Kemper (KMPR) 1 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Karen Guerra	Vice President, Investor Relations
Joe Lacher	President, Chief Executive Officer and Chairman
Jim McKinney	Executive Vice President and Chief Financial Officer
Duane Sanders	Executive Vice President and President, Property & Casualty Division
Greg Peters	Raymond James
Paul Newsome	Piper Sandler
Gary Ransom	Dowling & Partners
Brian Meredith	UBS

Call transcript

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Operator

Good afternoon, ladies and gentlemen and welcome to the Kemper’s Fourth Quarter 2021 Earnings Conference Call. My name is Tamia and I will be your operator for today’s call. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I would now like to introduce your host for today’s call, Karen Guerra, Kemper’s Vice President of Investor Relations. Ms. begin. may you Guerra,

Karen Guerra

President, Good Financial fourth and Casualty XXXX quarter will Vice Vice the Lacher, afternoon, operator. Jim and and discussion Kemper’s President Duane McKinney, results. to President. Sanders, of Division you Executive Kemper’s Joe from our and and hear & Executive afternoon, you, Officer welcome Chairman; Chief everyone President Kemper’s This Chief Officer; Thank Property full Executive year Kemper’s

around few Q&A We quarter remarks opening our will context the a fourth and provide for a session. open then make results to call

closed During presenters Vice Kemper’s Executive published the we release XX. by about Officer; interactive Executive supplement. today, earnings XX-K our portion financial and be Boschelli, Kemper’s of or markets Sternberg, President our presentation our and Investment call, John intend the our Chief and to We file February with Erich will our Form Life Vice issued After & President. on earnings and SEC President Division joined Health the

Our Reform and may provisions and Securities the not outlook the to, Private of of of results These the within Safe Litigation statements discussion limited the financial contain of include, but conditions. Harbor XXXX. company’s statements are today operations future Act meaning forward-looking

and Our also statements. These be differ actual statements future financial materially results may pandemic. COVID-XX impacted may condition from these by the

these as GAAP includes defined non-GAAP please earnings we meaningful rules. refer accordance our statements, also Form well supplement, and presentation earnings financial measures where may to forward-looking and investors. with in all afternoon’s as quarter have our In fourth SEC For impact reconciled are believe required the information to earnings that measures financial additional on to XXXX we XX-K release, release. financial non-GAAP risks discussion our This

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

Joe Lacher

saying, renewal but you thank the continued fourth profitability. we to today, pandemic-driven of afternoon, fourth those the quarters with life couple rates you, continued full are to The of reported remain, and historic earned the In shortage. cost increases everyone regulatory our and our In each Thank mismatch therefore for rates, severity. We were Rate pricing. and in repairs and quarter environmental increases negatively the benefit quarter, have talked chain inflation-driven loss we during came without Earlier our to economy and results. policy the to we that the and joining Good discussed quarter, suspension businesses. loss due created an relationship delayed. see and has last with policy. last Karen. reopening P&C, labor supply have subject challenges the trends of rental we issues of Goes related Labor disappointed us. car all inflationary we results. intensified. challenges to rise body in auto between at not impacted discussed impacts only is The and and year rate that inflation approvals, fact about earned These policies rate over incurred immediately have roll between pandemic increases are the surge severity. to loss of on increases inflation is The the

Delta and favorably did rate margins for costs moderate. have the we rate pandemic. and results. percentage we XXXX and book variant we ultimately business Health the results. excess the actions we believe closed continuing impact rates we The be actions increases they our and that of targets in increases initially and We profit largely earned impacted imbalance non-rate level continues car will up inflation and X%. quarter the the significant incur filings this XXXX, will rate submitted, will quarter, on in in used will were line to example, increasingly making fully Overall, exceeded excess prices environment, & in a to by Omicron, up Progress the to direct last our the are XX% In wave, then continued In over the an stabilize to mortality. the be then mortality of the negatively respond alone, visible situation aggregate to not this take, XXXX. our rate more To our made significant have taken the see and continue In restore were and national quarter, levels. year during future As benefits the remained XX% Throughout appropriate from Due rate initial progress rapid progress on become Life of gradual, summary, impact have immediate now as segment with impacted short-term. approved. the will to margins number our trends. These the both These in improvement. realized.

