Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen and welcome to Kemper’s First Quarter 2023 Earnings Conference Call. My name is Jason and I will be the coordinator today. [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 conference call, Karen Guerra, Kemper’s Vice President of Investor Relations. Ms. begin. may you Guerra,

Karen Guerra

Executive Good and first and afternoon, quarter Joe President and of and hear operator. Kemper’s President Jim discussion Vice and Hunton, Executive you to Kemper’s of from President Chief President Kemper’s our XXXX Financial Lacher, Auto. and afternoon, you, Chairman; welcome McKinney, Officer; everyone Chief Kemper’s will Officer Matt Thank Kemper results. Vice This Executive

by our a make to opening Q&A first quarter few followed around will We provide results, remarks a session. context

During our be the President our joined P&C Executive call, by of Officer. Vice Investment Kemper’s division; President portion Executive Vice interactive of Chief presenters President John Boschelli, Duane will Sanders, and and the Kemper’s

earnings presentation, supplement XX-Q. markets Form financial the today, our closed earnings our After and issued we release published and

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

discussion of meaning Securities within may the the contain Reform safe Act Our forward-looking Private statements of XXXX. of Litigation provisions the today harbor

its company’s but include, are statements and financial These of to, not the operations conditions. and outlook future limited results

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

For XX-K quarter please well XXXX additional our refer our forward-looking Form information these statements, to risks that may first earnings on release. as as impact

reconciled includes and we all financial to investors. non-GAAP supplement, This measures non-GAAP In financial afternoon’s defined believe financial discussion GAAP. our release, earnings earnings also measures are we meaningful presentation to and

SEC the We with rules. are in required accordance

these documents unless the All period of the corresponding each kemper.com. to comparative of stated. find can be website, otherwise Relations will You on Investor section references our XXXX

to over turn I Joe. the call will now

Joe Lacher

I disappointed and start call quarter’s of the I’m with by sure are our for entire Thank saying you, Thank you is today. well. I as Karen. want you many results. this team to am that joining

into impact reporting others We run digging in rate. episodic nature, are in line drivers. the going time our and like like the time severity near-term believe majority spend changes to We’re weather,

difficult a operate to continue and and in challenging are We environment.

of this We peers that voiced many same the issues our have during experienced season. earnings

our below on but entire as the team temporary Our targets. a setback. focused our business highly expectations, to achieving this see we returning first were quarter The profitability and financial results remains

company shareholder results We are and the pursuing value. to deliver long-term opportunities improve position to aggressively

weather X Pages reserve the prior we driven higher-than-anticipated year Unlike continue. state catastrophe by with changes primarily and new prior believe are and injury, X, impact Starting of business development The prolonged that frequency The coverages. to we These elevated being and industry. a throughout episodic. frequency, elevated are of impacts was severity the and we year will we quarter, driven property insurance largely development felt mix combination financial this The and was experienced adverse results. was recognize by related in uptick frequency environment coverage losses, elevated seasoning. frequency the inflationary short-term and impacted collision damage bodily and higher largely

We’re working relentlessly profitability. will linear. journey not restore be to The

control predict. profit and margin. deliver we’re tightened different we actions and components mitigating to the our this apply can levers reductions, the focused cost ensure take As of impacts, on trajectories, continue pricing we’re underwriting Against can inflation curves be to target difficult environment, we to loss to our see rate

improve our In capabilities addition, uncertainties. and to projection navigate continue tools we cost environmental enhance to to ability

half caused again The setback. trend as update of this us guidance. temporary to changes. These a first quarter see several revealed first We modestly XXXX unanticipated our

we and XXXX further accordingly. financial if targets our a quickly our and shareholders dynamics, in we to achieving negative to prior be reiterating of of will profitability underwriting greater the actions We’re guidance continues and return than see XX%. our to current ROE an half second The in react communicate environment XXXX of difficult,

first to quarter walk the I’ll over turn of Jim our to results. the details now call through additional

Jim McKinney

Thank will with on begin X you, consolidated I results. financial Joe. our Page

For the loss catastrophe development year diluted challenges adjusted $XX facing operating $X.XX $X diluted per consolidated quarter, share. of financial reserve of and per an $X.XX we million million net net ongoing reserve of prior $XX of year industry share impact loss was This a generated included environmental results. prior The losses, of development. the to which continue million and unfavorable Kemper’s P&C

Our concentrated to restoring the energy remain and efforts business on profitability.

claims X. unanticipated a development, Page related extension adverse an Moving in reserve with to payment. quarter’s claim to timelines portion Digging more was into closing significant with reporting this

saw trends. with these reserves. levels. In to time based pattern about coverages. increased reserves evolving within and estimates Consistent increases We on reserve bodily collision addition, and feel injury, good said, property and are change changes we reserving severity quickly our we our reacted damage philosophy, That over

Specialty. X. Page for this notable to quarter not underlying the underlying experienced of into Preferred Specialty frequency fourth is occur severity to quarter. item business results, combined quarter the XXXX as fourth half This between included traditional first and insight P&C To weighted walks first ratio we towards the year our back the enable of One for seasonality heightened and the Turning the quarter greater did benefit of XXXX P&C. quarter and

we that this large more a noted, portion to believe align is traditional patterns. of results April previously episodic. As Preliminary

Turning and to Pages X XX.

update to point. guidance path loss higher This outlined previous incorporate profitability. underwriting we unanticipated our includes to modest Here to Specialty the starting ratio Auto’s a

an profitability reach currently ratio Further, quarter range. business fourth initial produce will combined Last, on and expect we ratio XXX% XXXX. the underlying in an below to result of between towards Based expect expect trending underlying this of XXXX target XXX%. returns the we the We to XXX%. data, midpoint in April combined we are

Page XX. Turning to

transparency rate the to of contracts. as accounting other the reflected life requirement most have we the insurance update by meaningful XXXX standard on to the standard The on new accounting provides the asset meaningful long-duration the impact standard. discount The change The comprehensive quarter, a and is been reserves. XXXX required adopted is matching. recasted liability new income. new During in enhancement

business initiatives. XX, with and to write Pages enable On regulatory the engage initiative, within update on we additional we reciprocal our during auto progress. quarter. strategic our track reciprocal our remain with to approval the stakeholders to process. will milestones continue the to on complete project approval, XX Post track we regulators share an Starting provide third to We

continues provide to launched Bermuda is to million prior benefits in and to dividends Our unlock parent to XXXX life the expected initiative approximately year-end. $XXX in

our Our strategic Insurance, Personal review of Kemper business, is auto home ongoing. Preferred and

Last, additional to additional our LAE $XX details rate have deliver enterprise in and end we in the the $XX estate inception, expect a We prior $XX to our of Since reduction our $XX each commitments. included are to of cost on reduction we second our initiatives achieved the million share quarter. savings. expect track, the million on run real improvement optimization ratio, or approximately This savings. -rate million in million expense and securing of X.X% commitment of completion approximately

XX. Page to Moving

At access well the $X of Our and end availability. liquidity. the have significant we capitalized to quarter, had approximately sources are insurance companies of billion in

We target to needed $XXX debt-to-capital and the of as continue in and capabilities. XX%. XX% to this invest our capital our ratio long-term advancement bringing back by are reducing Further, million core navigate have the to debt previously of appropriately committed we outstanding environment to to disclosed

investment Net XX. to quarter $XXX Moving for income was million. Page the

leading X.X%. over basis XXX to yield pre-tax are XXX year, investment yields up prior the of points a to equivalent New book annualized

to by nearly markets, monitoring maintaining fixed manage philosophy management opportunities sectors high includes or A conditions risks portfolio and accordingly. is quarters better. of income quality liquid portfolio help economic our a portfolio three and Our and Today, rated

institutions. We also assumed or banking don’t have failed exposure to

the to turn P&C I discuss over Specialty call the Matt will to now business.

