KMPR - Earnings call transcript Q2 2021

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Michael Marinaccio

Thank you, Grant. Good afternoon, everyone, and welcome to Kemper's discussion of our second quarter 2021 results. This afternoon, you'll hear from Joe Lacher, Kemper's President, Chief Executive Officer and Chairman; Jim McKinney, Kemper's Executive Vice President and Chief Financial Officer; and Duane Sanders, Kemper's Executive Vice President and the President -- and the Property and Casualty Division President. We'll make a few opening remarks to provide context around our second quarter results and then open the call for a question-and-answer session.

During the interactive portion of the call, our presenters will be joined by John Boschelli, Kemper's Executive Vice President and Chief Investment Officer; and Erich Sternberg, Kemper's Executive Vice President and Life and Health Division President. this second issued supplement quarter XX-Q. closed and earnings and markets our published earnings the afternoon, our we release Form After presentation, financial

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

These its today and not safe provisions may Act limited the company's the statements of to, discussion meaning Litigation statements financial These and Private harbor may within pandemic. the of statements COVID-XX Our impacts the future forward-looking include include, operation of related XXXX. Securities condition. the results of Reform contain also but outlook are to

condition Our differ actual future results and from financial statements. may these materially

acquisition One earnings For refer including This includes also are financial we risks to reintroducing our associated Form as afternoon's adjusted potential believe information measures -- non-GAAP to Form relying impact acquisition. quarter to the our reported XXXX of on as to on release. please is meaningful our well understand XX-K measure discussion forward-looking are statements, important Access as Kemper It's with overall. second our has for results, we such investors. American

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

the Investors can period stated. be kemper.com. over You to turn comparative All unless find references XXXX corresponding each website, now will Joe. our of call these the I section on to documents will otherwise of the

Joe Lacher

thank on Mike. joining Good afternoon, today's for you call. us everyone, Thank and you,

decreasing step the frequency country is and recovery the would in took happening its environment quarter, economic This with of reopening increases faster a rebound. it's anticipate reopening significant we Last indicated the we a forward we're The and pandemic, quarter, from create in strong mortality. severity. middle in than the auto projected. very a expected dynamic clear Further,

result, a significantly further and As frequency especially related to was in that auto a stressed, already auto increased chain supply was pressured.

increasing their we miles magnified our multiple In these in our environment has issues, seen the speed by significantly and products, also effects, increased inflation in quarter's led we supply the driven Although historically for increased expect saw PIP policies activity shortages, chain of financial auto of labor years. largely COVID-related court creeping persistency increase limit Alternatively, reduction business, businesses, into impact driven reopening mortality. impact rulings that in results. our elevated Life lower a an demand through to high and this the social policy Florida The severity frequency.

our remain long-term value. ensure we model Our balance reopening. create the intrinsic to and to sheet We're meet the and to customers taking action business of appropriate well positioned continue navigate needs

reported per the share specifics million to as or We quarter, For and of $X.XX on or Page a a few $X.XX per four. million as $XX loss net share turn generated adjusted. $XX please

and diluted $XX million as $X.XX $XX share reported produced operating We net consolidated or adjusted. as per adjusted also per an or of million loss $X.XX share

greater in results. these of the speed environmental these other before, Duane the challenges impacted and issues negatively highlighted detail. will reopening As discuss

we Access Let's metrics declined gains, created to our by the use we The this X%. evaluate American majority decline. discuss Tangible goodwill contributed key value from share, book the short back expand about on transaction unrealized value. excluding enthusiastic transaction our remain performance. at was unrealized to relatively expect the per auto gains, Return specialty of earn as announcement, XX%. equity, the how a we and stated Note, franchise will acquisition excluding tangible

continue flow. strong In cash we addition, produce to

generated challenging These operations. cash Over even environment, the sound. a Kemper $XXX from past year, remains in highlight how we of metrics financially million

I challenges adverse rulings reopening Florida to severity the swift court and reserve increase environmental an earlier, PIP to both quarter. factors and the Turning year this Further, drove segment prior frequency and in led The mentioned inflationary results. referenced these development.

Specialty As adjusted appropriate underlying million C to generated We adjusted a corrective XXX%. short-term that and a obstacle combined a of take we ratio an loss and P $XX as extend few this segment will underwriting actions. an the quarters believe result, of while be

state April, from to reopening expect state how behavior. ratio few we more In We shopping return uneven underlying to next the a quarters. normalized within impacted to highlighted the combined

This adjusted written business X.X% experienced grew direct quarter, force XX.X%. remains positioned growth well premium for for return, and we appropriate measures long-term returns. as and Policies grew demand a corrective we on our products in The through growth. proactive saw attractive and basis long-term strong normalized

segment segment; Specialty to same Preferred C continue our P this faced work we business. enhance and environmental the Our to in challenges

segment. Life Health Turning and to our

strong the and is profitable business ongoing mortality experience of The for positioned demand. beginning policy subside. increased is level to pandemic continue The growth. heightened earlier our We experienced to we retention in

flexibility. April American the we $XXX while auto roughly acquisition actions the the we continue in high In was Access On on quarter, of summary, the reopening. long-term environmental expected enhance on maintaining magnified challenges shares front, deployment intrinsic that end level worth experienced of quarter. company. impact the repurchased unanticipated of the million to of value a and of our capital closed Their speed through one this take rapid financial by of We

level more On of the profitability. a has flip side, begun normalized to our to Life business return

and deliver operating long-term our discuss customers the to like to over call continue detail. now our ensure in to investors. balance more model a results I'd value have a second and business We strong and quarter to to to the we Jim sheet positioned turn navigate reopening

Jim McKinney

you, Thank Joe.

to Turning five. Page

You business. the can In our environmental was tough it a challenges recent short, financially, the that had impact see quarter. on

of environment While growth return and This reported Two normalized actions rate. additional to loss increasing to and years take credit more to reported improvement. in of begin levels. to appropriate corrective net $XX for frequency returned loss of It million. million, $XX operating net a of few supply than adjusted to offset of a earn quarters to normalize million top $XX and mortality more swift to the severity, profitability likely year's resulted million line chain a premium adjusted challenges and this an net year's a loss loss $XX is in consolidated and return a last

to Turning tangible value book per share.

Excluding share to unrealized per compared book June. $X.XX declined last gains tangible value

declined this quarter, of it The was investment last at to driver Looking accounted relative our for and the goodwill AAC $X.X $X.XX. in primary change. corresponding that its

this expect be our view Page to value. transaction to accretive income. On franchise to of six continue We operating we highlight

As as frequency year led certain development. challenges prior that mentioned, as severity well environmental negatively quarter this reserve impacted adverse and to higher by was

underlying to prices XX% and supply in adjusted as Our combined XX% Specialty to segment's and issues, shortages. commodity change as frequency approximate an approximate severity chain such and an C to labor increase XX% XXX% ratio due P reflects X% of in

sources we of On the the page, bottom volatility. half display of

in see provide and some can prior tangible inflation impact litigation additional of share We Duane the development In track seven. displayed this. increased You that the social on we the had our Page tangible value financial on book On per details year to and will use results. the capital including on reserve moment, metrics performance, and growth return in key equity. a our

on XX%. XX return months, unrealized tangible the excluding was past equity Over gains,

to earlier, to last the discussed This unrealized goodwill. As and was declined book corresponding share, its largely quarter, tangible AAC value acquisition gains, XX%. relative per excluding due

shares XX.X% our the of of this On totaling and X, June navigate strong Page they balance of insurance are our reference X, in do Going range XX%. to roughly demonstrate we forward, challenges we stewardship. will with believe us target Liquidity outstanding challenges appropriate will environment relative That industry highlight a and million. said, provides well profile our XX% approximately likely not targets. growth long-run specifically, Continuing share year, repurchased term stated actions. capital to the we significant entities we've value pressure short impact taken capitalized, This optimally Page these investments. to our well This ratio of our $XXX our is tangible be strong near-term book remains historical and financial on $XXX flexibility of debt-to-capital performance. nature X% per XX, to we within strength capital believe Through make environmental million sheet of degree

increased addition, per In and we term repaid to share stated AAC. our $XX dividend of last as million on annual closed the $X.XX quarter, the acquisition loan,

XX. the Page strength investment Net to for the investment $XXX million, of core performance. alternative and portfolio Turning strong our reflecting quarter income was

investment stable Our of is cycles. portfolio Sunrun. This re-highlight On energy equivalent and through pre-tax with on X%. provide quarter's which construction, income this liabilities we to evidenced focuses Page total designed various solar matching is return our through XX, yield

and to provide to used From are on with a deductions income accounting primarily as items dollars of homes. portion returns clean these fair source helps of residential tax the a recognized the the will solar alternative portfolio homeowners. partnership. value reductions investment finance Our offset credits energy the of installation statement in an being perspective, panels a of be through by This

over the quarterly was us will benefit stakeholders. we factors, are of investment over of This In the the performance income great our to financial multiyear taking confident will expected With P C last took can $X.XX a While the the this largest our year. loads quarter. have of actions I how million return this few recognized most to we income the the to our environment lifetime net and this expected environmental pressured place the result, Duane corrective financial is like quarters. next by now segments. a and we per of that, both industry the Net The and use and has results are targets transaction recognition. tax closing, increased our approximately discuss or returns return of capital share. while by $XX nature investment, turn be to company's the would front the example Cumulatively, is cash impact call

Duane Sanders

and Jim, you, everyone. good Thank afternoon,

I auto results, few to into specific want Before I make comments a jump segment our overall. about

loss XX. to auto turn Page There are challenges that are environmental let's several impacting costs. So

policy multiple the inflation. and some injury changed and On of Recent miles challenges, resulted Florida severity shortages in labor chain At years. personal the These an rules in frequency is supply significant in claims. time, to same have social increasing rulings side, due regarding changes the a increase rebound court impact driven requirements protection. has

our both doing result, increased a This is business is market Florida and in our commitment, in to this we manner does As customers part that reevaluated good our and for of year prior a serve ability change shareholders. and reserves. not

One ability of that an increase claims. our these process is in operating the industry and types attorney the seeing we our others in of to quickly legal to changes, have what underway. in in are and with Further advantages pricing adjust line is model observed, involvement

reduction costs reacted. activity the expected have to expanded level plaintiff focus resulted appropriately in loss in With This now pandemic, their the policies. claim limit we a to attorneys during higher has which lower have of

and We actions. corrective continue situation to actively monitor taking are the

I'll C. Moving Specialty P to start with Page and XX.

combined XX.X-point loss a underlying Given million. an mentioned, experienced environmental segment I the increase in $XX resulting underwriting its challenges just of ratio, the in

loss view actions line perspective, the From taking franchise. to return we long-term comfortable of profitability. are of the with We underwriting target across profitability of the a had growth However, remain the strong the doesn't business business. and practices top our appropriate change current our entirety to

Texas Specifically, driven while portability highlighting increased increased on significantly our where we states, and the XX%. territories. our model policies basis a This Florida, have achieved expansion top premium written and of in normalized was existing growth, new force quartile X.X%, by into

colleagues closed will us last and working we're that their Specialty to American the enable acquisition strides It's making capabilities April business. pleasure we been great our I the our integration quarter, of new a on with leverage on to Access. enhance mentioned X, as Lastly,

is to Preferred facing Turning segment the on The challenges. similar segment Page environmental Preferred XX.

the now Preferred As our ongoing bring these call Joe. us enhancements desired improvement profit to to segment, to the the were by actions expect Preferred -- date back Overall, business continue a we in I'll overshadowed our results. closer to challenges. segment result, to turn

Joe Lacher

Duane. you, Thank

levels. and mortality Turning to profitability beginning the Health pre-pandemic Life Page segment XX. our and on Overall, to Health Life to segment's returns improve is as

mortality of pre-pandemic Life through of quarter's last stated auto this disappointing, not for profitable and segment Issuance by a cost the were When lower historic a quarter's positive, impacts. million business Life quarter, is was the expect high. income the while frequency we is positioned outlook and we and auto associated driven earnings seen creating insurance to strong our in surprise. produced consumer policy investment XX% the in are policy loss segment decrease This premium. were more inflation a remains for is for levels purchases concluded of summary, net that they items of call, we is levels, increases these above growth. a In stronger retention. increased new increase robust results and and Further, see demand. and complete financial products, For mortality, economy improved our issuance $XX retention. in The a Overall, a levels and X% at earned retention combination result environment Health

these All at faster a to rate. came than factors fruition anticipated of

provides balance these financial model and designed be appropriate of changes. our sheet types Our for nimble, responsive. protection business is to Further, efficient

quarter's stakeholders. to we expect questions. value competitive to we'll the our financial to remain I'll to deliver and strong continue in our our results Despite market turn and to customers for position, this quickly the long-term challenges, for call now provide promises continue We on improve to profitably and attractive over advantages our creation to operator use increase results share. a and

Operator

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

Greg Peters

it back segment Or the And wanted And think and about the us the I give was results, my was this if the XXXXs basis. Property model. some back Florida? they most where I results everyone. I ratio underlying going California? went the color early Casualty high. on to could pretty reported I'm there. quarterly the on was afternoon have Infinity other Specialty I Is wondering just good Casualty expansion results Was in focus Property Hey, never severe. did. guide it you more states? thing, to And deterioration combined and they I ever a pulled sure a don't up it

it but you're or just everything sure to curious business I'm spectrum? integrated So this just I'm pocket it at isolate to you're or wondering able across -- is I'm if running -- a the point, entire is of

Joe Lacher

and some significant we're reopening with very Yes. around is a thanks We'll team rapid the tag question. here, and set What frequency the change. a for bit results significant in broad little Greg, up of supply severity. seeing issues fairly chain bounce a seen a The issues have

getting a You're shop increase the run a delays to whether or you're getting or in because you're they things long car, labor chips get get increase an run through or to how through in like. cost rental parts, shortages take trying parts getting to it's body and

in social inflation in business seeing into we prior that some are We creep our weren't ways quarters.

frequency, a hadn't attorneys part who on is where reduction the think limit that and before. saw seeing when seen in for pandemic other places lower into you're what they policies had more policies started limit they we moved them higher focusing I of been looking

that. that's putting So pressure some on

You've the you're normal cost inflation got seeing. medical that

going in at have to second So largely have in and you fairly as somewhat to Honestly, What been fourth quarter, with rate in would described business quarter, chain and normally in would have thought are those sort of in things we expected slower but those as I quarter our we expected. later is foreshadowed adjust happening would rapid. Specialty that surge more much the those the it one third a not it time. was last little demand quarter. capacity seen crept came for all and the of We to We a of see challenges year. supply rapidly be

Given ratios, the months low wasn't of last XX on combined hard ability there. that particularly the to turn

some history, time So to it bit look recent when it's at going that more of profitability. shows positive take because rate do and a a back back the you little look at file to you

watch in the issues across not parallel the of three and the model all combined underlying the we're an are the ways, way at perspective four underwriting and some progressive from up very or seeing we're underlying ratio combined similarly the change combined book. be points ratio over rise to a Honestly, go or you So anything in similar. months, very underlying seeing our an ratio temperature last much appear perspective,

Duane Sanders

when I'd quarter, other And than Yes. would purely encourage which just couple add historical aren't highlighting, particular is necessarily is the here. combined But things six-month what through noise running underlying Joe you XX, running the through higher Greg, of maybe was I at you've our of again, has of I accounting purchase to to are think the and business, think the quarter. at ratio look one what things some folks got really it norms. the are a that for that about it that indicative definitely what

development of, intra-year some related to got year. You've again, for PIK is the our that kind both

think elements And on that quarter pick that accident we this and particular to going year, trying when in so about of we that's out terms have you six-month they're that quarter a in information would some and year intra-year quarter play about an overstate brings would create in would to basically some be. little the again, how the the in more bit that view, development but accurate or what of the when they itself think intra --

further revised we've see enhanced additional what And severity car is. the frequency you driven just that because is, shortages driver whatever that got around shortages to labor estimates chip being again, by relative our we that's the thing see or whether days but is, piece that that only continue year, severity you've uptick. the rental not now or thoughts the second the to for some we have there The piece, piece,

it in but a look XX, year, I got higher full from think, you've perspective. again, so that a quarter does good And

Joe Lacher

One thought, this other Duane. is

-- on the insurance business, it's the then by California types In late historically. being same right? of by we're others, mean Joe of -- it, to think by the But I pretty I believe you some large, we attract there, seeing when of terms and dictated state and opened written I profile of much nuance nuance, the opened states changed. couple slightly. hasn't write it by mean, driven but a as I It's outcomes. you hit different there's would ahead up, saw we've by game. suspect up we mentioned continue things that to countrywide large, do was and

there saw So in as did the And far that as And frequency Jim of severity both would of and you probably the we've know very if down, to environmental in that goes, slowed would outcomes we're far a unique we some take the going have that that think unique. later And you those reenter. hit environment go Joe I time and don't terms as pressure pressure. little normalize. that's seen think in quarter. I you were Infinity, think with And certainly I as as I as the COVID we outcomes bit back seeing have to seen and so history things highlighted that seen challenges the you

Greg Peters

point I that. -- as just you. just follow-up Thank on a

coming limit coming in minimum policies. attorneys what legal I they just after the after You that limit costs policy lawyers -- Or policies? -- inside Grail, limit limits for are the the outside I'm lower policy the started lower see limits policies. Holy wondering guess, the mentioned are they're the

Joe Lacher

limits. one are Not Yes. Greg, lower are minimum policies of but our limits, every there

alleys they they're to So a dollars policy. the filing $XX,XXX conclusion They described rats They're they're at And during the activity. coming there. coming with I've we're a even maybe than looking a those on the find or out bit like what less more if that limit suit can another less with and the pandemic in activity. came somebody Chicago rampant It's were little little XX-XX and after $XX,XXX. is a of they

picking And puts to We're a that Two not that we've against lawyers in told work There and are before. going long of business something places quarters comfortable stay working some, to dollars a limits, And the again, Infinity that Some underwriting think would wouldn't bit lot the or fundamental pandemic are be issue compare think I didn't we something quarter. we or writing. there, -- of are but question expect ago, we they and would. we're with didn't little how ratios going this that these of this there's a we your not trial it's the you be rebound. that's problem. worst they I at -- It's there was pressure. look say, a smaller I combined three low? the got

it abnormal environment think balance is in an to rapid seen will I what we've that combined, had an in itself It's combined. abnormal reduction going pandemic and created an the have back return out. then

comfortable very I the and our pricing environment, year look comfortable I'd growth we're that pointing the you perspective. to growing and and with the in with numbers about targets foot away. business on a take we're this message gas our good So was from that's full feel long-term Jim the the at fact

Greg Peters

Got it.

I all, of analogy the of First rats. love

to it's toward fourth at of the to continue you the to a books. quarter So But couple going really we core sequentially should this seriously, you quarter, deteriorate of point, quarters you because take improvement? we worse Should going the of things to to then Is record were get it's getting the we that in you month we the things month ratio. escalate, what maybe say by sort end normalized assume combined but be to thought back in fourth that get that's third see going start that that when emerging, of and more down go expecting? cadence said to when

Joe Lacher

quarters. he slightly couple where guidance we to you business, to inside to the answer rather would number get supply and go. that returns. that than around to Specialty to all the across trying the on, issues is two chain, be recognize going attractive this a of those going My but of forward Greg, we try to labor an it's to up them sense two I through. industry costs to usually pressure elevated around looking inflationary probably be before your other I X.X is to there, trend, going you giving to you're What with going principal from a conversations going and going like period tell those is can pick. historical medical that the a to to the to is through up some all issue avoid and issues. wind shortage noise insurance higher a ultimately, maybe of think has wind being should to cause weight four has XX severity historical to going they adjust returning And -- in giving you had availability the That's respond think an to The attractive normal XX two auto to of one. departments more carriers of require for and you're of we're or think Yes, loss put that of those I'm a to to look a restrict we're months, quarters conversation try all occur than an I'm is to we different, cause forward-looking which typically least profitability very if going question the industry that And in months. perspective. at at issue going going Number a rate working and put don't periods or going two. the elevated, of for on the industry and I projection cause But continue going sort the data realize data regulators the at trend. I That's all to severity going two, think supply returning regulators past it's This look to that because it's are of to insurance filings stay and see your of some problem you move more typically, returns. the are it's or frequency, We're let set future. It's going showing at

is but little it that mid-XXs normal. of maybe years, time that range somewhere think little be in we period four bit a I three, that take into more get than It's think So I at. will that a take to not to something time, quarter like back to going two,

Greg Peters

you. it. very thank was That Got a thoughtful answers,

Operator

Our go ahead. Sandler. next from Paul with Please Newsome will question come Piper

Paul Newsome

the Thank the and in I'm couple ratios in you for had you, 'XX looking we And business you're Specialty had XXXX, about like a loss so at -- running XX%. -- then in companies most of but points of improvement what than to a stay-at-home was the which orders XXXX, lot improvement are we that I less in standard. think attributed saw other that mostly

Joe Lacher

stop which you're I make about want you talking I for one to second, just understanding again? Paul? Can sure I'm segments

Paul Newsome

auto. and personal specialty The

Joe Lacher

auto? Specialty The

Paul Newsome

Specialty Yes, auto. personal

Joe Lacher

because Okay, thought I about talking I heard you homeowners.

Paul Newsome

No, I'm sorry, Specialty personal auto.

Joe Lacher

it. Got sorry. I'm Got it.

Okay. Personal auto. Yes.

Sorry.

Paul Newsome

attributed was by the a to couple that was impacted of in improvement were And orders. drivers that thought the nonstandard XXXX different state than, of say, The point standard of less little stay-at-home points was behavior there in the that a of sort homeowners. was business was

on back closer a looks into is run basis. like XX the I Now today, if the to probably loss ratio rate number it

is the remainder couple a stay-at-home count I give of should to and a say that these here was congress that was happening problems earlier. the started versus there that XXXX or the wrong what really really points magnitude maybe to things just other guess that return of is that the essentially am pieces is the in of I impact masking what environmental -- PIF that of is issues, frequency to So I -- that that me what orders the is

XXXX. we're underwriting the issues quarter, today year, that so started culmination is actually of for but sort this just And not of we're what seeing back this in

Jim McKinney

points Yes. of Paul, -- it think I I for first, I'd potential No, Jim. couple was than is more might a I the start of encourage -- thanks think impact. question. with This

had back premium offset right? or four- when Now step you've But by of I not have again, like I'm years speed right, the would come two monthly say through XX%, have right, answer that this extended benefit that you there nice that the with frequency benefit, other in I with pressures rate job you too both some right, you're the going the type now when financing in where for isn't severity a almost the much right nothing other like And now you've do the on effectively, you but to brings kind that through, to even you of side. increase, was against five-point back down to end now that the that instead be progress, a come instead than credit credits some which coming instantly other forward, some match anything increasing might of have to some the that think of way XX% rate on back. was other that severity, that other We coming was are back see was they came to of And have extent there. -- And that you having think offset up kind net or running or of got you've a on way severity to we trend that of side, that referencing. other now of couple gave that end point that the having premium and similar would the

work of that don't to of it are And on supply more you've chain the of there now. for period quite impact how the that, I quarters think to in same don't quite align. normalize them the taken level of a put got the matched. being same a that, more to frequency perspective, is data regulators terms you get of time provide If pressures so increased frankly, with so from these an side this kind from the because On things top put it's you unfortunate severity have would few this

unfortunately, highlight AU used something can bit brought I'd won't your rate And quite so be balanced, frankly, again, And how fusion. seeing it's in we we versus not it that disjointed. that how right, little we fix it's what terms to. and to how things a with two which is or not responded more of just in these but are you're now, quickly comes

we're through and ability or But profitability this work going share. that. an and the our benefits this take to going got long-term business to of unusual customers isn't to market the to that medium- we've we'll Now change time, bring to continue long-term saver bring or underlying

but again, to we'll an So back we attention. unfortunate. where respond got we'll definitely and were. get That's It's understatement, our

Paul Newsome

the the should into magnitude? contrast all there it is two underlying segments Or is between preferred that of the we and versus themes with you we've Could the same think differences other about And how with sort the these situation nonstandard basically the auto. it. are same

Joe Lacher

that the we in things the There's do Sure, Paul. are issues the space. Preferred. only exacerbating are business Florida few because Specialty specialty a They're largely inside don't PIP same themes. Florida of

the business unique What those in the a was understandably difference little there. are changes. frequency we in saw So Preferred of and different bit a

folks have the business as been before. this In to worked went good the Specialty You did. And home of preferred were rebound in likely the Those highlighted didn't much pandemic, Specialty see business. bigger frequency home actually a the from guy less has before. people as the when

a As to from less to be were home. to they continue work able likely rule,

in miles bit and that little you a in been driven distribution delta So increase some frequency gives of a those. around as there's difference

our saw Specialty little think that a business I differently. just

them of biggest and probably the I the between slope issue think frequency the numbers. PIP the coming around is

the where ahead little I net-net still net-net I the they but is think to a if Preferred up, in those two. were probably were from total measuring down

combined. those when the off get You change percentage comparing any on little period-over-period. than specialty you're a is worse net-net, But that

Paul Newsome

that is you, Thank Great. helpful.

Operator

come Meredith will ahead. with question from Brian next Our Please go UBS.

Brian Meredith

A questions of thanks. Yes, couple here.

First, to little right bit situation this ultimate what now is to loss going what just curious, regulators be a out while of and are on why Joe, a off you kind growth you the perspective? accelerator cost give wouldn't step just going from figure I'm rate you

Joe Lacher

We're that described responding we've an we issues would going that 'XX. disruption. can put -- looking have during ourselves like catch some we're the what's and levers Brian. move it confident that normal a a inside knowledge we non-rate that's and earlier. have running appropriate what there. normal we've happened, business the expected and be time hot, six quicker. a And ultimately perspective Specialty. the right going And capacity 'XX environment. into they're severity comfortable net-net, of adjust We've confidence of competition going the we out seen We are the on is a were, business rate our highly Specialty haven't little with that little what to we're what than time are to months inside Sure, respond and are period. They our and combined inside confident we're is with probably we and move from yet, that increase that, the from to in in over and and it's period. more levers got that rate position. very years case also an market We're underlying often It's next model we're less a to model period of confident the now issues And just two seen than earlier and whatever bit pull of to some folks the while to at We look got the to going to the we the do is a it of to underwriting like believe where same there continue degree, got

Brian Meredith

to your loss Okay. on And effect kind situation? underlying my that that just is an is for? it a Is segment? Florida just guess purely being PIP And Or simply you then need of year in just one-off one, I policies price something the Specialty situation. prior Or current the year on have does ratios affected? it second

Joe Lacher

and associated million, or ruling you're and some the $XX the a you Yes. five-year not a schedule it million there's the limitations, way of it, fee year, only technicality current $XX There but limited there's PIP that, with if will. whether impacts paying around changes was statute numbers open

really that's about $X.X five billion. as if And that Florida policy about So were I running us, years. for over think it would

number the five highly combined remain at will $X.X the with It ratios -- million forward. in billion. $X.X you million billion And it's even look they've $X.X Florida on policy base base it been put But attractive. going impact attractive. and if So losses over will a a over you $XX not last when big impacts years, the year of current highly the

it doesn't market. change that you on were factor that we'll if doesn't just view do happy math you'd on the growing be it. And So the being the and view in love the the our into you'd state that our Florida process. us thought But we stand-alone basis, change it

Brian Meredith

you. Great, thank

Operator

come Please Dowling question Ransom Gary go will next with ahead. today Partners. Our and is from

Gary Ransom

Yes, good afternoon.

commercial? it of in what talking Personal affecting personal are the talking bit think about But as has business the same been most -- trends you've better specialty, about it see about talk some has I been you side, you've ratios. better been little I Auto. about on the I know Can well? has line that combined a of part

Duane Sanders

as where we're it this terms doing slightly Gary, It's making are in volume, is of I side. than closely. I to point, It's side, of line There's well. returns, changes along the that moves market is. you obviously us, side on a to And on would of business Yes, the inside we're decent little different say, subtle Duane. distributed inside again, it bit a that we're think way Personal and impact. we're frequency watching the correct. continues little commercial the Auto the severity But more, but the generate seeing Joe's as

Joe Lacher

inflation a in We're there. social change not seeing really the

It side have PI impact and was obviously had saw little whatever the it in So of that was there, any of point. of we the doesn't bit a the a better house starting PIP there before.

general the that through So it's running space got there? the of some we're Auto the aren't the specialty rest of the just things issues, idiosyncratic environmental but Personal in

Gary Ransom

Right.

there to you little plans payment -- take, business do other things rate to new Are there might about. lever Okay. like things there's you whether obviously, And then have can a in terms more or of as might treat talking quickly, how that, the -- were be it's change are meaningful actions you a pull. that that other you want or things

Duane Sanders

last how is call earlier that exactly comments we're about we we've pulling Gary, And we constantly to kind side; -- rate we're again. been lot XX seen the we're you're change. do Yes, that to and the certainly we've guidelines have it if Joe's continue that the we we that. that pulled manage those right. start already those I'll and the this over underwriting of ourselves monitor a reacting, to Duane have And of we change as XX environment the abide by to to within to queuing the continue And market days, positioning days while for up. not have

to meantime, of as levers adjusting you get to play respond as have seeing. But to soon have can We those we all those, across that try to the lines can. business in of segmentation imagine, levers that have, through we underwriting are several in we what we our as we're

answer your -- answer we is are. yes, So long is short

Joe Lacher

in in, at We're Gary, as We're what when you growing team taking longer-term first did of intrinsic combined slowed to was we a XX-some-odd grow and We're never able taking a believe XX% had came that And XXX we term. We was be acquisition you I'll United long running quick taking, the because value creation a in returns ratio view. point best produce management not over relatively fix that, view. quarter our inside time that and process. we percent. and this that's what the business growth to thought long-term at on that. to had that below a And the we remember, Alliance an business

thought So the going was produces book value, that's we long-term what look view. at tangible to longer-term and NPV point best thought and it in have we when different we're it, saying be of if into going trade, a process. our might growth a we But

have So it confidence on the impacts the speed. we

Gary Ransom

Thank All much. right. you very

Operator

question will come Matt Carletti ahead. Securities. from Next Instructions] JMP [Operator go Please with

Matt Carletti

good afternoon. Thanks,

year, but We wanted accident from went on a a real of that of that relate perspective. accident lines, in getting to kind five one perspective that into year business? of spent second behind ask, then at prior confidence What's distance development. know PIP tail. confidence one we things question of good just get -- And from I'm out to? trying hopefully feel away in limitation -- there, did your get terms on experience your to put it's years And been really you? do along kind just a in those of least a I to conservatism trying on level tail XX of kind kind or effectively, kind time the certain have the of the that get the kind when a statute but year years, of that I your prior which you Just a at really quick lot from once guess, of

Jim McKinney

Okay.

So lot there. a

little couple Let and tag a me sure a this try things, to we'll I'm of unpackage team bit. it and

these that try estimate, I environment, development In and confidence. a air the be tell curves the there's of do that question think at terms to And take put terms lower bar versus but in we okay, I end end -- to to of at. where also try but about, the we confidence forward range believe our definitely it's from a we forward the an view how trying wide foot you higher in developing. have and would of as are are we best

is that's severity we those here happening going what up with resolution impact think about from that think is today, claims. ongoing an particular of our do severity end if So to we

And want I to so viewpoints sheet. there. think have different not a And a that for us. It's level from process standpoint, you'll the we strong that's have a would balance always same preference of see same we

-- tend from conservative to more don't so that is perspective, word. be And we wrong I the

we than I'm lean is that not. the tend but one the right we so And we to item we're lean sheet more that -- toward have to to if the to of balance trying tend to ensure or going say, way another, view going

second and that So the there any unpackage your follow-up to before we let questions on if try of see there's question. part me pause

Matt Carletti

Thank makes sense. No, you. that

Jim McKinney

Okay.

