Kemper (KMPR) 29 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Michael Marinaccio	IR
Joseph Lacher	President, CEO & Director
James McKinney	SVP & CFO
Duane Sanders	SVP and President, Property & Casualty Division
Matthew Carletti	JMP Securities
Gary Ransom	Dowling & Partners Securities
Paul Newsome	Sandler O'Neill + Partners
Adam Klauber	William Blair & Company
Christopher Campbell	KBW

Call transcript

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Operator

Good afternoon, ladies and gentlemen, and welcome to Kemper's First Quarter 2019 Earnings Conference Call. My name is Andrew, and I will be your coordinator today. [Operator Instructions].

As a reminder, the conference call is being recorded for replay purposes. I would now like to introduce your host for today's conference call, Michael Marinaccio, Kemper's Vice President of Corporate Development and Investor Relations. Mr. begin. may you Marinaccio,

Michael Marinaccio

the Officer; Good first and afternoon, quarter Lacher, Officer; Chief from Andrew. President Senior discussion Chief and you'll to of Joe Financial Executive and President our and XXXX we'll first few Kemper's McKinney, for Property to opening call afternoon, you, Casualty Duane provide Kemper welcome Vice everyone, Vice open quarter President. Division context the Kemper and Kemper's senior our hear results remarks then and We'll Jim Thank results. up Sanders, around session. questions-and-answer President & This make a a

Senior During by President Health & President. the John of and and call, joined Senior Division Kemper will Kemper Vice President be and the Vice interactive Boschelli, Officer; Chief Life our portion Investment presenters Green, Mark

issued opened the published first quarter markets Before supplement. presentation morning, our this earnings and financial and earnings release our we

XX-Q SEC. filed In the with we our addition, Form

the can website, on You of these our kemper.com. find documents Investors section

today may Our contain discussion forward-looking statements.

results Our may these statements. actual materially from differ

on also that information and refer results, relying as overall. on XX-K such to the believe Form first associated for potential had financial non-GAAP afternoon's again, as with reported please our XXXX our This is discussion want release. impact XXXX to acquisition. important well acquisition measure Form are to earnings quarter as we of forward-looking XX-Q includes measures Infinity Kemper It investors. including statements, meaningful risks to to For One our understand adjusted I - that highlight is, is clearly

and are performance results impact businesses. acquisition provide easily closing our visible. the an prior of purchase the defined insight includes to to more This where an and Infinity's supplement, and financial to the year-over-year we we easily measures adjusted trends with into performance, presentation rules. expressed interest historical the acquisition. meaningful not In to accordance of financial provide combined the and of the also reported also for our information as impact historical understanding Since SEC release, our in non-GAAP include the underlying a in underlying required have current accounting earnings removes underlying provide accounting, the investors our organic information all financial the effort In GAAP purchase Infinity reconciled include However, financials of comparison. don't have the

the You website of on at each these documents Investors can our find of kemper.com. section

all will to now corresponding be Finally, comparative references over I'll period to the unless Joe. stated. call XXXX otherwise turn

Joseph Lacher

that value specialized the call. quarter superior performance. business portfolio afternoon, The value and We committed you to pleased appreciate Good announce delivered of Mike. growth We're on you, everyone, we of thank another to our and grow. today's growing customers of for we're Thank niche that joining strong them. businesses continues see creating our to for remain us intrinsic and underserved we're focus on our shows delivering markets. which The

Our combined this our strong for the creating earnings demonstrates and outperformance value we're with growth shareholders. financial

Our into ability deliver future. the strong reinforces to to sheet continue promises on balance our our

and growing Infinity an above are we target On premiums every All that culture at pleased report the great on delivering more where Page time announced of or targets. ahead to million of the exceeded learning, and Written this than financial have employees fueled by we're dynamic are X, are of those S-X. via the schedule increasingly results. we transaction $XXX

range. above of high the enhancement the end yield is XX% Our

approximately $XX million, than ratio $XX and million Last is below XX% we target Our our revised quarter, debt-to-capital XX%, number savings has that realized. to of projected. been cost raised to earlier

half profitability be after projected. we And an two tangible quality to three and has value success. ROE already is It's business. of been are and out-of-the-park forget, than core financial the measurement accretion. earnback. and don't the the through We book part balance acquisition the the have mid-teens continues year our ROATCE underlying has less all-inclusive. statistic most operating two way earnings cost, Probably includes the accretive one, And targets. sheet initially significant the quarters. exceeding improving That's but force and years of no integration It's that The year

Now and balance to while organic first sheet. margin X we and Page significant quarter. growth a generated of highlights review let's strong Overall, turn the improvement the double-digit maintaining

increase continue in demonstrated excluding gains fixed in by maturities. per our increase share and share create per value XX% shareholder value unrealized in book We as our to book value XX%

maturities, our We're from return at an significant return. we the equity improvement with Looking average XX.X% on this gains fixed pleased produced our represents performance. in unrealized excluding historical

Specialty strong delivered on share operating on P&C per increased to of net in $X.XX underlying increased consolidated share, Earned XXX% we business. net stated, the per XX% an premiums to share adjusted XX% per within XX% while income adjusted basis, our a our fundamentals XX% basis segment. $X.XX. As as grew and reported improvement Earnings as-adjusted

managing payment in basis before maintained more debt-to-capital the Both growth, improvement Specialty performance. XX.X% liquidity. over Life the & that, strong $XX of and on In standpoint, This I'll the to in available X The remaining P&C significant mention with XX, the in On this improved provides of to I to significant call coupled combined million as XX.X% Jim. Preferred April points appeal. we as-adjusted we us our operating and our our and XX% to $XXX reported segment's hand an flexibility. achieved within of while XXX Health contingent in addition a The dispute. from volatility, quarterly to is XX.X% underlying financial underlying benefits normalized range with we historical almost financial additional ratio over to P&C Life segment's ratio And points basis. segments to a the one results million returned levels. software Health judgment The From more strength item financial connection briefly The continue Jim balance on an remained I'll CSC expenses over with segment's it normal Preferred received ratio of currently hand award consolidated detail. to discuss mid-XXs improvement. combined catastrophe with ratio demonstrate in while & a remained down the P&C exposure.

James McKinney

Thank you, everyone to call. and afternoon Joe, on good the

X turn results. the Page first discuss Let's quarter to to financial

our mentioned, returns. great profits the by As a growth while premiums year. represents growing increased over each to driven growth basis, start Earned our a from and line generated we billion. the quarter, an top to had this organic XX% of We strong increase Joe On as-reported prior and year Preferred $X.X On and basis, Infinity. of a and acquisition the mixture XX% P&C both P&C business XX%, result our increased in within increases Life and of from Health increase the segments. as-adjusted earned premiums force the an policies Specialty segment in rate volume & of a businesses

Infinity Turning to the net maturities. up and share in value value to acquisition to our increased excluding per strong Organic prior Net $XXX to the an on underwriting million to and and quarter net income share. per per book share quarter. book led for an performance results improvements per income $X.XX. to in on share reported totaled net from share income ongoing XX% as-adjusted per $X.XX growth robust basis Adjusted On a share income $X.XX. $XXX net and from growth share reported net income income. per Net net net our consolidated income, focus consolidated adjusted unrealized operating growth, from basis, operating year On on operating increased $X.XX share million, income basis $X.XX. basis, $X.XX. per fixed adjusted income a These adjusted increased to led increase gains XXX% per consolidating

Page Moving on X. to

This segments. Difficulty] for volatility sources isolate in margin our efforts the the we now our P&C per [Technical the discuss is With Preferred $X.XX improvement segment, our continued division profits XX% reposition that, turn or P&C underwriting Adjusting & steady Health the over to by our key in call underlying Specialty quarter. strong of the expansion Duane results Life for within earnings. driven performance I'll our improved from Here, of to operating franchise. to growth share and P&C continued

Duane Sanders

what's a operations, first a effort many key and the focusing Thank afternoon, with achieving an Joe harmonizing capabilities all good leveraging outcome from organizations becoming to on Infinity important, is Earlier, successful targets, efforts, to that the both acquisition a you, along which quarter. the exceeding is others, us or on Jim, yielded one. financial These consistent and fact credit and hit has everyone.

P&C Page Now discuss segment. I'll to turning Specialty our Insurance X,

improved quarter claims auto ratio Policies increase the our $XXX due preferred ratio our our from above-normal Preferred product, quarter point expense by underlying produced basis, grew to increased our loss the generating on relativity the remain improving with XXXX. position premiums driven segmentation. X.X to with profitable for additional prior growth. goals. disciplined million grew demonstrated I XX%. in our combined have of only strong gains, We the Not Infinity improved an which homeowners' to results ratio volume premiums force resulting the As over further up as-adjusted meaningful value and and to and related quarter, of XXXX. This of quarter, target management policies a delivering in segment's some all in due combined continues auto the bring X% leading improving The through growth scale benefits ratio a Page ratio. two to market. P&C within to by the improvement underlying combined product including of this customers first underlying quarters, XXXX, quarter The in and points an to increased over of prior that policyholders, premium Earned was quarter simultaneously activity. the Kemper's quarter the results first demonstrates - specialty strengthening improving On volume force continued in you business share this loss provides periods. show of fueled increases. capabilities, over by Earned an over the we result up profitability product as was our over decreased products of remain auto X.X generated results continued improvement. continued see line segment. and loss up business new growth the we our Underwriting The Insurance on double-digit large primarily in focused to to focused We line market the value first growth further XX, will expansion an the resulting business largely provide million competitive for on X% results review the The for will ratio for as quarter expansion. XX% for underlying by increased top higher business $XXX to

Turning others ratio as losses large underlying result mentioned business. last than about was combined just of as higher your number primarily to earlier. year, The under of points Homeowners a XX%, attention X.X% abnormal the and an

and the pricing claims in actions. we continue has underwriting I'll through force this Our diversify policies not it and product on expect decreased our catastrophe as unexpected changed, our business actions. call through rate, bring now appropriate X%, not turn Jim. we about to Long to term, and back still to to exposure profitability position

James McKinney

Thank you, Duane.

& we items at resulted onetime to in XX XXXX, improvement Page continued Life volume of that the quarter and had agency management results fourth rate related non-run earned In time premium noted over expenses the increase in enhance focus investments long-term The and on Health X%. process an tied the expected Our incurred team's profitability. to division's to business majority of were of the and on presentation. growth

level the line with back returned This expense trend. our quarter, historical in of insurance

first elevated level within the benefit normal a volatility of experienced ratio XXXX season. quarter In a due flu remained expense the range addition, the to versus during severe of

Turning on Page XX. investments to

diversified remains the highly demonstrated page. bottom-left on the rated of as portfolio and Our

left, Looking the at the over performance X investment upper chart see can you past in quarters. the the

We produced the of strong equivalent to episodic of This the funds. delivered portfolio. is this net discussed and Infinity the portfolio the X.X%. capital investment annualized by a This the an result On loss a and of of the investment X% core deficiency. quarter, mix XX, yield a Overall, investment we asset Infinity's we income. portfolio addition from down Page event The income. underwriting million that million, of is in X the not in alternative consider first to portfolio book income pretax result In operating of generated mainly increased due underperformance delivered theme quarter, of alternative shift indicative or broader of market of portfolio our due driven highlight the net decrease $X previously flows discipline, compared increase operational quarter scale higher investment increased a largely investment $XX The and The to position. net financial million management. a year. to and million cash liquidity first the was $XX last $XX addition

in chart upper-right the of the attention our Page Turning to XX.

financial company $XXX You from with well we our present remain parent can chart, cash revolver our had substantial $XXX liquidity. corner of see borrowings end, the that insurance in we At in million our quarter left-hand In all and subsidiaries. and groups and capitalized. million upper investments our available flexibility

debt-to-capital our us can, to to like ratio operating Finally, would income I us in invest financial we high-quality basis. program on providing collateralized in significant risk-adjusted flexibility. with investment our XX, assets to leverage program. a was XX.X%, on turn, This enhance which quickly page On provides advances net touch access

not addition, market we this impact every would debt-to-capital either that are as create for fashion, our it employees. value agency With capital. would inefficiencies. this rating take impact reduce enhances be or the ratio, an our structure the and our our accounting ability shareholders, In not call or deploy of evidence borrowing to float borrowings further When standpoint opportunity that, turn in operators some to debt to utilized provides therefore, change back classified working advantage Joe and, capacity, our customers closing for for and I'll discipline comments. fixed looking Overall, cost from

Joseph Lacher

Thanks, demonstrate power to and continue the our In conclusion, the building we're strength operating the making on of quarter's platform progress our great franchise. results Jim. strong this of

consistently shareholders. our and to with effort and collective that, to committed and Life top-tier and profitability improving in business questions. specialized our quarter our turn Preferred our P&C our auto in Our call focus for premium stable remain value your results team's and & dedication lines. core with another resulted businesses specialty over Health our outstanding our operator We And take the the in in customers capabilities, I'll back earnings of strengthening maintaining market to delivering growth

Operator

[Operator Instructions].

comes of JMP Matthew Securities. question first from The Carletti

Matthew Carletti

view Just be as improved and questions. that at would run improved a ratio have Specialty growth you could this a of kind XX% that the look Or level? here? combined these quite margins target the of substantially. you think that as few In At maximize from so have you'd profitability underlying point, do to margins rate segment P&C,

Joseph Lacher

Thanks We indicate Yes, provide targets. Matt. that low-teens the we're targeting We We ROE. it's question. do Joe. a - don't for

over I do - I on And than a that, it that that. the hard said mean that. to low conclusion project and would come be think would the where hard we're math be come to or I low quarter to was double-digit the not ROE. the It to low better that conclusion exceeding maybe XX% to it try and come goes to next X, Trying it wasn't doing to going ROE. teens. to double-digit avoid

looking fitting. function what of doing issues and we're all XX%, going growth to a I a is think were math local we than be looking become margin definitely how our and we're much market as would did competition can. and that where that's we're you concluded at expansion. ROE, a as than low we grow we that And for if at point But rather more double-digit better to

Matthew Carletti

to Without think a targeted Specialty? for by that of a And Preferred, should target, kind improvement everything great. terms in you the Or business the higher-return target you kind And Specialty then which be? and might you there, about want line whatever that of how for the could is kind go expect that, you question. shifting time how margins running capital segment achieve we that that could on similar giving similar would when to you a return of expect is would Okay, of is think where it business?

Joseph Lacher

Jim something. if want of and couple missing I'm can a in you or Duane and give me if then add and thoughts, let they jump So

than specialty auto. before, and talked this margin First, improves generally about slower we've

policies. auto sensitive auto, specialty XX-month has customer be little and have of more perception Each home, temperature different the be little to have and a required amount typically businesses. tend whether business to the a the action changes Regulators rate in tends preferred to capital. the specialty those auto, responsive. that changes it's you when so a caused They preferred problem a underwriting typically, businesses, You there's more of a or in -

hurdles slow a underlying some and or this over on Homeowners, that There's what and steady maybe there doing. inside you'd in cat point they've different The look said, and improvement but were and in see at see terms P the Jim reasonable sort the of been back X a you'd profit improvement if - at business. you triangles got numbers, underlying of last volatility Schedule X years As look very business. they're the of

I think work close. do there's some a still has bit little Homeowners go. there, but The to getting auto's further to the

Matthew Carletti

from question one the ahead. Okay, go operating great. away then more oh, kind of just And -

James McKinney

Matt, add to I comments. Joe's would just

kind the You a for take from triangles that standpoint further standpoint. personal of of a some look insurance available Preferred can at the are

the you stepped what point I position or point than roughly in is you'll to back XXXX where into had in go XX totality and we that where the projected that time. we think we're if at worse see points of prior, that at time was at

pay as the through You can from come incurreds see that development there. as kind have both the of that from well

both referencing available if against of see as terms there. progress can anything, from Schedule development a if favorable is K, the as seen as you've to so that well slight at in to in we've business years, But seeing adjustments of in and forecasting we on and relatively kind you're meaningful as surface rate and making profitability XX that by what points mix, underlying from improved been And reality, today, the the our And P in of flat. over a triangles the recent be appears the those make that. look you've triangles Joe we both seen continue you

Joseph Lacher

than hole was. it we is deeper thought The

Matthew Carletti

a And Got then quick lastly, you. one.

Could help appendix on how us in cap kind the through of both you program. we the changed the program think just and an that and ballpark model? yes, program, XXXX how the kind of put the aggregate kind Just, reinsurance of pricing update you flowing should

James McKinney

big-picture-wise, changed I cap pricing nonmaterial the mean way. Yes. in a

to a a be. come couple going will out million In see place maybe that year. us general, over it's a totality dollars pretty perspective from You're of for to premium in the favorable

Operator

The of Gary comes next Partners. Dowling & from question Ransom

Gary Ransom

might I'm that question bit the or now. for a - last in the environment to stable were opportunities more of pricing terms X mean a thinking on. it might guess that how if or And we grow I And X compared growth. more had years, little other is just that I was you understand a I help from that could on little where changing that things wondering less me shopping on whether going missing there. going be to And there's challenging makes whether or I'm

Joseph Lacher

So about principally, business in the the talking one. specialty maybe you're will I and Duane this tag and Gary, most team assume auto, I principally. P&C

Gary Ransom

talking auto about probably I'm mostly. Yes. Yes, specialty

Joseph Lacher

which Okay. We're from what high. growth still really, It's was seeing fairly there. down we really saw year, attractive last in

like Now a more little But have we're looking there higher business. the price-sensitive. we're shopping because specialty competitive. they exploring it's opportunities to just tend are also a not And X there's then regular auto with to goes we're urban premium just our in or great. partly X out customers of a but so they're And general finding set on products in zones, just that expand

Duane Sanders

the to shop is of to kind echo might and with those where tendency reach are them they would share in out movement Duane. will find a to the And price competitive even Gary, insurers to put And us kind other back where and more point, be geographies. them spreading stable. get allows the have though marketplace. I are Joe's try then in making gain different areas of Joe's regardless into And comments. by continue some to and of Yes. large, competition to that it pressures - is we there, nature there so This you alone changes, out of

Joseph Lacher

will with We more worry results prices action, see question, up started if some in might to it aren't if there as by temporary jacking was contraction, realize And be rate then the sale a cause actually we to expect be and that many it a won't when and your being of think that we usually, there up later growth The pressure. - people I having that disruptive about was We sale. was shoppers. disruptive people premise the Gary, being ill-advised. on

Gary Ransom

see different that it the All right. Is side? all market? you Do in on Preferred that

Joseph Lacher

with on different and bit the this We side one. it of We're modest-sized Preferred book as going I've to working we make entire don't for our broadly got house. across a seen looking in I'm the a quite you're so some specialized there, not comment little geographies market. always a in volatility the more tag more program, we're sure see much and if there. package

Gary Ransom

fine. that's No,

going sitting is most no that a helpful. - the Maybe on, there's saying it lot of a inertia think Specialty way back I is of comment not and... there's always of churn people

Joseph Lacher

all more churn see preferred somebody's the There's environment. market moving shopping behavior generally prices tend to in a behavior specialty the you a in high harder You see when when market soft - or in preferred the more degree it's time. of market, triggering shopping and

Gary Ransom

Oh, yes.

helpful. That's Okay.

Just subject have companies lot of little leakage us whole back I'm joining claims as the where think claims but together. I you X And in brought X be maybe bit that on you the talked you've progress you I Is you all, it you you've too, companies? thinking if another and that could a everything made a with wondered process. tightened of where want tell the stand just about to

Joseph Lacher

organizations you some period together the Yes. I you've different their got of two doing claims, those bandwidth and Gary, part different to together that customers with our would figuring nitty-gritty organization time, how I in all customers, mean we're you of departments out leakage. serving processes, think we addition be of there operate, of claim doing systems, the what was expect job what dealing you're is how how some always two owe. stuff say, with when training job of spans that career spent people, supervisors hiring happens, in putting always claim to two when the might great and We're to combine for when a processes, control, those. possibly great paths, different serving put were - individual paying describing increase that the different two different two a Typically, we some

up rental a items X shop there's of and if another so day that winds might operational in longer there's expense Sometimes, occur sitting body a more fee there's car storage day that or push we might dollars occur. know we that know up those whether little merger-related I attractive bit, right don't now. out. if exactly combined pretty we've know they got ratios leakage pull I know expect And the we terms that's better. out that margins Matt would the effectively, you the question getting in about asking, will there, be to look rather the, more extent months. sure seeing to know when I that make thinking be it fully is intentionally there competitive that the over price we combine something next to than we with XX of was that would margin I

Gary Ransom

Right.

Duane Sanders

process, you you've things the Joe I'll - organizations and, the mentioned, other call, is vary. And relationships, those also to you've only the and got when I vastly say got thing, would is, all that procedures bring together, Gary, vendor

it And we'll extent And at of way will. we our doing - paying you efficient look you can Joe as do so takes as that, to a through work - time continue harmonize we then those. and to we'll work when And possible. little it to we the process, owe says, just what those, we effective best continue to the most that to and ability,

Joseph Lacher

claim claim we until one one And anticipate the year. on the one system not under, set surely, the on We if end we're of system, processes. year, until don't end be Duane, can't of being of

a we further. [Technical the that's little going that Our one a once have would I Difficulty] about prospect we and advance on systems to before actually we're coming from when described just together. hope one would the of all be But can system talked be ball to we processes, you set mean, XXXX

Operator

comes Newsome Paul of O'Neill. Sandler question next The from

Paul Newsome

the on quarter. Congrats

a anything in if But almost I real abnormal that touched this. that like there a or there I know just unusual expected, there showed Just to quarter? up jump had bit this But a in be quarter? looks if favorable than thing. different not wanted the to would I anything more apologize little reserve you've was development I quick. is and I it. missed It bad follow-up, off this

Joseph Lacher

the Again, in we're our out. Paul, is terms significant Nothing differences stands Jim, - or applying. methodology application no of this that the

trends of was favorable Just within continues underlying to net that be the the development quarter. And the business. during favorable result

Operator

question The Instructions]. next of Klauber William from Adam comes [Operator Blair.

Adam Klauber

I the you this As organic. out buybacks pop capital down, like with there usage, as X up, know if And far consideration to a But do deals become like also. coming there, don't if are first deals you leverage year?

Joseph Lacher

go this I'm I go started And to back Yes, this going Adam. going - to way, to back know it you I'm but question the to way.

for is think job shareholders. on customers priority business. a focus to job We first model growing we've this Our good done nice building the that and a does

When opportunities grow a growth. or those. the shareholders. will to explore the returning something priority like out have And we capital when to first to the similar, we don't are time we'll going to opportunity be ways foreseeable there is horizon, Infinity there explore organic over Our at business, look acquisition don't,

look variety of we'll that that, regularly ways the in for to efficient that and a there's sort of and what's return. best do about most talked we've way can opportunistic at get and appropriate think we I to the shareholders do the return

Adam Klauber

I it's investments couple far color recur alternative you the that? as maybe quarters. And mentioned said didn't I you - as on think great a couple in you one-off of some so and extra expect could you do there And probably quarter, that add think to do don't were that you next during Okay. the

James McKinney

exactly for events. get episodic The a them look more have at right. That's Jim. little reason when to you is We as This volatility is investments. Adam. Thanks, end-of-life Yes. related you being that

those the associated the is a other market permanent change and medium-term the a of rates You just discount a the fourth result more alternative quarter, assets of with like trade. or impact or of at how on end-of-life those our couple changes quarter, Not income reality the volatility quarter. a change of terms their the or investments, will short-term of for that some something of and to assets the have of some really, in totality of portfolio, in within where indicative the of then end-of-life and kind terms change where we're broader investment

Adam Klauber

us on operating I an Okay. Just in - you near investment up color bumping give And then of that give idea program? can income And that us know if the kind what don't that term? is could is. leverage start you some

James McKinney

a impact our run what income earnings $X perspective. strategy look increases if on don't perspective deployed I you future it. that we'll a or from try so other in going we're we just try I million. of greater doing the to when business result program at as normally far haven't, than or can. would rate a have item detail you little you question to to sheet operating what we've and question it's I not least I'm that something terms to in context what $X with your to not from the initiated I deeper. leverage would highlight the balance quarter if and to a know expect terms in have out million our And by we best would have here let or answer otherwise heard so the that came So in that of something a that dive That's looks I at Adam, The material run look larger potentially the in rate me at wonky of initiated

that it it strategy helps of create terms gives In the us, efficiency. pieces

the it By that to from match elements of come take float appropriately differences capability to an us You obviously those timing additional have of have in that. perspective, and when available. differences having and assets program, terms you in a are gives this advantage timing

have it'll the think the think small And and overall incremental further assets forward the of in I to we increase we I company the just matching a go as kind there of business. liabilities move continue in is opportunity of So margin forward. as that is big

Adam Klauber

your book business, of - ratio? will Okay. seasonality, And then I what typically very have - about, Could as talk loss do versus loss you a think from mean, far good. as business, for better was the a worse have which - auto you ratio quarters the

Duane Sanders

is this Adam, Duane. Yes.

normally what look some pick If weather historically industry, run will make on it at If if the book, use a the question little the potentially be - by that. is the quarter terms that I'd could large, to of pick, be on it. look you and that. about an last geography, point I to annual nature. last and the think that begin proxy of - how if of Big to our you to fourth you year. you gave bit think if quarter for industry, look just just would picture, you that. add of reasonable estimate look in at miles the find end I I quarter, at at we asked driven actually, answers a And create that it's things but color back maybe it's probably to Adam, we'll you'll

things I highlighted, of project bit and the is reasonable X approximation merge those out recent, there underlying in annual give trending time. you and which income and in a get we're But a to you of seeing, two the have as look pick applied the of pretty you'll a company. to kind what think quarter and will think again, trends included close If we Duane bandwidth to average the underlying at kind close that little the X or pretty I order at this for a put most

Operator

KBW. question Next Campbell Christopher from comes of

Christopher Campbell

the guess My at on first since reserve seen that I we've most that's least the is question XXXX. releases.

in? So in I accident lines are the what emerging years redundancies seeing guess you

Joseph Lacher

caused about loss little a arrow some time you, is will sort biggest in and a but bit. in when that we're period I at point periods we're offer other thought. were this maybe any less high fairly little of between disruption. time some that us time, up time in some look organization we a disruption items And there's and might to did when have or about I'll and of thoughts the at the picks, some we're sure Chris, that thinking not to of either management's team our this and - it growth that picking one. of So somewhat couple At point we disruptive greater evolves, have But the definition. period, tightens tag wider as I'm was think bar, Jim best estimate by looking - always given for

fundamental level things. as mentioned some start seeing this timing doing as a in issue Jim a, immediately wouldn't of we're I it. of just how So change earlier, pieces There's around the

James McKinney

No, I Yes. there. would agree, Jim, this comments is Joe's with

of perspective we to specifics of favorable from at X.X a both picks million, maybe and of $X seen million, development we've unfavorable and looking little seen development a pressure, when our loss the in at, 'XX of the the year reflected $ 'XX prior, XXXX No just some continue we relative quarter. terms It's we've came in an - look developing that accident we and case macro run. relative years we then In from the the in or the we're bit and that's point of incurred business, to to overall trends the more underlying where on out principles, favorable macro change this for see reserving results process of terms across view. a

In terms to reserve point, might data favorable XXXX. the seen of you have what this a development from is quarter first of a relevant similar - in

to is find you'll we're doing, correlation what relative a numbers close. our to think for a that's but trend are those not have unusual no this have company number perspective. potentially from They I

Christopher Campbell

of got Okay, just building And then it. that last kind on question.

X businesses? rates current the for and the you loss guys spread have is auto cost what your So that between

Joseph Lacher

can typically connect a trying That's I I'm or not you combined provide a - figure what Chris. out stat to you're - trying to those so I'm project trying you're we those help with with to you're don't assuming ratio. a because to ratio loss what how components. We doing try give,

Christopher Campbell

to businesses see Yes. would on kind The just yes, idea be the underlying was, the like loss with what trend ratio. of core the

something look their kind So we inflation, normalized get And rate of filings, seeing X% x at cost cost increases... have like X% then do don't we an guys and if know, percent, could I like, these I inflation to X% is that? a to rate like like the you guess, X%, loss we're okay, or like loss idea like,

Joseph Lacher

for, So help Chris, looking can you more help and to complicated I'm me you're you a give than answer going you. maybe

loss to when see go a at run range. When tends bodily Over can you're injury, outsized dealing inflation auto or line, collision you term, the cost periodically X% individual to long them to with you X% any on that.

would You can frequency pops. frequency inflation, total If you're that - talking also there's so include about

answer. just you're a different talking If slightly about get just ex severity, frequency, you

I'm we point grow a to impact as back ROE, you're much profit fact If as to you that, a what as to can. going say to to the you're our and margins, net project after look we trying target to double-digit going see we that low we

we'll course department? then any what and through the rate inside How going of what do what margins to our that of would folks doing loss rate we much doing from And going and profit to state look and are frequency all that versus of inside given next like spot is claim filing given would that of in in be environmental there? put doing any any think with looking they think months? is reaction we're forward. over XX is do What a they What the should you be seeing they that together So what the they of the and particular environment, be our think trends given something happen of might march to they line are think say, severity? do

fairly already. now. bit talked ratios We've have a strong about that combined right little We

if to trying general those would that a were to way we - would the Our find grow ratios. combined we be seeing business be bias at

Christopher Campbell

looks between of of mean, And there like uptick I to at it. type in starting things good of mean, underweight Is difference be look like kind your after think cost. Because would an drivers? like the loss way towards overweight are loss you more and those PD some a some like liability Got collision tilted that bulk like, PD kind that you the inflation of a the are I big of is more more and tracks any repair the think mostly government series way It difference like seeing like would of and to you that? cost. I be it'd maintenance inflation seeing like between that? be

Joseph Lacher

be up of preferred specialty your end would crash We auto book typical I buy we're policies in injury. you book. sell and repairing on let's policy it's vehicle. not is you a full a up preferred business, - liability-only would than higher coverage. though our covering What A vehicle bodily my any percentage typical we'll say I a liability-only, liability-only my if and into that's being I'm But still ends fault,

physical both yours It's So car. not repairing with has and damage policy repairing you payments a injury my associated just bodily bodily have. liability-only of any It's injury and it.

some getting still through some metal we're So flesh and that's running these.

It's take at would our pressing look trend around at very those seeing management looking pieces a all be So granularly, them we're more point We're team those external and information a view also we of of that. product in of components. we local environmental much tactical what as locally, and and at issue.

Christopher Campbell

the this on one's looking in question. that - looked it Okay, the investment was like Why great. equity was numbers helpful. at I this a That's just for of very Maybe kind net then quarter, Jim. And dividends million income. million was spiked like security, happen prior that? anything $X.X Did and last more special was the only points like, It quarter this XQ. And like last number would looks what it data with $X.X then quarter. be.

James McKinney

reasonably No, nothing - we mean it's special. a have book. I sized

alternative continued just how have We of layered. they're of timing terms in placed, when terms books investments our material but they're the diversify to a in in even change real the not types

from is moment I we're episodic over pointing to our terms investments being way and with standpoint, going of those change forward, similar-type for underlying returns the think course. here Big the to of would time that historical play But our out. I in relatively you're expect in percent of and holdings, line a no continue market-dependent, how the general see over philosophy, I investment to returns trend away. we real and last would that, are several picture, kind take what I think more think look you'll you business and about than think any to, Chris, if years, I would going

Operator

I like conference Lacher the turn closing question-and-answer to over our to would any concludes for This session. back Joseph remarks.

Joseph Lacher

on your the in forward a look We lot. to with in for quarter. time thanks Thanks and operator, you and today the Thanks, for your next everybody call interest being to Kemper.

Operator

The conference has Thank now attending you presentation. concluded. today's for

disconnect. You may now

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