Matt Hunton

Thank you, afternoon, good Jim, and everyone.

comments, earlier environmental target to actions our with challenges. remain restoring profitability Moving on business Specialty combat long-term to XX Page business, Joe’s the in continue take we incremental aligned centered and severity P&C to to

states. new elevated California ratio within the across On episodic. weather states. catastrophes basis, an came heard We and about all in elevated. this drive have and it state non-catastrophe events expected. impacted frequency than of in weather largest events experienced combined much episodic of rains We uptick by points, our frequency this combination belief we higher the all three underlying into largely was frequency business that and our seasoning. plus activity was our significant To Digging around coverage country. These a these was events our extent, QX, a was lesser mix of driven by believe main In

In terms have the traditionally we discussed new in industry, business of penalty. the seasoning, new business

is the premium ratchet results restoration short-term in higher which with ages. days. up XX mix will it to had continue actions. as of a profit new quarter, This alleviate we own phenomenon data, XX As the days than more this quarter in XXXX, policy end significant XX year. of at at is policy earned of than we the the look an less we life the of pressure, fourth to to our first Throughout our it first Relative age

are rate We we have to loss covering adequately tighten costs. our continue our underwriting will and and take to ensure

until action a achieve better taken to new have We further or business combined we ratio. volumes suppress XX%

Breaking two in to average will points apart approximately XX been for points quarter, since of points Specialty personal rate. a Auto of across components the this rate Through the the weighted third have and basis filed of on book, quarter QX. first auto XX approximately XXXX we earned increase business, our has of XX

actions As of to view forward, the cost we we aligned move trends. file to rate will current continue loss most

Shifting frequency. quarter, increase an we to experienced vehicle, in the in commercial

We items a weather-related Our largely believe comprised analysis are mixture items and indicates of mix. that this is weather-related episodic. the of

mix the through are manage we We changes. this ability items, in pressure effectively rapidly to rate to aggressively of combating environmental our remain trend and In underwriting react confident terms actions. production loss and

the legal As transition meaningful by our the have a to are anticipate positive In long-term short-term it monitoring improved financial side our encouraged the industry, and are quarter will in We note, to second of results. closely we summary, provide we environment an Florida. we and reform the improvement actions effect a effects. believe benefits on

XXXX. We expect the an during to profit of half deliver second underwriting

over to and will now Life businesses. to call turn the cover Preferred the I Joe

Joe Lacher

Thank you, Matt.

losses profit P&C our in favorable actions offset in rate underwriting restoration points, of benefits underlying by other quarter, auto and million. Both contributed our lower XX and Page $XX home X.X Incremental improvement. to ratios. and were catastrophe this business, the frequency had earned-in and combined of actions frequency higher lower this from Preferred their improvement of to sequential Moving seasonality

an quarter. this strategic Jim update mentioned, we review later on our anticipate As

new Life reflective Turning LDTI the to Health Page Life results January segment standard. the on are of & our X, XX. business Effective

Although X to progress sequential claims, returning uptick we last pre-pandemic reported indicative levels, in quarters on mortality over profitability. prepayment average, is saw nearing a towards of the

and it this. overcome leverage We XX. our guidance and revision including is its incremental with control hurdles. It’s Turning for adapt data the that summary, can outcomes. nonlinear expense reductions. with profitability increased disruptions are earning difficult changing you the insurance The rates inputs drive to these I’ll entering base underwriting trending we and year is In identify of is to trends tightened economic first quickly challenging industry modest deal and both inflation. costs We help us half to know filings, The analytics positively, related loss too. impact Page the year largely leave pandemic-induced post The to unanticipated so we and to targeted you, frustrating third to in, adjustments. rate

For long-term couple creating and quarters, shareholders. see the toward we profit continued to expect positive next of value progress for delivering underwriting

can Finally, I’d operator, as questions. With dedication for their support to like to our all navigate now continue this we we thank employees environment. and continued that, take