We rate actions to significant planting and restore possible. after most improvement will take little levers this every are discuss margins It’s and process Unfortunately, accelerate are tomatoes Duane working a to time. the actively way winter. will like taking non-rate the our more shortly.

will detail. the XX fruit. time fruit discuss results our lockdowns. warms accelerate a get until can it. in frequency takes rate we way now us Though We operating more will it to no to successful is actions the time, meaningfully going over You rate confident our you will from the it turn to growth. position call once Jim can’t are isn’t take faster. it’s start And and There before be take couldn’t and eat to take filed, bear until days There up for I fruit. rebounded to way after to the

Jim McKinney

Joe. you, Thank

Let’s turn to Page X.

generated For per $X.XX adjusted the $XXX per and loss quarter, $X.XX net acquisitions. or as as of million or we million $XXX share share reported for a

increased as primarily on driven headwinds P&C reported $X.XX reported a loss $XXX and or quarter adjusted. share X% and acquisition. for costs share was basis an We AAC the $X.XX also per loss after Earned by of net million loss consolidated environmental The net our $XXX per adjusted for produced operating businesses. million impacted adjusting XX% that throughout premium the or as

Our remain to focus restoring has profitability. on target Kemper been and will

third XX for executed on detail of number and and greater actions points of combined, fourth the topic margins. non-rate personal filed this improve During a team teams of approximately later. books. rate P&C the quarter will our XX% Duane on the provide auto Further, underwriting to

X, equity, gains, targeted is Page tangible on negative X.X%. to our excluding was Turning return. below unrealized This return long-run

achieve to the transaction corresponding share American of taken this and corrective created. acquisition actions and goodwill Of to by historical in last On Excluding value to we environmental to higher be taking response levels. highlight we over declined compared that view unrealized of our creation change, to challenges. Access The value are Page negatively tangible cost the time gains, December. enable trends X, will continued $X.XX operating per impacted loss our is book related $X.XX have us the income

this earlier, to we segment ratio mentioned P&C underlying severity higher Specialty reporting combined as-adjusted quarter, our leading of an witnessed As XXX%.

equity. including tangible On and costs we in to some & capital to and the In mortality review addition, Life value continued in COVID-related per benefit tangible metrics excess segment, experience due book persistency. key of share performance, track X, growth we Page elevated life use to return our our on increased Health we

and these long-run to challenges last a not target. We to be we below challenges environmental nature expect believe have impact of Recent impacting performance direct For few quarters, do the in is the result targets. short-term been them our the industry.

of restore measures we and X, continue to disappointing, the business balance corrective our to institute will is the this profitability. strength On Page highlight sheet. instituted have to target While we

and navigate within Our positions and capital substantial environment. us enable liquidity to the optimize current

has to business year. to optimize long-term investments continue We cash for strong us in and produce $XXX continue million geographic enabled generating our to profitable for growth. over our flow, footprint make the the This

and within target our Liquidity Our range. ratio insurance debt-to-capital are entities XX.X% of well-capitalized. remains our remains strong

to of provide we catastrophe and cost of our programs. our risk year, X, an Moving overview reinsurance our multiyear with programs and minimize to annual loss to the Each our to review of capital. aggregate highlights excess appetite Page our align we

our XXXX, we additional in excess an program purchased loss For in auto due million specialty limits our to $XX of growth.

of $XXX excess at of will million. Our in XX% cover program losses million $XX

aggregate In ag $X level. program the intended earnings with reduce events. This to volatility the our by catastrophe were our Increased program, limits impact a and retention million year-over-year program from was costs addition, corresponding the severity there low increase cat in offset is costs. on renewed minimal we to frequency, high savings Thus

the quarter for income $XXX million. investment was net XX, Page to Turning

designed is to various through and construction cycles. portfolio match income provide stable Our liabilities

pre-tax factors. a X.X%. generated yield quarterly be we pressured company’s equivalent performance to quarter, financial the closing, In of by environmental various continues This

our taking turn over With financial who details we have will confident are will time corrective We I actions our return Duane to taken well the are over that segment. P&C us that, on now and to call provide the targets.

Duane Sanders

good everyone. and Jim afternoon you, Thank

we Page to frequency working help XX. this and illustrate the historically of to turn miles accident dynamics low. are were the onset At navigating. Let’s pandemic, the we quarter, Last slide driven introduced

had major to increases rate customers. premium along effectively Kemper time, carriers this delivered no additionally, During most and with rebates

journey. context profit on will lockdowns, from year. to emerged pressure up earned bring illustration later translates rate margins shoot the put This against in to as pre-pandemic we intended rates. These unchanged is to and XXXX As written saw the rate to continue dynamics clarity we the restoration loss in trends

paths potential to diagram and inflationary timelines the As the rate get and curves create several highlights, there.

a Moving labor ratio the on earn XX, profitability right actions of approximate a and points. trends backdrop in reaching with our favorable. upper experienced timeline loss temporary on levels, progress remains increase the quarter’s long-term supply will this including to to Specialty underlying with year-over-year XX combined an P&C. of made issues how The the of segment obtaining of will loss frequency view the year, shortages of rates challenging the inflationary quarter XX highly and businesses. throughout an points, related the we chart business along imbalance, shows sequential rate Page the increase Against through chain pre-pandemic Despite

for XXXX fourth much XX% during our book, approximately of quarter, rate effective. the already with on filed example, the For rate roughly X% we of

for the filing earned on the our written of to time additional takes Understandably, and an in rate effective be of results. our We it and X% into quarter. process for specialty are book first XX% in filed

second half the majority most be the in impact XXXX of in the in earned earned of the expect with rates XXXX, year. the We significant to filed

XX. challenges. to let’s Preferred face segment similar continues P&C Now, Page turn to The

for on roughly Looking preferred auto upper right, the rate the the quarter. fourth chart during XX% our book of we at on filed XX% approximately

of restoring levers back call the in profitability. organization the Joe. are I the important additional most on is to on quarter. process In focused the We filing in book XX% turn to first now XX% of our an summary, will for the

Joe Lacher

Duane. you, Thank

increased premium turn due we X% in-force improvement. As earned to of & we to in new on segment by Page that Health highlight Life continues value business persistency base policies increase, our to XX, driven persistency higher life sales. The

encouraged for We by demand observed are our products. also consumer and strong

with our country-wide results remain Lastly, trends. in mortality line

on the the and the circumstances, over the operator couple years. subside, call focused on closing, benefit target questions. financial quarter’s As impacts the these mortality managing of of through disappointed results, are to team life challenges to responded couldn’t turn will returning prouder over to costs should of how more now this competitive and revert to our advantages. last although and normalized and has expanding our I long-term I circumstances for be we levels. our in We In probability COVID organization mortality remain

Operator

Peters is from with first you. the line Thank The Raymond Greg James. of question [Operator Instructions]

Your open. line is

Greg Peters

right Good to defining interest and chart give been XX how rate the XX. us on Slides afternoon, has a And in provided XX, much focus XX in where and XX, hand I’d on of you was like upper you particularly information much corner that the And everyone. see for preferred, impact filed the – has the the of to and how both in you been. and results should for than the first look rate amount quarter what then if is impacting going specialty be at deterioration ‘XX? less be you just

this of more think to looking be third strict reconciliation we about you this, your then you quarter, there that other than And results you for a of So can I do second business. as know can I guess on quarter, new more is the first that quarter. just and can cancel rate you improve is piece am agents,

underwriting of So possible? curious house, that – going that in on I if side the what’s am on

Joe Lacher

and Sure, Greg. it This at [Technical shot a Joe. Difficulty]. is take I’ll

to walk First, the Difficulty] of and sort little top XX make corner their let things bit intended right is and of you through let you see how to me way XX [Technical sure through. a waterfall it

premium filed we happened In quarter. in of that of ‘XX, use its Let’s and on the our as XX% be also XX third the X%. That for weighted quarter rate was example. effective to average

work the a of in and understand providing when impact during XX% to written quite the time we fourth a maps you Difficulty] can’t Those trying of to You of pending that quarters see help quarter a over works there Those want you’re rate, prior you are getting combination Ultimately, from still the in of be things works not are approval. The that that are of X% X.X% – way quarter some from [Technical earned. expect points that’s the quarter see [Technical that filed, had pandemic. intended and is see effective. well. to And of set without each the those to quarter. our these just will X.X% rate second Where all to and it then It’s third you earned come how we’re tables That through from rates we premium that occurred Difficulty]. of overall you for drop impacted across. that XX% as loss perfect occurred What was ratios. third the another filed for as it department was what means impact only their to not and and through. of it’s but X.X written going to how massive impact you work XX%

