2026, the income tax expense attributable to Kemper Corporation was $5.3 million or (1.3)% of loss before income taxes, compared to an income tax expense of $34.0 million or 18.3% of income before income taxes for the nine months ended September 30, 2025.

Note 17 - Income Taxes (Continued)

As of September 30, 2026, the Company recorded $1.7 million in Unrecognized Tax Benefits, including accrued interest. There wereno Unrecognized Tax Benefits at December 31, 2025. The Company recognizes liabilities related to Unrecognized Tax Benefits and related interest and penalties in Income Tax Expense (Benefit).

For the nine months ended September 30, 2026 and 2025, federal income taxes paid, net of income tax refunds received, were $21.9 million and $20.5 million, respectively.

For the nine months ended September 30, 2026 and 2025, state income taxes paid, net of income tax refunds received, were $0.4 million and $1.7 million, respectively. No foreign income taxes were paid or refunded for the nine months ended September 30, 2026 and 2025.

Note 18 - Commitments and Contingencies

In the ordinary course of its businesses, the Company is involved in legal proceedings including lawsuits, arbitration, regulatory examinations, audits and inquiries. Based on currently available information, the Company does not believe that it is reasonably possible that any of its pending legal proceedings will have a material effect on the Company’s Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements.