Kemper (KMPR) 8-K Annual Meeting of Shareholders

Exhibit 99.2

CEO’s Remarks

Donald G. Southwell

President & Chief Executive Officer

Statements

Safe Harbor Statement

This presentation may contain information that includes or is based upon forward-looking

statements within the meaning of the federal securities laws. Forward-looking statements do not

relate

strictly

to

historical

or

current

facts,

but

instead

give

expectations

or

forecasts

of

future

events or the outcome of contingencies. Forward-looking statements are not guarantees of

future performance and may turn out to be wrong, as they can be affected by inaccurate

assumptions or by known or unknown risks and uncertainties that are difficult to predict;

accordingly, you are cautioned not to place undue reliance on such statements, which speak

only

as

of

the

date

of

this

presentation.

The

Company

assumes

no

obligation

to

publicly

correct

or update any forward-looking statements as a result of subsequent events or developments.

You are advised to consult filings made by the Company with the Securities and Exchange

Commission and the Company’s website for further information on these subjects.

Non-GAAP Financial Measures

This presentation contains non-GAAP financial measures to analyze the company’s operating

performance for the periods presented in this presentation.  Because Unitrin’s calculation of

these measures may differ from similar measures used by other companies, investors should

be careful when comparing Unitrin’s non-GAAP financial measures to those of other

companies.  For detailed disclosures on non-GAAP financial measures included in this

presentation

and

their

GAAP

reconciliations,

please

refer

to

the

discussion

at

the

end

of

this

presentation which is also posted on the Unitrin website at www.unitrin.com.

Kemper

The

Company

uses

the

registered

trademark,

“Kemper,”

under

license,

for

personal

lines

insurance only, from Lumbermens Mutual Casualty Company (“Lumbermens”), which is not

affiliated with the Company.  Lumbermens continues to use the name, “Kemper Insurance

Companies,”

(“KIC”) in connection with its operations, which are distinct from, and not to be

confused with, Unitrin’s Kemper business segment.

Presentation Outline

Profile

Challenges faced by Unitrin

Actions taken against

challenges

Good things to report

Key takeaways

Distribution Channels

$494.0

$290.5

$242.3

$661.4

$930.7

Kemper 35.5%

Unitrin Specialty  18.9%

Unitrin Direct 11.1%

Automobile Finance 9.2%

Life & Health 25.3%

2008 Earned Premiums and Auto Finance Revenues

Product Mix

$398.5

$295.2

$160.1

$155.0

$242.3

$80.0

$1,287.8

Personal Auto 49.2%

Life Insurance 15.2%

Automobile Finance 9.2%

Other 5.9%

Homeowners

Insurance 11.3%

Health

Insurance 6.1%

Commercial Auto 3.1%

2008 Earned Premiums and Auto Finance Revenues

Challenges

Profitability Impacted by Catastrophe Losses, Unitrin Direct, Fireside Bank,

Alternative Investment Losses, Realized Investment Losses

295.2

$

304.1

$

Underlying Operating Income

Impact From:

(90.0)

$

226.8

$

Pre-Tax Income (Loss) from Continuing

Operations

(93.7)

62.5

Net Realized Investment Gains (Losses)

(76.3)

6.7

Income (Loss) from Investments in

LLCs & Limited Partnerships

(25.3)

(66.0)

Fireside Bank

(45.0)

(41.1)

Unitrin Direct

(144.9)

(39.4)

Catastrophe Losses & LAE

2008

2007

($ Millions)

Challenges

Economy Has Negatively Impacted Investment Valuations

68.3

69.2

-595.6

26.5

62.5

-93.7

-600

-500

-400

-300

-200

-100

0

100

200

300

400

Change in Unrealized Gain/Loss

Realized Gain/Loss

2006

2007

2008

These Are Extraordinary Times Which Require

Extraordinary Measures

Action Steps

Redirected management to shore up short term

results. Challenged profit plan submissions.

Resulted in:

–

Underwriting changes

–

Geographical changes

–

Reductions/eliminations of salary increases

–

Reduction of employee levels

–

Continuing reduction in exposure to large catastrophes

Extraordinary Measures -

Investments

Actions Steps

We have substantially reduced investment risk by:

–

Reducing concentrated holdings of Northrop stock

valued at $706 million at the end of 2007 to $40 million

at the end of 2008

–

Sold most of diversified stock and REIT portfolios in

fourth quarter

Extraordinary Measures –

Unitrin Direct

Recent losses are unacceptable

Action Steps

–

Rate increases and underwriting actions to lower loss

ratios

–

Merastar (2007) and Direct Response (2009)

acquisitions add scale, homeowners product and

affinity business

–

Staff and office reductions and reduced marketing

expenditures to improve expense ratios

Extraordinary Measures –

Fireside Bank

Unprecedented economic and market conditions

have resulted in losses the past two years

Sale of company not feasible due to low valuations

Action Steps

–

On March 24, 2009, announced that we have ceased

writing new loans

–

Expect to recoup

Fireside capital (in excess of $200

million) over time

Good Things to Report

Investment risk has been reduced

Kemper, Unitrin Specialty and Life & Health

operations are performing well

No debt due until 2010

Creation of Unitrin Services Group to reduce

expense

U.S. property casualty personal lines

fundamentals appear to be favorable

Investments

With Little or No Direct Investment Exposure

Derivatives

•

Credit default swaps

•

Collateralized debt obligations

Hedging Activities

•

Interest rate swaps

•

Forward foreign currency contracts

•

Commodities contracts

“Alt A”

mortgage securities

Subprime mortgage securities

Commercial mortgage securities

Practices In Which We Do Not Engage

Securities lending

Writing annuity or other investment-

based life insurance products

Investment Risk Has Been Significantly Reduced

$

$

%

%

100.0

3.0

10.0

3.9

3.7

23.6

55.8

6,602.2

198.5

658.7

254.6

243.0

1,560.7

3,686.7

12/31/07 Market Value

$

$

100.0

3.7

9.1

3.9

4.4

5.6 

73.3

%

%

3/31/09 Market Value

217.3

Loans to Policyholders and Other

228.8

Alternative Investments

5,878.1

Total Invested Assets

535.7

Short-term Investments

257.7

Investment Real Estate (Not Marked-to-

Market)

328.5

Equity Securities

4,310.1

Total Fixed Maturities

($ Millions)

Aside From Unitrin Direct, Our Property Casualty

Insurance Operations are Producing Solid Results

115.0

99.1

92.8

1

QTR

2008

100.2

99.2

96.4

96.0

Unitrin Specialty

110.8

118.7

119.4

108.1

Unitrin Direct

92.3

90.8

92.3

86.6

Kemper

1

QTR

2009

2008

2007

2006

Combined Ratios, X-CATS

st

st

Life and Health

Operations Provide Stability

$

15.4

15.0

1

QTR

2008

$

19.0

78.8

103.8

108.5

Net Income, X-CAT

Losses

15.0

$

51.8

$

97.0

$

101.5

Reported Net

Income

1

QTR

2009

2008

2007

2006

($Millions)

Life and Health Insurance

st

st

No Debt Due Until 2010

Revolving credit agreement expires June, 2010

$200 million senior notes due November, 2010

$360 million senior notes due May, 2017

Creation of Unitrin Services Group

Expand utilization of best practices

Increase effectiveness of current operations

Eliminate duplication

Reduce expense

Improve bottom-line results

U.S. Property Casualty Industry

Personal Lines Outlook (Industry)

2008 Results Deteriorated Significantly

Catastrophes and investment losses causing

surplus to decline by nearly $60 billion

Continued rate firming to replenish capital

Underwriting results for 2009 should improve

contingent on more normalized catastrophe loss

levels

1

st

Quarter Results

1

Quarter

9.4

16.7

Income From Continuing Operations

Excluding Realized Investment

Gains/Losses

$

(5.6)

15.2

Net Income (Loss)

712.8

$

685.7

Revenues, Excluding Realized

Investment Gains/Losses

2009

2008

($Millions)

st

Key Takeaways

We are taking decisive action to return to profitability

Investment risk has been significantly reduced

Continuing reduction in exposure to large

catastrophes

Exit of automobile finance business will lower risk

and return capital to Unitrin

Personal lines industry fundamentals appear to be

favorable

Non-GAAP Financial

Measures

Non-GAAP Financial Measures

                Unitrin uses the following non-GAAP financial measures to analyze the company’s operating performance.

