Kemper (KMPR) 5 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Christine Worley	IR
Joseph Lacher	President, CEO & Director
James McKinney	SVP & CFO
Duane Sanders	SVP & President, Property and Casualty Division
Greg Peters	Raymond James
Paul Newsome	Sandler O'Neill
Gary Ransom	Dowling & Partners Securities
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 Second Quarter 2019 Earnings Conference Call. My name is Sean and I will be your coordinator today. [Operator Instructions]. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. to Kemper's host Investor new like call, today's Relations. now Worley, Christine Vice would introduce for your conference I President of Ms. Worley, begin. you may

Christine Worley

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

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

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

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

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

discussion contain forward-looking statements. Our today may

Our results may from differ statements. actual these materially

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

information easily underlying of purchase include expressed our to are impact Since not in prior underlying current and accounting, understanding combined organic historical results the visible. don't financials However, investors businesses. an include of closing the acquisition interest Infinity's trends have the performance also our as-reported the the the of

provide acquisition. insight a year-over-year also and to supplement, of presentation effort for combined impact an businesses, release, where underlying our information to with and historical view includes performance the of financial accounting This the the to into reconciled In adjusted the non-GAAP display and removes as required, comparison. Infinity meaningful In measures financial we SEC all financials easily defined have in GAAP, more provide we rules. accordance earnings our purchase

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

to the Finally, stated. be period, corresponding unless all comparative references otherwise will XXXX

the to call now I'll over Joe. turn

Joseph Lacher

Good and dedicated announce on Christine. of for and yet This the to our strong to work to determination of Thanks outstanding be delivering every performance possible day, quarter afternoon today's us and everyone without results. call. joining focus another coming Pleased financial thanks operational associates performance. wouldn't

businesses, meaningful, demonstrated portfolio turn in which resulted value specialized quarter progress, shareholders. has our creation growing of long-term our in for our This continued in

We later further and balance provide call. also took actions these the more strengthen in on sheet will our flexibility. financial enhance detail this Jim quarter to our

acquisition results, Before the that Xnd, ease and leader of efficiencies. becoming celebrated enhance our doing progress anniversary to in auto Infinity. expense like we management, one-year note the scale our our further product claims July transaction Kemper on of giving our the business quarterly effectiveness, of specialty specifics discussing business, accelerated The significantly I'd in to a of

and team have we growth, auto target a points; created Insurance a anniversary, and with on at ability has three, franchise. strategic successful to And this to one, strong our every significantly proven experienced leaders, organic specialty reflect to integration announced drive of transaction. Two, we the time premier M&A. to profitable execute key I'd we like approach of financial As exceeded highlight the we three

across We specialty our look to this value. these skills and grow ability our to intrinsic portfolio enhance competitive businesses. All of profile demonstrates Kemper's deploying of forward

Now page quarter. margin balance growth, and we maintaining generated highlights leading organic sheet. review and a the second while let's turn the to Overall, industry strong X of

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

return Specialty net reported underlying $X.XX premiums our share, our in growth improvement XX% the fixed at XX% with our XX% a combined ROE. per share business. to delivered results, adjusted. adjusted on share equity, as of excluding $X.XX. XXX% goal segment, an Looking stated basis. on our per average income a on produced grew as gains operating low XX.X% consolidated double-digit of Earnings strong reported unrealized we fundamentals underlying per We X% ratio very we in and maturities, increased increased on delivering to return, our line while strong Earned a an P&C In XX% adjusted basis, with of

that We're have force increase We While & to stable an we combined it time cash X% our deploy range take benefit flow to from begin quarter, we California. business, across in benefits. saw earned investments to generate Health double-digit results. benefit charges in this to wider we and in these in diversification continue we provide strengths California, of report the pleased to the highlighted quarter, Despite business growth We're with of geographies. policy in would to gains one-time to delivered our pleased a previously as growth that outside the growth some improve premium profitable continues our capabilities. Life

Preferred P&C continues. turnaround Our business

this this we volatile process than As on appropriate results return quarterly we and to a longer before, remain are basis takes an hope. more But committed generating would in said business. we've shareholder

million maintain currently coupled of XX.X%, we our -- ratio contingent This, debt-to-capital standpoint, current of financial provides available us significant financial with strength flexibility. financial over strong with and liquidity. $XXX a From

the results to call detail. over to discuss that, I'll hand quarter consolidated With more our Jim, in

James McKinney

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

Let's X second results. turn to the discuss page financial quarter to

this As was Kemper. for Joe quarter solid mentioned, another

continue We generate while strong growing results, to top returns. line and profits

performance reported acquisition Infinity. and an On as XX% an basis, basis, adjusted increased the result increased as premiums X%, X% primarily Top of to operating increase business driven organic our of share, earned a income growth growth businesses income per to each Earned in-force, net and from per net on segment. share. within and robust led by underwriting of integration income, improved in our line consolidated adjusted the in or acquisition, Infinity of net premiums successful growth P&C Specialty the $X.X policies our billion

value income Net consolidated $X.XX, up net an $X.XX. $X.XX to per adjusted the increased as book share prior million, income increased operating as These year operating net a totaled share income income adjusted On adjusted to basis income per quarter. share fixed the unrealized basis, basis, for share $XXX on million to Adjusted XX% in quarter per and an $XX reported to on on growth a share from $X.XX. reported net per basis increased consolidated per gains increased maturities. to excluding $X.XX $X.XX. share XX% Net On led per book value from results

P&C Moving underwriting which key our on business, Infinity isolate profitability segment. Specialty to strong is operating we Kemper relatively to in for line drive page benefit performance year. the helping sources X; sources previous in within of with volatility of addition volatility, in the the is Adjusting our growth our of us underwriting these earnings. from continues

segments. results now of P&C I'll to discuss call turn to the the our over Duane,

Duane Sanders

our along auto leveraging many growth. franchise. a I'd and we've quarter. others been revenue accelerating Infinity the towards our of Earlier, reiterate core capabilities milestone harnessing enhanced combination specialty team, like you, second in of and entities premier Thank becoming with By and good and our strength successful that two everyone. efforts, These afternoon achieved Joe the our to noted a anniversary Jim, operations resulted committed has acquisition. the in progress have in of talented harmonized successful our

on as an the quarters, our as I will three this at business periods. Infinity in prior Looking adjusted all page P&C review segment Specialty Insurance on including basis, prior with results X, results

up for XX% driven in-force increased XXXX. our remained premiums strength. quarter top the profitability, above market while X%. over strong average, of to increased producing continued $XXX and Policies very Earned growth by second product million line quarter, The industry the

quarter, focused In share, Auto's the second on XX%, year. combined underlying prior increasing We the growth remain ratios. appropriate generating consistent combined maintaining was with while market largely and ratio Specialty underlying

generating our customers growth. to further to profitable continue We value and enhance capabilities, our delivering disciplined

you up by Preferred P&C $XXX the underlying of Insurance ratio combined million X, over quarter, for our I'll XXXX. to see product segment. increased increased premiums X% to for results quarter the drivers the page Earned On separately XX%. the The the second will quarter of discuss line.

earned activity. the on Auto reflecting the we remain In underwriting increased increased an In quarter, premiums the and X% policies appropriate X%, rate business, continued focused in-force margin. achieving Preferred

than large intra-year the points and Homeowners' our was development year, three to roughly Turning non-catastrophe Other last underlying XX%, combined losses. higher primarily driven by ratio on business;

Despite exposure. about diversify Our magnitude as experience X%, we of cat industry, a active for same to decreased cat the quarter we didn't our relatively, continue the policies losses. in-force

higher losses and the cat always on this results commented We've proportionately our not size a modest than seeing past, the when in losses. of industry, industry good given our concentration particularly book, of and are the indicator we're

remain claims, this move and below actions goals, profitability improvement underwriting, towards we underwriting rate our segment in results. our results us While in will expect desired

into transitioning final XXXX. agreement $XX transfer we to million book On Hagerty. to expected. in our that we in entered marketing in announced as of The is collectors a This business annual begin a note premiums classic July, had book proceeding

to back call the return now I'll Jim.

James McKinney

Thank you, Duane.

enhancements X Division's our the of X%. The Health capabilities to improvements, continued in and page Our on agency resulted growth Life earned & presentation. results process focus on over of premium team's

are for and in impacted by to an increase technology we as benefit the and our our cost enhancing further business in in develop markets. This service operating profit investing target expenses, our products quarter, and was one-time the capabilities higher platforms,

portfolio page. on highly investments the demonstrated on left our Turning bottom as of and to remains the rated, diversified XX; page

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

net million of yield in This Infinity higher in quarter, Infinity's quarter the income, shift produced the of the $XX net investments. resulted XXXX, from core second in largely This income. pre-tax the due asset equivalent to of we down book addition X.X%. of annualized by X% driven delivered investment the portfolio a in The is portfolio. mix, investment This due addition

quarter operational management. XX, capital increased was cash quarter, strong $XXX a increased page the result This disciplined flows highlight year. to of second and our On position. compared In last of and $XX million operating financial second and liquidity scale we to the million

the chart, in XX, chart liquidity. to Turning company see we right the upper the insurance can left hand upper present well remain capitalized. our groups In of our you that intention parent page corner

the further with of term cash to During a our on favorable million advantage $XX to quarter, borrowing $XXX May, and hand. took approximately a a of loan the transactions, ability new raised the second In to hybrid capital, securities, of share repaid common strengthen term capital increased million market revolving capacity June, we series into million loan we expensive in million. entered through we permanent offering, $XXX with our and $XX conditions, facility In credit position. a replace

we equity subordinated used new the $XXX to the the a Subsequently, million, with XXXX. due of in together offering, portion redeem from July, X.XXX% term the proceeds loan debentures,

investments flexibility, and end, available in we subsidiaries. with quarter million and and had At our cash $XXX in revolver our million $XXX substantial financial from borrowings

Our debt-to-capital was the the XX.X%. quarter at ratio end of second

aforementioned of actions of result capital $XXX cash capital, have currently appropriate action with decreases with structure, us the decreased provides XX.X%. and a quality investments high As we million after taken debt-to-capital weighted long-term and cost closed, our flexibility. capital average ratio in has our and the This quarter

to turn for call I'll Joe back the that, closing With comments.

Joseph Lacher

Jim. you, Thank

demonstrated overall Kemper's areas. our Our three long-term building perspective on value ability quarter to in and key do remains this so focused

of First, revenue highlight growth, solid our niche-focused insurance built. platform the the specialized returns. strength our earnings again to businesses, disciplined and we of approach financial produced The results portfolio shareholder

obtained our we're tangible accretion earnings value ROE the create show value disciplined and approach acquisitions. continued Infinity to the from for Second, to book acquisition the able

of reach continue insurance Thanks just composition appropriate model financial strategy further structure. and to our markets team, with perform affordable solutions. expanding well, easy our Kempers to flexibility continues Lastly, as the entire use, to Jim to serve enhance to discussed, and capital business and and we our specialty

questions. turn will the to your to I call Now operator back the take

Operator

you. Thank

begin now session. question-and-answer will [Operator the Instructions]. We

will come go James. Peters Please today question ahead. Raymond first from Our with Greg

Greg Peters

California I were I to noted that slide on to states? Good Can policies almost a footprint, with existing where wanted your also dovetail it presentation, afternoon. growth is from? in-force in in comments revert X and coming X%. or Is in in you you on an back talk as your from your adjusted up stand coming it geographic And Florida? and your can that that conditions about basis, is

Joseph Lacher

bit. will a Thanks little Duane, comments Greg. maybe give team Will gladly you some and -- we tag

Duane Sanders

it. Got Yes.

X%, the or that your is So part from places is the that I currently question markets coming we think new play. of first was -- that in

the and It's west, book this existing of existing, of So to actually got terms can able and you growing out state. I we've that? that to side. introduction been again, add that and diversifying part before of talked to make new the second successfully PIF kind concentration And that your continue in in from I ask are as we've in expanding is question, want an can about the we do markets sure the away growth you on of

Greg Peters

Conditions and in Florida? California

Duane Sanders

Yes.

So -- market from were we about are. a where perspective, we good feel we

same whether about to show grow player we're those. growth. Texas some In though, Even be to there, we core We of our California. continue continues have that to a in Florida, opportunity that both sizable or other of the states, an feel and

the players, at marketplace, how in kind they're of look to out we We a it's desired sense kind we and to We then we think and they're to how watch continue business that outcome. doing responding get of -- the move find the going of other with to the forward and opportunity. what turn

again, going continue we're and to and So are presented in to the take opportunities that that us. those of space, watch advantage well participate we to

Greg Peters

Okay.

Joseph Lacher

at what you crazy Florida, is activity the trying a but to what there. bit we're you -- there. environment, seeing is And talking were to think, that marketplace with Greg, -- competitive in well competitive little seeing and get we're from were more reasonable not are a we get perspective still still we're was it about Duane getting earlier, feel positioned at, trying Is that? at like anything California a I

Greg Peters

so up can underlying spend I result. you the to don't the just longer-term impact said got to and and and X, what's -- get auto on by quarter's hung from talked mean a loss know us mix that that you being a note to -- up, pivot low, think give what of I But yes, you we too can I absolutely, for guys. your auto, sense with But be trending advantage it's business target? for ratio critical expense ratio and a and about wanted I one slide your minute you on you

Joseph Lacher

Yes.

make slide actually on Let me to shot this give or me a one comment example use and both that expand make provide nudge What of mix but a then first. seeing Greg, actually on in preferred, a these Duane little specialty. bit color that could going at the And with and and is I'll back. similar X businesses, we're impact, I'll the specialty I'm as

asking You were about growth.

they We are bigger rate Texas But and in population seeing seeing in and state's maybe California, a for We're California. to in some are high more. some very growth the geographies in growth modest a growth Florida, closer but us. still little states -- that and Texas probably of percentage we're growing outside or more Florida

of California. came most the growth, you PIF outside it add up, all So if it of

as a a chunks example, vehicle vehicle. ratio. look ratio, business When expense little better commercial big commercial programs, our had at the but we runs loss an has in higher You

largely a United thinking expense Alliance fee attractive total result, it run all but ratio, -- running product with it's more Our a in as because the those ratio. higher has of we we're California loss combined can about income, ratio, a

shifting, we is like the where a or expense part we in some is the of get Alliance In to as It's have together. on thought works more do expense its differently. the is ratio because to ratios United, mix the appropriate fee running ratio ratio. and up different manage commercial in processes quirky it can have a things loss vehicle, that when direction, intentional structure that more mix how you moving sometimes result, appropriate So looks our the loss about

In think combined question. that's we're low not in product very different of have product of some lines the don't legacy whether targeting of the a typically We give the that growing growing underlying do they becomes some target and ratio. ratios, look permissible at last we it products. to our close was of between we organization, the fact look have will and double-digit which to a where products we we We I that across different have, they geography get or cause that across our start the mix as part we prime to Similarly commission idea have, your do in some achieved, that combines, are great reference get loss or loss We a cases, -- the result, the difference Preferred, point. individual ROE, it different you expense can components different the assumptions provide once structures, a But capital can and new it's states product and each of given some target. precise targets. the you lines as

Greg Peters

answers. The last yes, -- have go Those are great ahead. one I that

James McKinney

Greg, I potentially I this McKinney. Jim I to miss folks could if just want is don't -- add this. And on,

XX which at and and months adjusted, ratio before look combined months our six kind we this underlying a where with year supplement, Auto which a the line, XX XX.X%, essentially we the accounting the if page an ago. year is basis, we just six on were you in on about underlying actually Personal see year you the roughly XX% is at X.X, running with were XX, specialty, at, that kind for we've look an there provide supplement, Auto inside you first If the X.X can got of of a What normalized the Specialty versus purchase underlying adjustments. through of pages of ratios as for of we've XX.X% you'll where is see business, combined there

market, and in have of then share make starting really grow faster that, California to to obviously gains, now market terms seeing continue you're to while you're the we continued than So both we pick-up same but the is to a outside the see market in growing. up consistency much California, than policyholders faster in same that time, margin, point what where demonstrate at continue picking

Joseph Lacher

are they with highlighting -- Jim's pieces. And quarter, -- of purchase swing Greg, quarter. was quarterly one the some run accounting one there this was help sort through quirky numbers a a hurt there, have last and that a

do XX picking scramble your month of got ratio business purchase make going and without the more But the which the are, that the job head piece. south. a is that, looking expense much into the on something why quarters we is of six trends you're enough you sequential to going as-adjusted, the that easily really, you're numbers conclusion wrong which and stuff underlying could if does accurate is on the what those to on GAAP is trying So getting there at up two why and expense XX, projecting of ratio on the quirky accounting in was going quarters,

Greg Peters

there's Right. Thanks. the questions. final, to great Those who just others -- that's I -- final want question, know a I ask color.

Just and how -- about quarter? can frequency your the severity were talk book you across second the in just broadly and trends auto in

Joseph Lacher

outside piece, guess, don't I on -- it behave think well. industry of frequency I we're to largely where continues So the

we that's industry think side, again, there we're I a what see I somewhat bit distribution. quite on severity maybe California. don't we're little -- a otherwise But the large, On based unique particularly be BI seeing on seeing. more limit moderate, think is the at our don't industry in side,

other or else anything color. think is any that add So to on I don't there

Greg Peters

answers. Okay. Thank you your for

Operator

ahead. question Paul Sandler will Please O'Neill. Newsome Our come next go from with

Paul Newsome

to -- piece this it's expenses. as about, one pretty the impact, run-rate talking you we out about what could maybe was and Life well reported have we and the truly substantial if talk new mobility time, a hoping pieces you could quarter? more if help to these earnings were that mortality is the as Obviously, a -- turn business Insurance was that I parse

Joseph Lacher

right. Yes. just if here, Great back to I'm top, can it to it couple hopefully in the Thanks, we take trying a over keep and Paul. that's question. then going of pieces all simple, come

$X one-time component one roll of perspective. seen and segment. XXX% Inside kind Health really million increase with, The benefits kind that of the roughly one-time of & really a you've Life from inside the think inside that I first a to inside simpler our through, group, one there, Life is

XX if that, less filing into P&C episodic million to noise. a items of in of than expenses couple Again, In addition preparation are some roughly But period. to inside are They purely wouldn't that then might us on you incur that sporadic an expense million see month to some were rate a associated that, and frequent XX business, $X inside some inside, be, so there. not that to type segment, one-time, the Life you are on go that expect or saw see other items the expect some related might on In it, but saw bit items you are quarter-over-quarter of that you I that include $X other things be can with expense, I and little one-time a they would our that investments the phase in that basis. would and wouldn't that you nature, to are normally create items side, say they expense about little are what business. a bit that necessarily

that in, there, coming end assumption really of it going what higher in the That's was. really our are little settling up seeing a per bit to about, of growth as to we what see not impact of On we've see terms but continued represents the initial you to some a we're in older seasoned, really run And really se, is rate than of highlighted what associated million what a saw dated other we inside a that we've and some you -- might in saw a become business years of of and long or few some having out called had, the and more bit in with additional just an what good inside us similar catch-up things are one-time business little older multiple view severity -- ones claims the of as be some enhanced $X Health business. there to review related could claims. side, and those as we of terms

run versus the in some versus specifically costs in Nothing kind to you much to look one kind And about total. say you of the into segment, kind overly where rate it's too get over that, of see of see you numbers, of your because with of try that really we've other these -- of or P&C mission at have the time bit of of and is seeing that of growth terms kind think again, in, when particular those things, them, to of expense expense a good that that if a segment. that upfront shown DAC remaining the result design net there you the $X some in is some that pressure there is about the in million, -- benefits associated upfront really to will, and the time. comes component total, you not kind policy. program, a accounting, additional of what aren't of The normally that of earn little inside life that subscribed again then out an you over policy

Life So they're really from real of and from changes year at is, where that, I things months, were will hey, are our change, would I it's cash about don't has out the last growth, good think what turn I they're that it the margin XX look I over If the from indication don't give don't see again there, see our sustainability something say, and think part I'd run the would inside I as any way, underlying business a material the segment out at are. to segment modeling believe business, I the the I where -- Health expect expectations flow but & be. look projections that. not of any changes material rate you that

Paul Newsome

my time then and more of color had return helped little sort could And that Maybe a sounds remarkable the like of bit investment sustainability about give as well. us the it a alternatives around, well. fairly second talk as investment side? out you this Great. question, just You on

Joseph Lacher

a feel we strategy Well, The things. to have this how investment or relative we think is Yes, portfolio. or is how pick achieved Thanks. that good no time. and there I results over overall we change. we change the not about that Paul. Yes, quarter There manage both meaningful

I we've think just continued strong think what of any there over the you're this quarter have time built and that nothing skill-sets note in out seeing that played some others. our those We think capability. to investment and versus benefits execution is out we

continued day in out execution. and Just day really

Paul Newsome

Thank you.

Operator

will question with Dowling Ransom ahead. Please & next from Our Gary Partners. come go

Gary Ransom

the any the I'm market. might Yes, good that coming acceptable be it's seeing change and and profitability And broadening competitiveness afternoon. I also, from be reached seeing the whether are if grow. across trying about are that looking nature appetite, the all They've wanted competition, I gotten companies, to in may in companies look just to are market, really of of sense standard competition just their companies companies -- when auto all level standard to other talk get close. I a or of wondered you're you the

Duane Sanders

Hey, is market. this don't is I relatively firm still additional -- I'm Duane. a yes, this Gary, players in there space. Yes. it's that know

participate, see in you'll seeing in But still it's some specialty still same players. new the particularly watch Sometimes where we place. on states in see and -- market, we'll pricing see and volumes move -- we obviously players. you'll focused are the not I activity that. I'm call the I not stay the

materially has like competitors It's nothing before, weren't are they we're cohort fairly -- participating others consistent. I changed. that not participating. are of now The So seeing

Gary Ransom

Okay.

Joseph Lacher

of moving of but into in people Gary, that Duane, fair are dynamic of we're going competitive answering our a on it the is stupid. asking There say, standard. crossing assuming not question it a bit non-standard in you're are and streams seeing to we from is and seeing being we more to softening not lot Preferred where really little the not preferred space, What sort and we're --

Duane Sanders

No.

Joseph Lacher

you Gary? what were that Is getting at

Gary Ransom

trend getting I in there. I that loss Thank is or contributor as yet. Yes, the the it frequency variation other of of quarter? Auto, thing, any Yes. was claims is you. to one what And the Is a that random in kind noticed a just mentions lower in ratio that Commercial Q,

Joseph Lacher

think look random, several I good this I -- I'm It's we do profile. We're pretty is book like and period, we nice got and it a limits I'm big -- we at frequency. intend and for that attracting But execution less enough we've happened to to is job the end confirm row, that years Yes, think be ready at we given -- a it less two in that. don't trend. some it's that a saw quarters will of profile. sure for good its dramatically shouldn't the declare it's market, not when purely selection, that loss for good some to of just underwriting of -- lower the

Gary Ransom

I you book a you commercial that know, that can grow is as think book well? --

Joseph Lacher

We've years profitable double-digit growth. had of several

So do a to way more believe We pattern. we we're can thinking that. than that's continue

Gary Ransom

Okay.

Joseph Lacher

at We're the end small that commercial vehicle.

vehicle way, dealing contractors. auto with playing my just off I head, we're in the think in I three XX Specialty for the in space. operating up well my Auto think, with one, caught in We're head what filling growth is more different two, it Kemper Auto mid-teens our the said, Infinity like folks, Auto. as has I Like Preferred or with been, noise more two statistics the than was, other I than challenges in a well couple of section have, not We're of up remember are Very commercial than that's top other XX, there of that think. a much quite particularly matches different we're we're getting not as don't years. it, ones. vehicles, I than because thoughtful Specialty dealing have we market, don't artisan business a fleets, some that We marketplace. void It the a

Gary Ransom

Great. All much. that's Thank very you right, helpful.

Operator

will Klauber question next Our Adam William Please come Blair. go from with ahead.

Adam Klauber

All afternoon. thanks. Good right,

On consider the the in Life or that that quarter, the timers business, include I four -- had of Does bunch that you run that think, Jim, quarters you so. you again, look a -- one a at this said rate? last what

James McKinney

this include accurate take of particular and would kind terms I of quarter, will that think from there quarters, a No, I give the would previous pretty I directionally in Adam, you not number. four run rate. that

Adam Klauber

Okay.

James McKinney

I'm [Technical but start kind over the estimate base, quarters. and how it's I'm now, basically terms happen, at thesis has changed. in I that modeling, Previous Issues] would I the last nothing with what might given looking an at been have to You from expect in four information looking of where of a

Adam Klauber

this And the business. This loss time Life three Okay. is -- then and ratio much adjustment as this so quarters, in the thought the couple the as far always lot I I've adjustment business see am you've as surprised small ratio that quarters. adjusted of those in second the on of benefit -- a of of on last is or to much policy,

that's is this is mortality, a dynamic variation? issue, pricing it what's the So causing changes in there

James McKinney

this creates little is to up really there not nothing than where it this going that Again, usually business. year be different of and -- look historically a it of I of to quarter. of at long-term happens But think It's quarter just trend -- a being as unfortunately, it's kind run or kind rate it's sporadic. I what you kind mean change looking some that bit -- type underlying mean you different, could what standing one kind And from a This not the season, would When and and noise, wonky. inside were don't a or flip get at a and it's you're lower. unfortunate be in tails, it's end of but could little economics quarter, official, more of in there's if little the of of heads a where Normally anticipating terms from this from one it's higher been. I of bunch flu like I that, things. you pattern be it and don't occurrence, frequency purely of a year you're

Joseph Lacher

we're lost is, It's on are the it components. last But three, the it's we -- dig then underneath it, to of not all like what the and looking starts at telling Adam, in a on pattern other lost two feel it direction. and it it's

prior, pieces. quarter to I what want is it just underlying a to four that into excluding into, is guess and sort the the you level view don't really of best forward, the think see hard minutiae of without get Our best is the current getting it's of going

Adam Klauber

you on know need I for Life there And that. there or appreciate change that I your Are A&H is lot Yes, a a pricing to is either changing benefit ratio. goes into the product?

Joseph Lacher

we've in our mix going. inside talking the that pricing investment mortality, we're the They product of we've view Life year, The benefit the last environment, our relating some changes of any were the and underlying made broad They about. issues were tables, to the business, was not where year and assumptions half. components a all and related of that got to

us will and disconnected those cases, were three where pricing thought So of they business, with bit X.X they policies into last and -- through, there from been at over again a it were of the in work our pricing the you month changes is last the our constantly But more some way years process but some XX that changing little a the in like process suggesting nothing that We've quarters, factor but in saw will in inside this. are making much behaves Homeowners. our those when two it might severity, your inside we business, from seen behaves an is it like assumptions mix looking your little about and like one-timer's, more perspective, and we're last working This space, there where trends, of frequency, its you to that certainly plugging -- have those, a you're off. prices Auto thinking we've along of moving. a pricing book P&C working as a Health a

Adam Klauber

Okay.

Joseph Lacher

action taking. the question answered pricing on I we're So

there losses on at, something changed you're there. those of our think makes because have view and I getting that they us our what pricing, not materially is view change

Adam Klauber

Okay.

James McKinney

[Indecipherable], serve just of $X,XXX. roughly billion Adam, And of quick $X life a a it's basically average policies

are a that's -- this. change kind just X.X% kind your about book other you're you outside frequency when that's not that, you with that can right, of when expect, just in would size. thinking can -- like of So or of what have of that, like swing And thinking have elements, volatility, not a about a a what's normal

Adam Klauber

again, up on to$XX had to the you this $XX million, and did million, mean, Okay. mean Health, whatever, you run last expense Life the is Why quarter? $XX I a for year the what And it million. to quarter? up related then jump of, jump hit and rate this they did separate, jump up it I side, both losses, total

James McKinney

-- specifically, what at, to you question Can looking want the point me answering sure you're I I help because answer to question? the exactly don't can want to make I'm us you and wrong

Adam Klauber

expenses, insurance million. at for XQ The $XX $XX Sure. 'XX at 'XX XQ were were And then million.

James McKinney

Yes, $XX.X million? got million $XX.X the it. to

Adam Klauber

Yes,

James McKinney

it. Got

We trips in We training. some are plan the and -- that this grow one-timers. that comp the brought up a to one-time couple the how sales population. to those bucks added We across thing the fact. had We qualified place. that of that investments a ripple you trip for through that for space with We've whole that's in center do we've year, sort agent growth plan We call new some of growth. of the recruiting to middle our expand capability. agent running some ability good trips. some and We year. We business, place some some inside distribution dealing through application and had can't some change a to and of come that there, added of they online it's plan of made occurred front the stepped made in staffing, reflects the the not for qualifying capabilities, You're the expanded was with a the a related -- and

capabilities individual benefit because over are old associated the they that the everything in got with you could wrote can't entire costs not the set of year, DAC with are an were those expense they period. They be policy, with current up new benchmarks So wind and the the they capabilities, those. associated with

of that's that that in using consulting that the there. one-time way, We same are for the the through now brought set and were up period. resources and running won't new some plan we some We we to them deployed firm actuarial changes online run capabilities time the

not it insignificant mean, I together, of a a item, series So have could out and overtime would become bit, a them items, little candidly, dollar it's that so we smaller taken spread pop. make appropriate didn't thought those actually benefits investments as see items move could. we timeliness answer We briskly the at the was to as and the it to right the that

Adam Klauber

quarter mean that pretty again, sorry, to business. -- it I on death, then don't to beat and but this Okay variation there's good

forward, as this that thinking thought in business quarter steady can a bounce more always business or we've course, business little of is should state quarter, around you the that swings decent going it numbers? we one historically, So steady-state be it but quarter a of a have in can as this of out, of

James McKinney

one steady generally less I a with bit state No, a expecting, about you would think quarter somewhere you're little are where frequency a to along, effectively, as going it, one have Adam, you're quarter has and little more. fairly going that get business, to than

are. years, in on you think When total overall you kind through, when you're expenses that, the of the For expectations too, no change, had the what a I your of sum of terms going in expenses and total earlier year, through, mentioned as many expense upfront we'll that volume million it over we items. to where is benefits $X will under right, get different the be was out, are just at. that related coming -- Again essentially those are from but

were $X.X with Joe associated coming them is again, million front. And investments life expect million repeat, But XX that's of had in. again, expenses on the across, benefit that not right, quarter close alluding many, then $X coming but items, of to, to those years. benefits some was to the items would inside are are been that the upfront types expenses to again but be again, inside have that that going types another that those those You policy, right many that of positive for the incurred, years but of expense Average those one-time do. of other --

and anything like I -- or huge what And continue from flow growth, It's seen. at cash we're capability any volatility it's much further we're franchise growth in that growth, historically grow but business. that, that, to business you've line a overall think excited the other starting few a with we the the or overall. enhance the have to And -- the picture, wouldn't going to so to doing continues little standpoint, about fact things expect bit just itself a the X% one-time, that big from it's that's double-digit perspective/ changes a position and good I now enhance to for little not We're business very it's bullish about a look competitive

Adam Klauber

Okay, thanks. answers. the Thanks for

Operator

Please ahead. KBW. question is next from will Campbell, now with Mr. Christopher Campbell line go Our live. come your

Christopher Campbell

hear me? Yes. you Can

Joseph Lacher

Chris. Go can ahead. We

Christopher Campbell

right. All Yes.

that. Auto think how first should I guess potential growth then Personal, Auto? Specialty the is, in the had the and I about mute we organic about question Commercial on. Sorry still

Joseph Lacher

going feeling the in about are aren't good we We give on on -- guidance the or the give going guidance Well, both growth growth don't earnings to of generated, we've either. forward revenue we Specialty segments business.

that of a fairly of both best got We've strong, the that it, about combined can a So consistent I is, we've fairly tell might pattern of growth you, very think out business. ratios. I sections seen attractive

or as you that over build probably that the I much you can. come that business we exceeding conclusion to best a were target. expressed did before target shareholder we we low-double We've we think the way ROE, long-term a those businesses digit delivering to the value, grow would is are likely time, if think once that meet little as to targeting bit that math, of if

that to So sure deteriorate, that let of little we're willing suggest that continues. a would make bit that margin to growth

and two. these It a becomes that together. we're conditions imagine happens now. can I But companies position those where conditions the doing not strong to be have or in hard still in a bringing whether on more net it one is, they the some can and from would pretty severity, market squeeze a change bet or frequency think continue we're improvement, we capability then single could and of quarter what any two And are, to us out what whether

Christopher Campbell

then And sorry, go I'm it. Got Joe. -- ahead.

Joseph Lacher

I'm sorry…

James McKinney

to some ways guidance, think about generally it. pointed I you tried think I you in not I to give but

Christopher Campbell

your just more Rates Okay, then, great. etc. about states if like mean -- coming so are I those but down of thinking that. And lines, the some No, dramatically, side. two appreciate -- fairly you're I California, Auto in Personal

think So your about, softening like market? how we grow just in to willingness a should

Joseph Lacher

you rates think Well, what preferred? down Specialty answering. about asking the I we're was Were I in don't that's come seeing Auto,

Christopher Campbell

well, if thinking. mean, I'm look like by -- XX is, Yes, of Well I'm what you about I the top auto like state. thinking like writers

might have at been like and X% that's California, over look XXXX, it in You come down time.

So side. more I towards be the guess Preferred would bias it

Joseph Lacher

look two And separate markets. very We our in of stat on They Think California Yes. these going much. up the when very is very markets. different on inside different as in than specialties, they're we of going line, roll through same and Florida. what's what's

look So we're each one individually. specialists, at we and those of

So not after. what level, the at terms market seeing going we're of be a picture we're condition of to great total, going of in is pulling what the in street data auto, for statewide

So premise the I a is think bit. off little

that The know willing it that let to you a about a is, if creation might and at way out, both bit, would or the up a said maintain to over two value value margin something or shareholder companies XX%, if describe to in to a Chris one creep I'm that XX% combined, little and suggest accretion started which XX% the that other XX% generate might think tried book time, And you we you My I returns like combined to it the would or that XX%, but is, strong double low growth. try better shareholder, I'm have the to in the not growing other the said, sacrifice you the willing trying digit business have preserve grow. ones, sense the book I'm to just exceptionally maintain and just margin. purely ROE margins, would you than shareholder margin -- try the going much at appropriate of from to maintain one group to to was and

one you ago, Personal stock find in in or more. those examples pick value which of one each to two, And investment if how that executed on by years and which obvious companies would grew be I wanted pretty focused have were process, up it'd of Lines the and thesis you market think back they XX-XX shareholder could one you

that which much as and as the hitting long-term growth, So growing can. focused generating on we shareholder is we're returns, appropriate

two if we combined choice points ratio points our was So four trade to of would. for of or growth, five now,

Christopher Campbell

are like any like in and one and then competitor. Infinity there -- -- Are And uptick like of that mean, was hot working your I I of then had ones? loss any know something are the great. seeing in for you or terms costs spots were Okay, Atlanta that like especially Florida, those other you out of hotspots I around area, competitors think states? any in that that noticing pointed like was markets kind on Georgia,

Joseph Lacher

especially on you two Not in particular, that mentioned. no, the

we're is Georgia -- we're early that -- and a signs but Yang Florida an continue the of focused side, and On the still growing. little we area on, we're of there we've that small, anything again cause In Infinity bit -- bigger pressure. something to watch a player is might for that

As outside of I got earlier bit and the pressure question we mentioned not in think side material. we're that anything I around, in California, the little on -- that, the of but BI an on I mentioned, think BI, -- not I a got seeing we're question severity we

Christopher Campbell

that trying pickup like that curious the bar just plugging like any by seeing not spillover of Auto? want some the Like I like like abuse, And auto? attack you're maybe laws, in any if the plug that down next into I was there? up, happens some up thing plaintiffs' that's fraud And to it. litigation Got of they that like Like there. might that know in to passed and Homeowners recently

Joseph Lacher

mean, point, over. not it the this be interesting run anything what future see to we're certainly will at I holds. But seeing

Christopher Campbell

all answers. Okay, Best the third of thanks Well in for the great. luck quarter.

Joseph Lacher

you. Thank

Operator

and [Operator are Joe Mr. for would over question-and-answer in I remarks. further this question the back no there Instructions]. turn to any questions session. will At conclude to our conference like closing this Lacher, time, queue, the

Joseph Lacher

Have today your you you everyone again much, interest very and look time good your for a and to Thank day. to Kemper. operator, and questions updating all thanks your quarter. next We in forward

Operator

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

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