Operator

from Matt Our JMP. question with is Instructions] first [Operator Carletti

line open. now Your is

Matt Carletti

progress update be on I an good filing the thanks, us rate since quarter. California Joe kind afternoon. in might give last hoping was you and able Alright, the just Jim, of to on

it’s I about outcome, you of be update the probably in can’t by but public lack great. you. seen think change I the been, timing much guess, an say anything expectations, at flagged the would I watchdog. better a too about that Thank of process any or word, know just for we’ve kind all

Joe Lacher

I seen. of and it’s initial you and from pace, review They some Matt, of that believe, Watchdog. bureau, to comment I’d the reasonable through rule XX no the when Right bureau productive department. XX works, particular love We rating would their it’s the would Matt’s just now, days that. which with moving reading we have work XX do can’t house or have on to tell XX imply our They has reasonable about I the been they we working would know – I three-party we May call had compared the and actually completed a a it. month that to There I inside conversations about the – tell our exactly would be is I calls moving, is litigation with think them in navigates are conversation have a department this of scheduled what you days. give that correcting you timeframe. are am tell I through. at to but week their that next the is, a Sure. a able that side Actually, where what how have don’t it’s moved don’t historically the away, but would bureau me, but expectations a to this, conversation but Consumer where again, the for second you and to particularly – to that I material. I want and their filings. away we a timing anticipate and timing, it’s of into,

Matt Carletti

just just you the one give if a just reform I great. touched very little it Florida. but color very more on us in you could, And Okay, Could briefly, there tort helpful. to other, related to That’s regards from quarter the Florida. on I Different issues to Some different it the have relates some took specifically understand. taken as the outset peers in that, companies Kemper? then charges approaches with

So just you state big long-term? or a to kind be of but for why draw how sort you. magnitude, we see order benefit Florida – you much could might how you of Maybe not think you. be. the substantial in then didn’t a I’m And that sand, line is reforms do kind asking just for of the with What of that

Joe Lacher

Yes.

about out. and Is the will the disruption you’re months part question? talking try but with isn’t So piece you and the you’re of to a what the a of I’m of forward, let’s everything fast that I’m view. we of going forward Matt, different sort sort couple there give that’s then assuming, XX, in of a the of bit Jim change, second to saying, ask XX to going questions. normalizes forward little start accounting

Matt Carletti

Yes. exactly. Yes. Yes,

Joe Lacher

Okay.

Jim McKinney

favorable others market as component that’s overarching, I whole. term, if but or will in the of right the think and on for weigh Matt. the Yes, longer-term Florida impact some it’s Obviously, business, our for of to residents for a Floridians,

we through In terms you avoid here methodologies is additional your depends of at of in there reserving To that they on the the confusion, short-term are things. came look think component claims really impact, sorting and way a some I how in, to at come that resolution been has bar that point around there this larger to these sometimes, so very our settle bit might in in or be to right early than things a time, little error same practice but the the to try on queue. our

early error And seen some of are practice, that is away, we’ve reserving on it. potentially a I the with an at. I’m – of being going so about that taken there completely tell immediate, And associated you’re little you but different wider, to bars we transparent bit we’re what take are outcome highlighting you I there nothing not or a would from where just stage because think place had mitigate again, haven’t the a see the put approaches importantly, of challenges to Duane longer-term I’ll some comment the that just or of reserving us, place to of already is a the in Florida don’t be essentially the to this that more others because And in again, we associated to But to practices, claim because had impact going we’ve with think litigation on potentially substantial we business. impact ask date. methodology the at and this to to

Duane Sanders

Duane. the And think and I right said Thanks, on Jim. Yes. is This been aligns has thinking. what is to

put come. that there are the we the meaningful will I and months If into through. have longer-term regulations been change is as it’s employed that way the our obviously the place, really in play On ahead think work to out laws going side, to intended

Florida, creative And it the know, activity, will something we held as time. if we an the see more the it out how in it’s As all extremely environment plays was and does into it past, over activity, it’s different. in litigation

and benefit mitigate said, months watch come will We as watch for and us, to figure continue we are we as remain Jim that and would and and to the claims near-term to optimistic, longer-term come remedy what to be. out – the they

Matt Carletti

Thank the Alright. appreciate you answers, it. much for

Joe Lacher

Matt. Thanks,

Operator

Greg Our next is with James. question Raymond from Peters

line is open. now Your

Greg Peters

that one a parts. But getting business through us that afternoon, changed frequent what from post Great. have the being mix walk in thought skewed of of Good then I and your most frequency, business towards elongated to And the X-month as they your question I’m me versus help of of hearing cetera, awkward is points. or of preannouncement business just Investor not just preannouncement those all related we’ve strikes been observations more Day I point everyone. information development questions final to popped new the in up why this you kind in related color to reference X-year on terms curious patterns. and policies. at carriers appreciate et could one your policies three end or flow. if the because around probably the your book somewhat is the new comments, your of And comments about X the mix I other March, higher lot talked frequency, you and

Jim McKinney

Yes, Greg.

and forth, the kind weigh depending back of to others I’ll evolves start we it’s if and here maybe here, happy – So and need do on to go may how if easiest in question that.

first the differently see trends the frankly, have, terms March than of the anticipated quite of the some had about in that we quarter the the months at or back periods earlier of way thought earlier September of half both fourth base. That the half of – the back and reporting we changed kind for kind continued, second, aggregate could couple and maybe of coming of the had In third of then or of unfortunate we is an saw what or of third in, week begin we than were data I’m not the impact we that coming that both as sure we anticipating. of did – we as didn’t we’ve perspective. saw, that payment was That as from of what a on some claims quarter higher to highlighted, but number it’s XXX% see we with closed well

as incorporated matures, point our kind year And our very the then then we and was that trends all what year do in react obviously that ratio of through. for I our That’s adjustment way processes, base we what’s think thought or and starting loss see to so for our quickly. this the today updated data that rolled including guidance.

weather say this other things we’re potentially skewed confident trend, a seen at. we where feel of Some when new could a a It’s reporting reporting those reacted saw have been patterns for other much traditional that bit. on want or much related at to than to to we I too that speculate payment and patterns that in to we payment say. April that, more little don’t patterns. look We and to reversion trend. We’ve hard

And good we’re so bit position. we through happened of essentially what little that’s unfortunate, again, revised that and led but that. kind a feel And a to us working about of it’s it,

Joe Lacher

a little on guys it, mechanics. bit with and may we’re like some frequency, add insurance I’ll Greg. this talking help And because the

we than had up anticipated what times seeing talk anticipating payment, its a thought making claims of is rings, number I’m will typically in what that Jim again, that will was our out pattern, pattern, with a we the if – elongated we that number have we’re frequency elongated – that, that not about and higher about by numbers. were necessarily but them. how that, And claims you will nature, certain is on payment We many as pointing will talk phone and

you’d thought you a X,XXX that XXX have you to were as a thought claims. about If phone payment, think rang you going XXX times had and

at and having If XXX and having said That be a you a then looked went claim. you’d back would higher XXX are frequency. payment, it about think a

issue. that, because that wouldn’t change doesn’t a change necessarily part pattern you inside of else So, surprise me of It with our why becomes it about payment pattern see that talking is piece. it’s of somebody frequency more a closing

about was business, this. about I piece to I new you asked want and think second be The careful

were a XX-month about or whether policy. You it’s a X-month asking

Let months at that, would business after X was about loss would over it’s first was me a as XX term. Matt back business. or experience look that was have thought new the regardless XX comment industry The up It it a of talking whether new in penalty And then the the a about months with you you, a we that policy we XX-month second. first season initial the the making and typically be when customer is he would that. year of

contract first data how And of comment he term item. It’s us in So tenure the the it’s a or long making. a observed our was not business of we with seasoning is that the frequency policy in worse there than XX is regardless period, to XX-month term. XX the in that loss is or of XX again, days last there initial days, performance of higher

through snake, care And different scratched you a so is a if an what egg underneath that’s and and and of business. there noise will said their new X-month will. whole So if around both itches. it’s Greg, mix them, your first We that old see a stop part when using that in we the are still but old the is and there, it keep about we incident bunch is feeding talk year, XX-month we I incident example and

Greg Peters

further, setback, that the the X-month get that the the give Because you you’re helpful. this like sense? in back out – feel Well, high to guess if there in in in quarter embedded it’s the to from some guidance, your it I been I recovery back business X that still year? level, Has of the guidance, of out year at very makes second a half shift half was holding recovery especially as and relates mix policies it your pushes momentum a year. the to

Jim McKinney

I of a is couple mention. there things, that would Greg, Well,

the component to way is our we’ve and some work data of help provided from saw that that that that pressure That of looking correspondingly you’re see at If through. its some will taken that we for you a base actions of do here. other we the combat assumption rate that,

The that short-term would you normalized through January, create second in a upfront. think that had so to said add financial so business from a we will than March some that and to little basis the even continue example, that results. again, work on. That building that thing, kind extent their little elaborating that of comparison into period ratio on about be pressure first February tailwind month our highlighting a maybe When suppress bit relative to in volumes will in again, here, its tenuring, in way the nature, of business from Joe of to as more new and will, more if infancy you that periods, loss essentially components bit a of policies, previous for new there second you than a of half were

kind frequency that thing of while trend, would we’ve you we’ve there sequential provided severity up, that’s stepped other so both our can inside I highlight where results The is and of we – see have data.

this, part traditional step a did seasonality step you down, will. not as You us see then of to if the up

in if then back of year, you’re throughout QX. the you come moving So kind down up that

not see occur. that our expectations reset You for to did us

the are new quarter So rebaselining we’re first the quarter and as fourth basically normals. if

more items were to a of was data mentioned. But a our previous there. It point to and to try period in we’re positive the from that and us we also the we its how with outcomes is that it And that up so we worked provided that front we that will that that be a we turn through there that highlights obviously unfortunately, you for way way when probably going an as there guidance, XX%, thought that the too, XX%, thoughtfulness, shows the that bit there, additional for on maybe we the rate and that that move to extent we’re out forward. range, little baked other real was has do that that to with that, didn’t navigate still be provided out

Joe Lacher

of it, that and asking suppression Greg, – it clear book. back Matt be you confidence and are I the not how on what’s you The underwriting describing, up. do business been on year growing does was new to part And think the tighter catch the our how of we had the

the that can a to be up We and You didn’t growing our changed in mind count. the see quarter in sudden first dramatically all PIF wake our of and book. decided

PIF, we business. more are but we been have new tightening significantly, underwriting, and in restricting that significantly, are very fact dropping We

been Jim’s have will have that description XX%, that tightening incremental we will that we We the now until and about. end continue at talking so are back

Greg Peters

I question HoldCo of I I the guess bit pivot provide on as I going expected, sheet. color end? of year going maybe the could to on to balance Okay. and last so my balances more guess am than the some what’s the changed cash the borrowings a little you end of quarter versus

Jim McKinney

Yes.

in at ensure our investments would are to other obviously, made to that our running have coverage subsidiaries RBC inside levels than, of much I targeted then continue we that and reference there that. nothing against too So, there they

source subsidiaries. us is holding the our the in what the that made company so have a see you really difference, accounts we into our subsidiaries, that’s and of is And strength as for for what investment serving

further The will at HoldCo. I that will available the thing that other Bermuda increase the initiative again, is – capital would initiative that further and highlight the increase liquidity

good So, some year. levers, as levers and to coming continue those as so continue this throughout will to there we there we navigate have are have guys we well those

Greg Peters

I will some Thanks. questions offline. take Okay.

Joe Lacher

Greg. Thanks

Operator

with Our Meredith UBS. comes question from next Brian

open. now is line Your

Brian Meredith

you. them A here for Good Thanks. couple Yes. of evening.

adverse or do your getting insurance of think versus the on? given business you new that curious, looking I to are the you is First, frequency you pop X, at am there. talked you maybe attributable the growth I How have that out business and weather just about am commercial the of you much Slide trend are up of X.X% highlighted your putting selection that

Jim McKinney

kind answer two of in it So, ways. let me

the put same kind a of of And and The first that of is of was hypothesis, so stuff that come not we that’s direction. confusion, again, this lot perfect quarter’s we step do our two-thirds kind all But form kind one We about weather-related, to there would to bunch But thing we of together sitting elements think kind independent kind that is avoid episodic, this. around each have completely a precision analysis. is internal different put We in unusual component. are outcome all of analysis of same together other think this we got of of I points conclusion, up. that that of other under. weather, and pieces

you element I is second are commercial The asking. inside the think component vehicle that

XX% little again, we XX% in nature, progress it’s some lot oriented we of of third continued bit underwrite PPA two-thirds episodic, kind of of And kind made the a and I kind there. that outcomes and additional going that’s about there then to with to and there. the other is have terms success other into weather, frequency for to in to QX to similar of of associated continuing already those of think components position then mix forward from which a ourselves

Joe Lacher

Jim, it I you. but can, you or maybe I can ask do mean can I

impacting providing I that incremental the we were some of March. Part timing. believe of You on saw that, frequency, really commentary the color weather, that

Jim McKinney

back throughout of rains an impact the to a March that the again, with created Yes. very got well, well inside mean a We especially little California are did has unusual little that noise. prominent rain quarter, the kind were California a kind weather we I we a California, Southern get, to that event as was, in of But period. up, Texas see bit for step so discussing bit in a of bit here, half. get it’s little that definitely inside also

again, from – where we more should got of you nature, inside not for episodic time essentially were those run period some got happen, really, would at. can helping But not weather step well, on, things components up on that those anything inside you you of again, severe that in and things predict regular March continuing types So, that, double a rate. but kind a

exact very a in unusual. probability quickly. or of get it We back-to-back, It’s about type are talking won won things but don’t I but were that, events. you possible XX-year of could that the pretty that gets would XX-year couple in low, those pretty know be

Joe Lacher

adding, of and February. you downward we in And was and saw we January we – see I in what out pattern. having We view described didn’t it. first quarter, largely seasonality what traditional are a a the have March traditional expected are we think trend

traditional We at look and back a in got an April, more have it’s initial view.

So in March, that are we first looking of part quarter. in the information pattern was was at, that the out

Brian Meredith

because Got see curious that or side, do with recognize perhaps it. line you underwriting could rectify? am commercial to the issues happening the growth Joe. take you little were longer I that of some on bit and And any a Did just

Matt Hunton

did we This XXXX, we passenger a were through harden there, market private to light vehicles. moving the is little When rates take hold Matt. started see exactly when of and of the PPA really leakage bit

tighten sedans across QX as that about observed book. small that think We took this way industry. in really light So, started its SUVs, trucks, to up. to the and into the And QX have make action we

of sort that which around we or more there. the type play leakage starting less exposures, don’t gravel. PPA was space really your of long-haul was and was that dirt, in the throughout traditional commercial in that market sand coming So, It harden it to auto

And QX so so we little contributor in capabilities that as bit now elevated said, was toolkit, have a a they cycles, little put more place appropriately. manage we frequency. cohort and Jim the frequency, an to think That of But bit was observation sharpened our commercial highlighted. I team, that a the the on in

Joe Lacher

that to tools the Matt, – timing? in it, sort egg happened the described snake coming through you the how of and as from when what’s And stop

Matt Hunton

in QX, so which two the were tools a QX through. we contributor persist frequency quarter a was modest that The QX, saw in for or work pressure weeks in think we market way will then and to the QX Yes. put its and

Brian Meredith

That’s XX%, to I or on run Great. clarify, at want the XX% make some Jim, year, you one, that quick will next helpful. target. for that rate? that really then point the that XXXX, at the one just ROE last be just Is expect And just during year you full to for guidance

Jim McKinney

are for would XXXX, update that a would if Again, anticipating ROE. were full it. that be year, we change, would we to greater than the that we something No, for XX% at – we

takes off nothing stage seen at this have us that target. that of We

Brian Meredith

Great. Helpful. you so Thank much.

Operator

with Paul Piper from Newsome question Sandler. next Our is

Your line is now open.

Paul Newsome

and are total talk the your level – thinking expectations go? some the us for expectations assuming that helpful the be give revenues anything for assume what Thanks just for call give us you I about better about businesses can of think PIF shrinkage, you good but on color-wise, in afternoon. am I embedded to where perhaps you might in directionally customer just are growth Could guidance?

Jim McKinney

Yes.

on from comments I from will can addition we I anticipating I we growth. shrink So, anything to mean, provided our are say PIF in haven’t are we hear at. – that you where mean

reasonable that that that, have a little – I that think to think specifically glide begin were of be to And this trying getting to think this but to reasonable with of period. certain that I are some maybe they might you probably forecast up cases point I seen if would paths you, be a inside of place to start about path likely, if kind from are PIF. in kind you are the

Paul Newsome

might sense – math that. is including new core interest a give And with bit a just am on book I precision the and to how about book at new yield different then just not of a the higher to maybe like at but the little could looking yield was looking it was on you I fixed talk I us portfolio, the investments, presentation, work more And topic, the Page sure yield alternative maybe little that XX yield completely the looks of investment because hoping income, is but the number rates?

Jim McKinney

the right, that’s are investment good. in the alternatives to the we I consider page. down you up are the top investment historical net we that. from some alternative you, do It tell So, still I Big would perspective, inside space the of include at of clearly, you there seeing that income picture-wise, the what reconciles from mean

between folks in impacts with trailing been market, the areas. those just alternative X months, of from the a about equity kind money where if months, you whole, if XX months, kind we two those making So, the trailing of have about still as are space you items, think think in XX a that are so felt usually

see are early doing the classes through well, those outperformed We and still time. have reasonably very good we in to asset continue returns and inside stages

we a select selective, So, to to feel note does investment are than nothing to good job complement about our there really there, other book. great the make what on choose and where we investments very doing we are we team

to yields, basis. from they the historical of up continue be on new have been going at terms money In where they a

compression we And bit So, the XXX as points basis points, that as XXX doesn’t investment additional basis XXX every points. put where you at forth see XXX quarter basis can’t portfolio off, to relative see yield and rolling basis a with point that where being core, And points, you to have million depending that that as are at, little basis XXX that yields. in higher That you here. stage in see, are to from this we at XXX money investments is to essentially alternatives. basis that’s one continues on range they quarter again, But that of replaced other you points mean continue simple to you build.

Paul Newsome

income point fairly or…? yield go significant important see portfolio is the should that we up, amount up, fixed that underlying some But go

Jim McKinney

continue You will see to that.

that that core and happening again, in from how the perspective continue the you a that investment yield that to portfolio it $XX just a building $XX million to difference million, component. there of, is works if So, see trend alternative again, its the little expect yield. way And what’s into you would bit in

Paul Newsome

for you Thank color. that appreciate that. Always

Joe Lacher

Paul. Thanks

Operator

questions, I the the pass over team will further back closing no are There call management to so for remarks.

Joe Lacher

on call. continuing next attention about the initiatives you everybody all on progress We to for we again. to again, operator. talked Thank look quarter. to you, make to Thanks thank And your to talking forward today’s and you time and

Operator

That conference concludes you call. your the for participation. Thank

disconnect your may You now lines.

Kemper (KMPR) 8 May 232023 Q1 Earnings call transcript