Kemper Corporation reported a net loss of $8 million, or $0.13 per share, for the fourth quarter of 2025, badly missing analyst expectations as the Chicago-based insurer grapples with elevated claim severity and a leadership transition.
The results marked an earnings surprise of -70.67% as per industry analysts, with adjusted earnings of $0.25 per share falling well short of the $0.90 consensus estimate. Revenue of $1.13 billion also missed the $1.19 billion forecast. The stock fell 4.8% to $36.65 following the announcement.
In the year-ago quarter, Kemper posted net income of $97.4 million, or $1.51 per share.
"Our results this quarter did not meet expectations," interim CEO Tom Evans (pictured above) acknowledged on the earnings call.
CFO Bradley Camden noted that the underlying combined ratio increased 5.4 points sequentially to 105%, citing elevated bodily injury severity in California and statutory refunds in Florida.
Total revenues declined $55.4 million to $1.13 billion, dragged down by a $35 million Florida Statutory Profit Limit Refund.
Under Florida Statute 627.066, auto insurers must return excess profits to policyholders when underwriting gains over three consecutive years exceed anticipated profits plus 5% of earned premiums. The state's 2023 tort-reform laws reduced litigation expenses and improved loss ratios across the industry, pushing some carriers above the statutory threshold.
Florida Insurance Commissioner Michael Yaworsky has indicated other major carriers may soon face similar refund requirements.
The Specialty Property & Casualty Insurance segment recorded adjusted net operating income of just $2.6 million, down from $101.2 million a year earlier. The specialty personal automobile underlying combined ratio rose to 110%, compared with 91.4% in Q4 2024.
The Life Insurance segment reported adjusted net operating income of $20.1 million, down from $23.5 million, due to unfavorable mortality experience.
The results came amid a leadership transition following the October 2025 departure of president and CEO Joseph P. Lacher Jr. after nearly a decade. The board appointed C. Thomas Evans Jr., previously executive vice president and general counsel, as interim CEO.
Evans said Kemper is "focused on taking deliberate actions" to address performance issues, including strengthening execution across pricing, claims, and expenses while diversifying geographically.
The company recorded $15.5 million in restructuring charges, with cumulative annualized run-rate savings reaching approximately $33 million. Management has also shifted focus toward third-party liability management, deploying AI-enabled workflows to reduce attorney involvement and legal costs.
Kemper is piloting a new personal auto product in Arizona and Oregon, with early results showing improved segmentation making the company "upwards of 30 points more competitive." Management indicated advanced discussions with regulators in Florida and Texas to launch the product within the next few quarters.
Book value per share increased 5% year over year to $45.71, while the company ended 2025 with more than $1 billion in parent liquidity.
