Kemper (NYSE:KMPR) executives struck a candid tone on the company’s fourth-quarter 2025 earnings call, with interim CEO Tom Evans opening the discussion by saying results “did not meet expectations.” Management attributed the quarter’s pressure primarily to elevated bodily injury (BI) severity in California and statutory refunds in Florida, while emphasizing that its life insurance segment continued to provide stable earnings and cash flow.
Quarterly results and key drivers
Chief Financial Officer Brad Camden said Kemper reported a net loss of $8 million, or $0.13 per share, and adjusted consolidated net operating income of $14.6 million, or $0.25 per share. Return on equity was negative at 1.2%, and book value per share grew 4.6% year over year. Camden also highlighted trailing 12-month operating cash flow of $585 million.
Camden said policies in force and written premium fell 7.3% and 9.3% year over year, respectively. He attributed the decline to typical fourth-quarter seasonality and “non-rate actions to moderate new business writings in certain markets.”
Auto market pressures: California severity and Florida refunds
Evans and Kemper Auto President Matt Hunton framed California as the largest challenge. Evans pointed to structural changes in that market, including the state’s increase in minimum liability limits last year—the first increase since 1967—where bodily injury limits doubled and property damage limits tripled. He said that, combined with social inflation and legal system abuse, made loss cost predictability more difficult.
Hunton said the BI severity trend has been “particularly pronounced in California,” and that minimum limit changes are “driving a structural change in BI costs.” In response, Kemper has taken non-rate underwriting actions that have slowed new business in the state while it works through rate filings with regulators.
During Q&A, Hunton provided a profitability snapshot across key states. He said California’s combined ratio was “about a 105,” while Florida and Texas were in Kemper’s target range, around 95 to 97. He added that personal auto profitability issues are “driven predominantly by California,” with other states in “pretty healthy standing.”
In Florida, management said 2023 tort reforms reduced loss costs and increased market competition. Evans said improved loss cost experience contributed to a $35 million charge in the quarter for refunds to personal auto customers under Florida’s statutory profit limit rules—an action he noted other carriers are also undertaking. On the combined ratio, Camden said the refunds added 3.8 points to the specialty auto underlying combined ratio and were recorded as a reduction to earned premium.
Hunton said Kemper has a strong-performing book in Florida and is making targeted rate adjustments to support growth. He also explained why the company was not more aggressive in lowering rates earlier to potentially reduce the refund impact, citing a desire to ensure tort reform benefits were durable and concern that overly sharp rate reductions could bring in uneconomical business.
Actions to improve results: pricing, claims, and diversification
Management repeatedly emphasized initiatives aimed at restoring profitability in specialty auto, reducing volatility through diversification, and improving operating efficiency. Camden said Kemper recorded a $15.5 million charge for restructuring, integration, and other costs. He said the restructuring initiative announced last quarter increased cumulative annualized run-rate savings to approximately $33 million, up $3 million from the prior quarter, and that additional savings are expected over time. Camden added that the charge also included a valuation adjustment for a tax credit equity investment reflecting an updated fair market value.
On the claims side, Hunton said Kemper’s recent focus has shifted from material damage management toward third-party liability management. He said the company is using advanced analytics and AI-enabled workflows to route claims to appropriate resources and drive resolution, with the goal of reducing excess attorney involvement and mitigating legal system abuse. Brad Camden added that represented claims can cost “four or five times” more than unrepresented claims, underscoring why attorney attachment is a focus.
Hunton also said Kemper is working toward a more geographically balanced personal auto book, with a long-term aim of having more than 50% of customers outside California. He said California’s share increased in recent years, driven by the post-COVID hard market in that state, and that diversification would help manage state-specific dynamics and reduce underwriting income volatility.
New personal auto product and growth outside California
Kemper discussed a new personal auto product intended for non-California states, featuring modernized contracts, more sophisticated pricing, and a streamlined agent quoting experience. Hunton said the product is designed to improve rate-to-risk matching and competitiveness.
Management has been piloting the product in Arizona and Oregon since the second quarter of 2025. Hunton said early production and segmentation results are meeting expectations and that improved segmentation has made the company “upwards of 30 points more competitive” in those markets.
Hunton said Kemper is in advanced discussions with regulators in Florida and Texas to bring the product live “within the next few quarters.” In Q&A, management suggested California policies in force are expected to continue declining near term, while the company anticipates growth in Florida and Texas, supported by pricing moves and the planned product rollout.
Commercial auto, life insurance, and balance sheet updates
Hunton said commercial auto margins remain strong, with an underlying combined ratio of about 90% and “double-digit” policy growth. He said the company avoids certain “nuclear verdict” segments and is opportunistically increasing rates where justified, particularly to address liability cost increases.
Camden said Kemper strengthened loss reserves in specialty auto, primarily in commercial auto, reflecting updated loss experience related to BI severity and defense costs, mainly from accident years 2023 and prior. In Q&A, Hunton said adverse development has been driven by large losses from 2023 and earlier, while development in accident years 2024 and 2025 looked favorable following changes to reserving practices for large losses in mid-2023.
In life insurance, President Chris Flint said the segment delivered adjusted net operating income of $20 million for the quarter, with stable earned premiums and in-force face value of approximately $19.6 billion. Flint said favorable policy economics continued, with a modest increase in average face value per policy and a 6% increase in average premium per policy issued. He added that Kemper launched an updated product portfolio and expanded distribution of its liability offering.
On capital and liquidity, Camden said Kemper ended the quarter with over $1 billion of available liquidity, and subsidiaries remained well capitalized. Over the past year, he said operating cash flow supported the retirement of $450 million in debt and repurchase of approximately $300 million of common stock, reducing the debt-to-capital ratio to 24.6%, modestly above the company’s long-term target of 22%.
Camden also reviewed the January 1, 2026 reinsurance renewal, describing a one-year catastrophe excess-of-loss program providing 95% coverage for losses in excess of $50 million up to $160 million, with a total limit $15 million lower than last year due to reduced insured value following a wind-down of a preferred business.
Evans closed by reiterating management’s focus on executing steps to improve specialty auto performance and create shareholder value, and noted that the board’s CEO search is underway with a pipeline of candidates supported by an independent search firm.
About Kemper (NYSE:KMPR)
Kemper Corporation (NYSE:KMPR) is a diversified insurance holding company headquartered in Chicago, Illinois. Formed through the rebranding of Unitrin in 2010, Kemper has established a nationwide presence by offering a broad array of property and casualty insurance products. The company distributes its products through independent agents, brokers and direct-to-consumer channels, serving both individual policyholders and commercial clients.
The personal insurance segment provides coverage for automobiles, homeowners, renters and umbrella lines, while the commercial business focuses on liability, workers’ compensation and specialty property solutions tailored to small and mid-sized enterprises.
