Kemper Corp. (KMPR) reported fourth-quarter 2014 net operating earnings per share of $1.02, which outpaced the Zacks Consensus Estimate of 74 cents by 37.8% and also improved year over year by 23%. Consequently, shares were up 1.4% post the earnings announcement on Feb 6.
Excluding extraordinary items, reported net income was $65.4 million or $1.24 a share, up from $55.2 million or 99 cents a share.
The upside was primarily driven by higher net investment income and improved underlying loss results in the Property & Casualty Insurance segment.
Total revenue fell 4.5% year over year to $559.7 million. However, results surpassed the Zacks Consensus Estimate of $535 million by 4.6%.
Total earned premiums decreased 8.9% to $451.5 million, while net investment income increased 21% to $93.1 million and net realized investment gains rose over 0.9% to $21.0 million.
Total expenses declined 7.5% year over year to $466.6 million, reflecting lower loss and loss adjusted expenses along with lower insurance expenses as well as interest costs. Hence, underlying combined ratio improved to 93.7% from 94.5% in the year-ago quarter.
Full-Year 2014 Highlights
For full year, Kemper recorded net operating earnings per share of $1.79 which missed the Zacks Consensus Estimate of $2.65 by 32.4% and also declined 9.5% year over year.
Total revenue decreased 9.5% year over year to $2.2 billion, driven by lower premiums, lower net investment income, lower net realized gains on sales of investments and higher impairment losses. However, results were in line with the Zacks Consensus Estimate.
Financial Update
At the end of 2014, Kemper held an investment portfolio worth $6.4 billion, which improved from $6.1 billion at 2013-end. Moreover, cash increased by 14.4% to $76.1 million and total assets improved by 2.3% to $7.8 billion from 2013-end. Even shareholders’ equity improved by 1.9% to $2.09 billion from 2013.
Reported book value per share of $39.88 in 2014 also improved 8% from that of 2013. However, excluding net unrealized gains on fixed maturities, book value per share of $34.50 in 2014 remained flat with the year-ago quarter.
Share Repurchase and Dividend Update
During the reported quarter, Kemper repurchased more than 0.25 million shares worth $9 million. In 2014, the company bought back more than of 3.2 million shares worth $115.5 million.
Moreover, Kemper paid dividends worth $12.6 million and $51.8 million to shareholders in the fourth quarter and full year respectively.
Business Update
In Dec 2014, the company declared that it has entered a deal to acquire California based – Alliance United Group. The transaction is expected to close in the first half of 2015 and will be accretive to earnings in the same year.
Kemper currently holds Zacks Rank #2 (Buy).
Performance of Other Insurers
RLI Corp. (RLI) reported fourth-quarter 2014 operating earnings of 71 cents per share, outpacing the Zacks Consensus Estimate by 18.3%. However, operating earnings declined marginally by 1.4% from the year-ago quarter.
The Travelers Companies Inc. (TRV) posted operating earnings of $3.07 per share in the fourth quarter of 2014, outperforming the Zacks Consensus Estimate by 21%. Earnings improved 14.6% year over year.
Progressive Corp.’s (PGR) earnings per share for fourth-quarter 2014 came in at 60 cents, 40% above the Zacks Consensus Estimate and up about 43% year over year.
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