Duane I'll here to PIP be frankly, ask of because, XXX% or in court the I in shook have quite terms think it's just out In Page coming June. appreciate of we'll the like and to for rather mean cases going little item Joe from fully -- the I and to hard, bid some a when

before I standards. you have when pick to you will could to the have don't deviations to to So -- about at mean say from huge We I be set within components XX be. after, the is really we this, those I prefer are back aside. little that look XXX%. what nine give tends really right? will lot. give next patterns XXth development over would And the Duane you think nine- quarter bit becomes going or going But up like difficult strong even from one think to your paid that and down to with to quarter two there and are up not a a we included. be a to whole move and want it'd a but entire I'll window be Joe to pattern some not a And ask -- comments. down? and to, So is this tried you and Sure, I months, team. points those also periods, don't XX-month point tried think it about longest indicate thoughtful validate is thought to XX, what ultimate are little the maybe development that best to factors that maybe what there at or it I we've talk those claims We have that that or it. tried time

Joe Lacher

And the Jim. here, want you asking the Matt, make sure way in we're I jump answering it. question I'll were Maybe to

sort giving sort you balance perspective? asking was on it of how you and that? environmentally through Or take work asking the question. Jim And long it from PIP changing sheet environment? to PIP a of does Were think confidence were a business you I

Matt Carletti

little a be helpful. the any And both. of sheet pretty the clear, was but bit latter is on I balance would think question color It

Joe Lacher

of bit some changing ratio, on why the what good schedule at it's level. business at the points be of little a of believe really folks thing might $X.X It a there's to claim of it. about us particular much most It's out and and we practice is how for been trial in there of five pay The intended open bucks or last us. a PIP on limited way were the the legislature $XX bit mess. verbiage changes Florida, -- juice different for arising. high more Florida It's is we Xs, to couple But is million Yes. were medical providers aren't work that and pay some attractive always only you about carriers on at changed changing rewritten amount. existing new challenge this I $XX a a of rulings the strong little a we about think business on into that be having a a how law whether to of combined some a were wouldn't This on bit From operate on it's an that changes. those squeeze an period and part written that specialty a low environmental had We fundamentally Florida. through of a who claims. the doing PIP Xs That's hundred fee not and on couple different perspective, a orange. nothing we for handful creates that look little for and were way an point you says picked. some set It's fundamentally if that's years a claim There's some of million, inventory purposes. good except changing the law the that work is in trying going impact happened, Matt, to for a decision a It's always interpreting court the starting word changes per points, our review group view billion little group we depending which of environment. system lawyers, be the at Florida. a you it

Matt Carletti

That's I about helpful. law. the insight the appreciate really

Operator

Please with ahead. Last question William will come from Jeff go Blair. Schmitt

Jeff Schmitt

thank to was Kemper Hi, Was reserve you. adverse Or any related IPCC. Access? development of and all the American it

of looking curious Just sort reserve how levels there? are

Joe Lacher

There's there, to we've those inside strong, it's book. and numbers. that's appropriate be referenced our AAC no and this stage. combined to other continue and balance AAC And The of No. we'll multiple think dug thoughts, Kemper happy assumptions the and I sheet, of through that has Infinity times, is we being or any very very acquisition, with continue happy underwriting do strength that. the the nothing there with at development changed

Jeff Schmitt

So same the mean -- doesn't boat Kemper? be look as in it I to

Joe Lacher

environment. is seeing chain issues the and labor What PIP shortages, that the on we're seeing of you're running There that environmentally those supply issues, through same frequency the no severity was increased working it's increased all significant issues. like, through

if and huge that numbers take year, the you set prior -- out we're through running not PIP of we're there. the So a

So got same are -- not similar it's just similar drivers the and it's roads on similar these -- environments.

whole there. severity seeing So and on issues the the are frequency we're book

Jeff Schmitt

historical like attorney claims maybe versus social Do on And Okay. some a now versus know inflation just provided limits. color down levels? you moving percentage ago lower then you those maybe into what of year or have representation

Joe Lacher

Yes.

the will of up it. different will picked something Jeff, and we feature sense not a typically count in counts entities differently, of have some counts. got We cars -- number a depending will they some people acquisitions, the claims of Where the we count the accident, involved; cars. It's disclose. from claim an on some we've of number count count which little

mechanism. a You these counting was get of any issues. different different There

rates going become differently little significant when look It's historically. a a the change, but those books across we multiples. not So

Jeff Schmitt

homeowner in that seeing be too? at? trends. is trending mean then XX% What cost the Okay. on as we've heard it side. inflation you increase could others it. Got there that I loss that And as from high Are

Joe Lacher

Yes, that are. -- yes, we

rest what that environment, lumber rates, consistent think body I are again, the we're seeing it's prices others the or with -- labor it's we're like fairly in space. whether shops just of or

Jeff Schmitt

Okay, thank you.

Operator

turn over for Ladies Lacher and gentlemen, Joe back this will would conclude any like I remarks. to our session. closing the question-and-answer conference to

Joe Lacher

home we Thank pandemic long-term thanks, everybody, of today. and appreciate all interest. at very But create quarter. interesting as and challenges, we business set us created talk prospects home We working next sort a that going to our are the We and an and overall a know it's we're of and and you, excited staying model to joining the interesting started our confident Thanks lot. for about as reopen. operator, you lot your from call on again time to

Kemper (KMPR) 31 Jul 212021 Q2 Earnings call transcript