Now doing of actions. a non-rate a non-rate variety we are variety clearly actions, of

are We canceling agents.

underwriting business, new adjusted have We tiering.

commissions. with We are working

a are whole non-rate [Technical We Difficulty] from doing perspective. a

Difficulty] risks we what of [Technical adjusting write. changing plans, billing We’re

of those our on do activity, are in have All a book business those tendency, earned impact. a have the fairly occurring across significantly of depending things to quicker

crystal bit quantify kind And in so to they or... chart. That helping – little less a is this are coming – that they are Greg clear of

Greg Peters

wondering I XX, and that on the guess, point, in a rate inflection this And meeting when look exceeding Page an chart everyone’s listening Yes, Grail trend that just at great the was you charts. is before that that everyone Holy the explanation stabilize of loss get so we call, get? going is Holy it as starts wants to you timing, bad we are to going it’s to deterioration And will more as Grail? when And to get the to. to improve or see this and on

Joe Lacher

those made, was back don’t the were think a be what is be the how And the comments activities briskly. going effective. non-rate XX Yes. and we pessimistic exactly go if And long, [Technical and predicting Difficulty] think, up were inflation and do a rate questions. I’m literally to We to of going for two going I of move complexity what thought can fast start are that we And control view most going trend I how early or to right is regulators was Slide to back relatively forward allow couple an loss rising. I and we quarter we weren’t coming. those quarters, to folks

sure filing I XXX% the the coming. we projection say, that this the not and that space. had are – Not filings us dealing rate the I in significant is with. rate moving everyone, great but in, multiple of couple I’m be quarters. next that’s I do Difficulty] think seeing are what’s we’ve know industry along amounts recognizing [Technical of where question regulatory Florida $XX,XXX of to that success environment fact, the over most of That, uniqueness going of path. we’re for that Texas

seasonally seen non-rate are And the X quarter worse be impact even, tends lot of Our quarter. quarter to you several X, seasonally and better quarter. quarter points sense be is third wouldn’t points, might a a the a the be in to first fourth plus. tends That that have a the X,

see first second. fourth, the and and you’ll You’ll see a in coming the in more little

Greg Peters

I Got the how state all your are sudden if go And give guess Can California? you’ll – involved, terms I threshold California. advocate other big of certain negotiations of in a the it. know with update on is the of an filing, the you consumer get progressing you over etcetera. us state a rate

Joe Lacher

Several four X%, programs you under department just have filing point, to the of All this California. that [Technical close relatively filing we have our got and the of believe into of X.X%, threshold accepted in are one fourth. a rate when in analysts. we Difficulty] been I have terms recent to described. the during At Several programs not them just rate four them was the first. Sure. moved had the of introduced

it analyst. [Technical think worked was on to sort to I the from and an move first be viewed that by of by Difficulty]

an really them vibrant that via And doing. the market about department issues And moving the they loss that health that going confidence historic what They of other on. commissioner industry that. felt working think and are to a the we’re country departments the recognize I’m dealing perspective. reasonable have are optimistic insurance on through open they of issue with like it terms to insurance And degree is responsive. the that from and high. insurance good process are we critical to is I important thoughtful health are are markets recognize and running about the to So overall be all going of I industry with we a that It’s the the of will in inflation that is they the department. of around keep

Greg Peters

that Got the can guess development, prior Prior please? Auto ask business, question, it. so in want Specialty my last both to I your development the the will I be year – comment of year and the other one. there last I’ll others you questions, know is on parts this

Joe Lacher

sure. Yes,

than a highlight marginal specialty, through in the not [Technical favorable like other of development – on coverages would indicate. a but larger relatively broad some wouldn’t come I that’s So, trend I Difficulty]

of just thoughtful And try to relative to make that. making you a little we’re reserve selections. saw continue bit to favorability We sure

inside I trends through with in an PI that York what relative to suggest of what kind the and of a pandemic. seen you’re our of but here some seeing, and has traditional changes the just way policyholders is associated new would costs a item terms other book, nothing of little that a some result that as that bit behavior coming overly really working trend we’ve litigation increased in perspective, from the In some with the front of of some been acting the for New we’re

points them of spot. right to And saw so a reacted sure quarter and that, in data that make just we we’re the then with those couple to this

Greg Peters

answers. for Thanks your it. Got

Operator

Peter. line Thank question Newsome Mr. is you, next Piper The Sandler. Paul from the of with

is open. line Your

Paul Newsome

Good afternoon. tough Thanks as have know right I results, you you working can the as for those to the call. to Always ship. tough hard guys but are

First simple one, impact think XX% specialty, rate should rate that a that haven’t that is a too question, is got the look it? they roughly we at of way California just the not basically to getting – Or as actually, just simple that’s – in book? the

Joe Lacher

it’s is the a will is Maybe was Difficulty], XX% Yes, first. it question, the a XX% in premium chart in that It’s XX% [Technical causing the additional additional third challenge. another that the a cumulative quarter, XX% there Paul. got an got XX% of and good us not set. then That’s an not and it get

or some their third some what So are you’ve is in helping. second cases, got getting

XX% XX% So California is all our of books. and the in included the

example, Specialty in an received Some book cases, in Florida XX%. In we them them as were the were was XX% in in some the believe I Florida California Every Auto the also in in increase. of have has XX%. an the was and XX%, of some

the get this can to rate and I And it’s again, when process. a We can you you they trying that pull them. total filings way in incremental, in see – overall the not are states, see So individual in we’re cumulative. were

Paul Newsome

is Okay. mean definitely Great. helpful... the I information

Duane Sanders

that the will kind the to will timing your there effective California the with track online same approval, from delay that’s delayed we yes, filings. and It of a ever biggest is of One is points in. implementation out eventually be us, probably stage. – XX this of as when comes bigger between of the then there date And that and where earned, approval then at you will can again, point, the days an be chunk

is good So here try insight hopefully, continue and as here is will we with is, a provide as what that trying what seen to update it and possible we’re consistency much to you’ve tables. to to enable And the these that.

Paul Newsome

points. very little helpful. you definitely already for is but worse a bit data from Anything We’ve fourth the quarter the normally, guys on change of the environment, can all pull we No, seasonal pandemic touched a unusual the would beyond this, if a of in sort No. given that quarter out that, of is a project stuff? of that of sort today’s seasonality couple nature

Duane Sanders

Paul, that know. Yes, not we

and prices, giving It’s and quarter move to the and to numbers. item, big of highlighted you for in that are think we’re example, big on I you year example side X% XX. purely in sequential some like the are Joe going quarter-over-quarter inflationary – and continue here, this car see used like that. those that comments growth, think the of I the move of that for it When his to see they extent trends

do right, it some think is limited what when moderation be it’s tells volatile would probably a some asset to a we that curve things we and of the normally think you It like. potentially not a supply, little comes some a utility is take right things exists slowed it’s economy will in just I not depreciate, pressure have they these is yet. But what has elongation kind bit it. normally an up to that, an I up or the down more savability like there that bit does imbalance go degree to see little a the it element supply-demand that down in than So down, you and that to what life those of to the behavior you of extent going going this because value forever. But of for once that given things, is is people’s To are a the limit some or depreciating slows extent really until depreciation these do is. have to again,

go will time. seeing some point that this zero it at just stage. in at So not to But we’re

Paul Newsome

Last in bit like I in the But bit the growing same down business, a PIF to It pushing we’re capital capital. you XXXX, least time, looks Does Great. P&C are question, noticed year? I’d RBC the the be but overall on at in is the like a fine. ask more little down that might the that over into business. at P&C capital suggest specialty next you business ratio

Duane Sanders

It’s is terms very extent possible that entities we – would. would in prudent, we’re is appropriately. make insurance we rent be in our of of our holdco To other we injections want appetite I not mean, that our what for and elements risk terms we’ve to the businesses. service from that to highlighted here the or would where

to plenty on that capitalized got to that know than not or rather that behind are make we’re we Kemper going more also have are make to and is they that But very – We’ve to we’re rash do stable us. will they any We to we’re we’re that business to thoughtfully, promises. really navigate would our going forced strong, can entities holdco to going environment stand going this a pressure at environment. optimize And and know through this able look that decisions able the liquidity any – capital and through to type of without us, strong policyholders strong sure we’re at our creating available others or and other. remain going when

Paul Newsome

help, guys. for Thanks the

Joe Lacher

Paul. Thanks,

Operator

Mr. you, Thank

& from question next line Gary with is The the of Partners. Dowling Ransom Newsome.

Your is open. line

Gary Ransom

Yes. evening. Good

of year quarter? runs through ratio You number already this neither may for in was and current the answered the on have the accident fourth fourth seasonality. there loss the quarter sort that any But true-ups

Duane Sanders

Yes.

points pay book. the So two there is roughly in about

think our on most necessarily as pace on coverages. increased in be play think our relative some focus inflation continue I to quarter. how to running of collision is largely focused expect and seeing not severity but going what through. is What trends, environment It’s your in that’s future third we the the terms those that we out in move forward on inflationary to we you’re

inflation, of continues probably to even especially component that. So most, our than higher a that’s hotter, but that’s there. cars Again, used projections in higher than driving run

also whether bit as point page saw we’re or it rates the necessarily changes, a little inflationary increased be that in elements. attorney We it looking at at into time, other front, but again, trends, rep relates up just, the in to differences looking kind on of not behavior BI

reacted bit that to from And go-forward basis. we’ve perspective accounted about on together. inside we to sure a see so that points summary an we’ve of two But a for that little got comes make in LAE will is there that kind that how And is there.

Gary Ransom

Was anything last there from quarter? from did hold those PIP estimates the or issue, Florida

Duane Sanders

No, those estimates have helped, no update. further

Gary Ransom

a to frequency, Then Great. think point. okay. also within generally about more wanted still that held, back Is less case? XXXX coming Have ask you less or last I the to Thank you. I levels quarter more or talked frequency about

Duane Sanders

change this the that from still Difficulty]. case. point is at That [Technical front No

Gary Ransom

That’s Okay. very Thank it you much. for me.

Duane Sanders

a Versus frequency.

X-year direction, our Ps every covers right comparison severity reviews you it interested but think in what what think pull with out this provide once perspective be item is will that when that to add We we really are are just can. schedule we underwriting trying and back other we way other. we to are of type best and nothing the increasing severity a rather are from continue. large set XX% changes But that. kind is an these that industry and items of There changes. get the which come I now some trying costs on that we really additional seeing frequency in to because structurally based points, I and react with isn’t they we associated the we The will this for as seeing up

are if, a can work it will It’s as not stage. just get it’s to not we just time when, it. working we through these. that we the as takes it’s an whether and this Now not to fast It’s – at

Joe Lacher

And it’s principally in metal coverages.

it’s So, it’s of the metal predominantly coverages. and frequency, inside issue severity

Gary Ransom

much. Thank very you

Joe Lacher

Thanks Gary.

Operator

Meredith line you, from is next question Thank UBS. The of Ransom. the Brian with Mr.

line open. Your is

Brian Meredith

you. Yes. Thanks. here A couple of for questions

want think what written on just to getting XX. individual this impact understand the written by basis, I are look clarification, a the impact just on so is are I at I If you quarter overall I these chart Page that a First, saying am that is. what

So, I the XX%? be first by of end right? something that cumulative impact should getting the quarter north Am of the

Joe Lacher

should that renewed. or that to written No. – it be X.X, all that’s either of have you it been policy had on what do new the say to those written, cumulative for of is and is What impact

quarter It ‘XX in an as hit October, it example, not won’t number, effective. fourth September, policies some that of not March it effective renewal. some some hit in XX% be third in will So, or August, if say, an in December. It some of the the if might hit approved it those will till in on been became was, that April. That some had quarter,

actually And and January. quarter. half it, the that but first gets impact XX-month policies that of in the six-month get the if So, in first policy be then one quarter you a year, you policies, could of get would with a

lot to Difficulty]. was side lines intended impact. the on is hard right of to of be cumulative really show the would There wasn’t running [Technical this Normally, read. dotted that a that the rate chart So, you a

from – give So, cumulative most it don’t have there. is and I a that’s again, different be you going think to intended folks to out

as it are accelerate and in. will way illustratively just we get everything that of second in can see you put see. you it you third because a way sort its think rapidly quarter into of I working the It trying to

through math If the the fourth what surge through. do you the first, on see that comes just running you and

Brian Meredith

little just are as just just Okay. people the some was? surprised earned six-month policies, a That’s a that low then policies clarification, were as was could helpful. Great. quickly, impact it And just So, right? your have

Joe Lacher

No.

We have have think preferred policies, we than are a most that be of than the there. is going effectively, policies to XX-month got six-month XX% carriers, policies coming standard book mixture of more through I more but

Brian Meredith

Specialty segment? Even in your

Joe Lacher

say Yes, of but closer segment. again, policies, just Customer of are another in segment it it’s our Specialty nonstandard inside piece careful of not at and The standard. are that nonstandard. there it of we is where pieces specialty, we six-month of this There even a pieces specialty, predominantly Hispanic are are it is specifically because this specialty, are part very to might nonstandard and to say, there the look it’s

Brian Meredith

it. Got

Helpful. Okay.

Joe Lacher

difference profile the [Technical underwriting Difficulty]. that think I deliberate our that’s in on

Brian Meredith

the mean am it it XX% like if are your you going then look need, loss right I some XX% impact as kind of getting half maybe I cumulative zero, margins. ratios, can would non-rate of you how your where profitability? perspective as expect Is you back much Because makes get a far rate it, take just to just now looks normalized sense. to I at it? a your to back trend assuming of with give quarter loss a That us to to curious, actions, Okay. to to And of an have back that you

assuming not non-rate that’s Now action.

So, how much will that contribute?

Joe Lacher

Yes.

then have we you – immediate answer an a going now of gets are exactly want, it third I figure to bit am out it, that the understand I talk commissioned impact and We bit insurance an did – to will you And am ultimately in around give a am and to you half. in earning answer to We it a an going I a and will little to comes and little a two. would the to just have probably point it, or you you trying If Brian, how I that something. about to want get to mechanic. be understand and could affect we somewhere get of sort

a lot change but doesn’t you does of inside business that – renewal [Technical move are book, tiers. to the That slotted. our in. those ability a same That underwriting higher the is new change level to the Difficulty] coming how We in rate there of have, programs, an

an has business impact book mean to new. of sort immediately through that that but agency, agency. Well, an So, I immediate renewal new could that on running cause to their stop it new doesn’t that what’s eliminate for on might go We away. business, the

go across that [Technical the book, might this are there have or in pieces whole of do difficulty]. immediately So, only

mean, So, on there at general stuff do point. we can this of are all is working we some expenses I those just underneath.

all working of are those. We

what into capture slower. or that want improvement. of project trying looking And sure actions put how the get Difficulty] to know precision I little way do ratio the get fastest are want am you do and loss think you I what it [Technical to to not helps you am the I the is The combined is ratio you would you I felt precisely and in back because it that for. I go exactly two-thirds want And first – third a non-rate the half to what

Brian Meredith

helpful. That’s Okay.

lot. And top just can maybe little a on what expectations that the think and we what’s next over then to little problem, distribution to business. XX are manage as fix bit helps I a this on focus your periods months kind or we maybe counts a handle you of in bit your line months XX happen you And now? right like with going PIF are in your to specialty how respect

Joe Lacher

Yes.

doing the some pretty pushing a of or would very was is there We underwriting more be going near-term. done function – than underwriting less that if happy I restrictions competitively – business everybody flat expect the on provides to little are is market. We be will [Technical down a of to for one the the more Difficulty] disruption is a more would and hard maybe that, be it in what’s more and near-term. of land. over There comfortable the it place company down this And in some we

new see them. they are move it’s sometimes with happening in impact because to business, for to uptick more those actually quickly but can you underwriting things that and harder customers a So, little pricing retention or you deal the

with inside or not will is more moving. clear flat to that and I market which a comfortable some closer would was we expect down it bit it’s down also pace the specialty of be completely the be would So, near-term.

Brian Meredith

Okay. And then ahead. question guess – I my go last Yes.

Joe Lacher

split Just between of earned. careful written to kind PIF and and this be to

Brian Meredith

And I agree.

Joe Lacher

the underwriting taking. so both I result of grow pricing and the continue for written as suggest the and likely exceed the will PIF, that to a earned would are And actions that we

market slight would the some move. but again, and probably So, of hold, PIF maybe things associated how I with on lot deterioration components that will a side,

perfect you PIF both the rate in. continued growth were the So, the we to related. would clarification see are written underwriting as Yes, definitely that’s go going I and up. think and comments expect strong definitely, on will probably earn with That – my a earned to but written to I what actions will see, earned continue and rate activity,

Brian Meredith

then And it. last you. Got for question

inorganically kind targeting if are are? Let’s that’s of I mean Do with of these where think and XX all where months really having seeing are be? now from opportunities potential to XX you players issues some right lot and types a I gets larger the opportunities that really would small both to must what grab competitors profitability midsize call organically you think your months you compete out share, really to kind of now. and you that a time difficult of be need see it, you to and once are

