Kemper Corporation

Good afternoon, ladies and gentlemen, and welcome to CAMPR's third quarter 2023 earnings conference call. My name is Lesser, and I will be your coordinator today. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference is being recorded for replay purposes. I would now like to introduce your host for today's conference call, Karen Guerra, KEMPR's Vice President for Investor Relations. Ms. Guerra, you may begin.

Thank you, Operator. Good afternoon, everyone, and welcome to KEMPR's discussion of our third quarter 2023 results. This afternoon, you'll hear from Joe Locker, KEMPR's President, Chief Executive Officer, and Chairman. Brad Camden, KEMPR's Senior Vice President and Interim Chief Financial Officer. and Matt Hunton, Kemper's Executive Vice President and President of Kemper Auto. We'll make a few opening remarks to provide context around our third quarter results, followed by a Q&A session. During the interactive portion of our call, our presenters will be joined by Duane Sanders, Kemper's Executive Vice President and President of the P&C Division, John Buscelli, Kemper's Executive Vice President and Chief Investment Officer, and Chris Flint, Kemper's Executive Vice President and President of Kemper Life. After the markets closed today, we issued our earnings release and published our earnings presentation financial supplement in Form 10-Q. You can find these documents in the investor section of our website, Kemper.com. Our discussion today may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include but are not limited to the company's outlook and its future results of operations and financial conditions. Our actual future results and financial condition may differ materially from these statements. For information on additional risks that may impact these forward-looking statements, please refer to our 2022 Form 10-K and our third quarter earnings release. This afternoon's discussion also includes non-GAAP financial measures we believe are meaningful to investors. In our financial supplement earnings presentation and earnings release, we've defined and reconciled all non-GAAP financial measures to GAAP where required in accordance with the SEC rules. You can find each of these documents in the investor section of our website, Kemper.com. All comparative references will be to the corresponding 2022 period unless otherwise stated. I will now turn the call over to Joe.

Thank you, Karen. Good afternoon and thank you everybody for joining us today. We're going to communicate several key points today, perhaps best grouped into four buckets. First is the favorable trend in our underlying results. Our underlying combined ratio improved sequentially. and was inside the range of our prior guidance. Second is what's happening outside the current year underlying results, including additional prior year reserve development. Third is the strong progress made on our strategic initiatives, which together reduce our long-term risk, improve our capital and liquidity, and enhance our ability to generate stable long-term distributable cash flow and earnings. And lastly, we are reaffirming our full year 2024 guidance. Let's move to page four. Looking at results, we're pleased with the 1.5-point sequential improvement in the specialty P&C underlying combined ratio as the benefits from our profit improvement actions take further hold. We have confidence in further improvements as we look forward. As expected, the 30-point California personal auto rate increase effective in August had only a marginal earned impact in the third quarter. its earned impact will meaningfully increase in each of the next two quarters. This incremental earned rate, along with the additional benefits from all our other profit improvement actions, provides a significant tailwind for loss ratio improvement in the fourth quarter and more so for full year 2024. Moving to our second big topic, what's happening outside of the current year's underlying results. Prior year reserve development was largely driven by recent trends in Florida Personal Injury Protection, or PIF, which has been an industry issue in recent quarters, and to a lesser extent, the extension of the bodily injury and property damage development patterns from 2022. We'll discuss the drivers further when we get to slide six. Reflecting on our third major topic, we continue to make strong progress on our strategic initiatives. All our programs are on track to be completed on time and produce or exceed their targeted financial and operational benefits. Let me comment on a few highlights. We're very pleased that our reciprocal exchange has received all necessary approvals and was actively writing business during the quarter, albeit at expectedly modest premium levels. The exit from the preferred home and auto business is moving as expected. This action will enhance our return on capital and support profitable growth in our core businesses. We expect to realize significant additional liquidity benefits in the fourth quarter from the Bermuda optimization And finally, we're meeting or exceeding the expected expense savings with each of our cost structure initiatives. Advancing these initiatives further enhances Kemper's operating capabilities and financial profile. We remain highly focused on returning the business to profitability and maximizing long-term shareholder value. This leads me to our last topic. We are reaffirming our 2024 financial guidance. We continue to expect a 2024 ROE equal to or greater than 10%. I've spoken frequently about this environment being the most dynamic and volatile the personal auto insurance industry has ever seen. I still believe that. While we believe this will persist for at least a year or two, we continue to be optimistic about what's ahead for Kemper. And now I'll turn the call over to Brad.