Because Unitrin’s calculation of these measures may differ from similar measures used by other companies,

investors should be careful when comparing Unitrin’s non-GAAP financial measures to those of other companies.

1.

Underlying Loss for the Unitrin Direct Segment excludes Catastrophe Losses and Loss Adjustment Expenses and 

   net investment income from certain investments in limited liability investment companies and limited partnerships.

2.

Combined Ratios measure Incurred Losses and Insurance Expenses as a Percentage of Earned Premiums.

3.

Revenues Excluding Investment Gains/Losses do not include the Company’s net realized investment gains (losses), 

   whereas the GAAP measure Total Revenues includes net realized investment gains (losses).

4.

Income from Continuing Operations Excluding Investment Gains/Losses do not include the Company’s net

   realized investment gains (losses) after tax, whereas the GAAP measure Income (Loss) from Continuing 

  Operations includes net realized investment gains (losses) after tax.

Combined Ratios

March 31,

March 31,

2006

2007

2008

2008

2009

Non -GAAP Measure:

     Kemper Segment Combined Ratio (excluding Catastrophes Losses)

86.6%

92.3%

90.8%

92.8%

92.3%

Adjustments to Non-GAAP Measure:

    Catastrophe Loss Ratio

4.7%

3.0%

10.5%

5.5%

3.1%

GAAP Measure:

    Kemper Segment Combined Ratio

91.3%

95.3%

101.3%

98.3%

95.4%

Non -GAAP Measure:

    Unitrin Specialty Segment Combined Ratio (excluding Catastrophes Losses)

96.0%

96.4%

99.2%

99.1%

100.2%

Adjustments to Non-GAAP Measure:

    Catastrophe Loss Ratio

0.2%

0.1%

0.6%

0.2%

0.6%

GAAP Measure:

    Unitrin Specialty Segment Combined Ratio

96.2%

96.5%

99.8%

99.3%

100.8%

Non -GAAP Measure:

    Unitrin Direct Segment Combined Ratio (excluding Catastrophes Losses)

108.1%

119.4%

118.7%

115.0%

110.8%

Adjustments to Non-GAAP Measure:

    Catastrophe Loss Ratio

0.5%

0.2%

1.1%

0.4%

0.5%

GAAP Measure:

    Unitrin Direct Segment Combined Ratio

108.6%

119.6%

119.8%

115.4%

111.3%

The Combined Ratio is Defined as Incurred Losses and Insurance Expenses as a Percentage of Total Earned Premium

Unitrin Direct Operating

Loss

(Dollars in Millions)

2007

2008

Non -GAAP Measure:

     Unitrin Direct segment Underlying Loss

(41.1)

$   

(45.0)

$  

Adjustments to Non-GAAP Measure:

     Catastrophe Losses

(0.6)

(3.1)

     Investment Income (Loss) from Limited Liability Investment Companies

            and Limited Partnerships

0.5

(4.4)

GAAP Measure:

     Unitrin Direct segment Operating Loss

(41.2)

$   

(52.5)

$  

The Underlying Operating Loss for the Unitrin Direct Segment on Slide 7 excludes  Catastrophe Losses

and Loss Adjustment Expenses and net investment income from certain investments in limited liability

investment companies and limited partnerships because amounts related to the Unitrin Direct segment

are already included on the lines entitled "Catastrophe Losses and LAE" and "Income (Loss) from

Investments in LLCs & Limited Partnerships." .

Revenues, Excluding Realized

Investment Gains/Losses

1st Quarter

(Dollars in Millions)

2008

2009

Non-GAAP Measure:

Revenues, Excluding Realized Investment Gains/Losses

685.7

$   

712.8

$   

Realized Investment Gains/Losses

6.2

(24.2)

GAAP Measure:

Total Revenues

691.9

$   

688.6

$   

Income From Continuing Operations

Excluding Realized Investment

Gains/Losses

1st Quarter

(Dollars in Millions)

2008

2009

Non-GAAP Measure:

Income From Continuing Operations Excluding Realized Investment Gains/Loss

16.7

$     

9.4

$       

Realized Investment Gains/Losses After Tax

4.0

(15.7)

GAAP Measure:

Income (Loss) from Continuing Operations

20.7

$     

(6.3)

$