Joe Lacher

I don’t Yes, think quick, but if ability the we don’t they large have slower are underlying of now financially would the think our it’s I focused I I they [Technical our strong. find on issues competition is it. spotted that right restoring shocked and in XXX% are issues. as profitability, chunk – so we two a be on as the think bigger Difficulty]. is we of One, and don’t pieces space to behind don’t focusing

little now. of opportunity we be going enjoy worse is going ultimately, lot to will it’s going right I will cleaning and more for for it’s that up, a longer. it I And to a do that take expect I messy quarters, them I there them opportunity. to enjoying So, and a couple think are be that an present think than

Brian Meredith

Okay.

Operator

Excuse with next no The Mr. is additional Peters you, Thank Meredith. from Raymond James. question are [Operator me. Greg questions. Instructions] There

open. Your is line

Greg Peters

allowing me follow-up. to for a ask Thanks

focus I How the With think for thinking too the on fiscal presentation spend ‘XX business you the most it’s fiscal that really this about of for and been COVID-related business year because because and talk probably appropriate of year, issues. for year headwind for that ‘XX? business, a a has to about minute life non-life the are

Joe Lacher

Yes. No. Great question.

great think I think economics, And of of the again, terms business important or get a the look a of returns, to which I it’s view have elements return statutory to will investment elements actually it’s a overall. take in some additional hedging. full first really through

models, surplus will I are inside down not think Not the and in. that’s anticipated, see Originally, now, but that highlight if year impact if $XX of you what have you they are that That’s tracking but even you component about are there speed well, XX% the to continues still of that marked a all target. right, from longer. million a having things or of while sit you great, pandemic say, I that would our But you kind you through the when and right, to are the now more you I it it a bad, You are because and – see return, yes, would nature maybe going return of excess impact. are you what less to that certain a of of you roughly Omicron have take made are that it’s in historical they this, seeing certain at this put turns lasted on tell unanticipated of has peak pandemic. and vaccines But lot mortality an thought of in much that associated. looking points look indicate. might a because you – actually – which it with components, second rates, severity the less during just be were spread, at the

– as more from return or suggests pre-pandemic it from I that think to and will a think medicine, we we, I short-term, business will force country, that say that is persistency of going, front. that in forever. both at or have not on are in think economic from base nations we responding. of were I XX-plus in through long-term many those hey, we and the be continued have once will But see we case But value to tell a pandemic expectations. is decisions underneath a When time, the I there, cash things hopefully, there. But volatility that from are a in those I more next it’s each I better point kind X that. trends. could some of there an making, you And which stage, a elements also same we at of flow are year when increasing and through expectations had what year those say in country, and value norms. can And within of period, when to hopefully, pattern better But go saying, speaking, think broadly that it are from continue I think this years, on earnings I get So things to gotten where to gotten about the was you perspective, terms okay. more going underlying return about to other if have you

being up over blip way kind we a normal, historically terms and year – got very had. revert still years, X back or we have hopefully And work our minor through but the in that’s So, to this. what we of period. more again, – of strong just as, a what not Hopefully, ends things again, a

Greg Peters

can’t On of detail just your And around us reinsurance the it. help myself. presentation, your you I Slide provide program. Got X

excess of XXXX all in $XX million, For year the of for cat the did aggregate million program $XX program, you or…? use your

Joe Lacher

we – For Difficulty] our from above you have hit enough XXXX hit business cat like, are our the XXX,XXX I retention the that property not inside asking in the [Technical events to specifically XXXX. think the level,

Greg Peters

And not did You that? you did that…? exceeded exceed have not

Joe Lacher

$XX any we million. the million, we using didn’t $XX not so – use not We didn’t only get we recoveries the start do

Greg Peters

the Thanks Great. Alright. for Okay. answers.

Operator

to any closing remarks. Thank you, conference the now turn presenters the will Peters. over Mr. I for

Joe Lacher

of which I you We And suggested, cut it. for thank for out. Brian, where to Thanks, appreciate think call. [Technical get for we joining be, [Technical after Difficulty] quarters everybody, work the a lot us will here, out described you, a have your Difficulty] we few hopefully, Well, excited everybody.

Operator

That XXXX you concludes participation. your fourth conference earnings Thank for Kemper’s quarter call.

lines. You disconnect your may now

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