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Investments | 9 Months Ended
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Sep. 30, 2013
Investments Disclosures [Abstract] |
Investments | Note 2 - Investments The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at September 30, 2013 were:
|  | Amortized Cost |  | Gross Unrealized |  | Fair Value
(Dollars in Millions) |  | Gains |  | Losses |
U.S. Government and Government Agencies and Authorities |  | $ | 357.2 |  |  | $ | 28.4 |  |  | $ | (9.3 | ) |  | $ | 376.3 |
States and Political Subdivisions |  | 1,334.9 |  |  | 66.9 |  |  | (17.2 | ) |  | 1,384.6 |
Corporate Securities: |  |  |  |  |  |  |  |
Bonds and Notes |  | 2,643.6 |  |  | 223.6 |  |  | (41.7 | ) |  | 2,825.5 |
Redeemable Preferred Stocks |  | 7.1 |  |  | 2.1 |  |  | — |  |  | 9.2 |
Mortgage and Asset-backed |  | 48.6 |  |  | 1.4 |  |  | (0.6 | ) |  | 49.4 |
Investments in Fixed Maturities |  | $ | 4,391.4 |  |  | $ | 322.4 |  |  | $ | (68.8 | ) |  | $ | 4,645.0 |
Included in the fair value of Mortgage and Asset-backed investments at September 30, 2013 are $41.3 million of collateralized loan obligations, $6.7 million of collateralized debt obligations, $1.1 million of non-governmental residential mortgage-backed securities and $0.3 million of other asset-backed securities. The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2012 were:
|  | Amortized Cost |  | Gross Unrealized |  | Fair Value
(Dollars in Millions) |  | Gains |  | Losses |
U.S. Government and Government Agencies and Authorities |  | $ | 384.0 |  |  | $ | 45.1 |  |  | $ | (0.2 | ) |  | $ | 428.9 |
States and Political Subdivisions |  | 1,251.0 |  |  | 150.5 |  |  | (0.1 | ) |  | 1,401.4 |
Corporate Securities: |  |  |  |  |  |  |  |
Bonds and Notes |  | 2,615.5 |  |  | 385.4 |  |  | (7.5 | ) |  | 2,993.4 |
Redeemable Preferred Stocks |  | 30.1 |  |  | 2.5 |  |  | — |  |  | 32.6 |
Mortgage and Asset-backed |  | 3.2 |  |  | 1.0 |  |  | (0.3 | ) |  | 3.9 |
Investments in Fixed Maturities |  | $ | 4,283.8 |  |  | $ | 584.5 |  |  | $ | (8.1 | ) |  | $ | 4,860.2 |
Included in the fair value of Mortgage and Asset-backed investments at December 31, 2012 are $2.3 million of collateralized debt obligations, $1.3 million of non-governmental residential mortgage-backed securities and $0.3 million of other asset-backed securities. The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at September 30, 2013 by contractual maturity were:
(Dollars in Millions) |  | Amortized Cost |  | Fair Value
Due in One Year or Less |  | $ | 104.6 |  |  | $ | 108.7 |
Due after One Year to Five Years |  | 674.8 |  |  | 713.7 |
Due after Five Years to Ten Years |  | 1,320.4 |  |  | 1,352.3 |
Due after Ten Years |  | 2,075.5 |  |  | 2,243.3 |
Asset-backed Securities Not Due at a Single Maturity Date |  | 216.1 |  |  | 227.0 |
Investments in Fixed Maturities |  | $ | 4,391.4 |  |  | $ | 4,645.0 |
The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments in Asset-backed Securities Not Due at a Single Maturity Date at September 30, 2013 consisted of securities issued by the Government National Mortgage Association with a fair value of $165.1 million, securities issued by the Federal National Mortgage Association with a fair value of $12.1 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $0.4 million and securities of other non-governmental issuers with a fair value of $49.4 million. Note 2 - Investments (continued) There were no unsettled sales of Investments in Fixed Maturities at either September 30, 2013 or December 31, 2012. There were no unsettled purchases of Investments in Fixed Maturities at September 30, 2013. Accrued Expenses and Other Liabilities at December 31, 2012 includes a payable of $1.5 million for purchases of Investments in Fixed Maturities that settled in January 2013. Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at September 30, 2013 were:
|  |  |  | Gross Unrealized |  |
(Dollars in Millions) |  | Cost |  | Gains |  | Losses |  | Fair Value
Preferred Stocks: |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | $ | 85.4 |  |  | $ | 2.8 |  |  | $ | (2.4 | ) |  | $ | 85.8 |
Other Industries |  | 13.4 |  |  | 4.6 |  |  | — |  |  | 18.0 |
Common Stocks: |  |  |  |  |  |  |  |
Manufacturing |  | 68.1 |  |  | 29.2 |  |  | (0.2 | ) |  | 97.1 |
Other Industries |  | 60.3 |  |  | 17.1 |  |  | (0.9 | ) |  | 76.5 |
Other Equity Interests: |  |  |  |  |  |  |  |
Exchange Traded Funds |  | 137.1 |  |  | 0.8 |  |  | (1.9 | ) |  | 136.0 |
Limited Liability Companies and Limited Partnerships |  | 137.4 |  |  | 19.9 |  |  | (3.3 | ) |  | 154.0 |
Investments in Equity Securities |  | $ | 501.7 |  |  | $ | 74.4 |  |  | $ | (8.7 | ) |  | $ | 567.4 |
Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2012 were:
|  |  |  | Gross Unrealized |  |
(Dollars in Millions) |  | Cost |  | Gains |  | Losses |  | Fair Value
Preferred Stocks: |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | $ | 75.4 |  |  | $ | 3.9 |  |  | $ | (0.1 | ) |  | $ | 79.2 |
Other Industries |  | 18.4 |  |  | 3.8 |  |  | (0.9 | ) |  | 21.3 |
Common Stocks: |  |  |  |  |  |  |  |
Manufacturing |  | 67.0 |  |  | 20.9 |  |  | (0.4 | ) |  | 87.5 |
Other Industries |  | 59.1 |  |  | 8.1 |  |  | (0.5 | ) |  | 66.7 |
Other Equity Interests: |  |  |  |  |  |  |  |
Exchange Traded Funds |  | 119.6 |  |  | 6.3 |  |  | — |  |  | 125.9 |
Limited Liability Companies and Limited Partnerships |  | 123.2 |  |  | 19.5 |  |  | (1.4 | ) |  | 141.3 |
Investments in Equity Securities |  | $ | 462.7 |  |  | $ | 62.5 |  |  | $ | (3.3 | ) |  | $ | 521.9 |
Note 2 - Investments (continued) An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at September 30, 2013 is presented below:
|  | Less Than 12 Months |  | 12 Months or Longer |  | Total
(Dollars in Millions) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed Maturities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and Government Agencies and Authorities |  | $ | 89.4 |  |  | $ | (8.7 | ) |  | $ | 4.6 |  |  | $ | (0.6 | ) |  | $ | 94.0 |  |  | $ | (9.3 | )
States and Political Subdivisions |  | 217.0 |  |  | (17.2 | ) |  | 0.3 |  |  | — |  |  | 217.3 |  |  | (17.2 | )
Corporate Securities: |  |  |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 704.4 |  |  | (37.0 | ) |  | 63.0 |  |  | (4.7 | ) |  | 767.4 |  |  | (41.7 | )
Mortgage and Asset-backed |  | 32.9 |  |  | (0.6 | ) |  | 1.6 |  |  | — |  |  | 34.5 |  |  | (0.6 | )
Total Fixed Maturities |  | 1,043.7 |  |  | (63.5 | ) |  | 69.5 |  |  | (5.3 | ) |  | 1,113.2 |  |  | (68.8 | )
Equity Securities: |  |  |  |  |  |  |  |  |  |  |  |
Preferred Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | 22.7 |  |  | (2.3 | ) |  | 2.4 |  |  | (0.1 | ) |  | 25.1 |  |  | (2.4 | )
Other Industries |  | — |  |  | — |  |  | 0.7 |  |  | — |  |  | 0.7 |  |  | — |
Common Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Manufacturing |  | 0.4 |  |  | (0.2 | ) |  | 0.2 |  |  | — |  |  | 0.6 |  |  | (0.2 | )
Other Industries |  | 11.7 |  |  | (0.8 | ) |  | 0.5 |  |  | (0.1 | ) |  | 12.2 |  |  | (0.9 | )
Other Equity Interests: |  |  |  |  |  |  |  |  |  |  |  |
Exchange Traded Funds |  | 106.8 |  |  | (1.9 | ) |  | — |  |  | — |  |  | 106.8 |  |  | (1.9 | )
Limited Liability Companies and Limited Partnerships |  | 59.5 |  |  | (2.4 | ) |  | 5.7 |  |  | (0.9 | ) |  | 65.2 |  |  | (3.3 | )
Total Equity Securities |  | 201.1 |  |  | (7.6 | ) |  | 9.5 |  |  | (1.1 | ) |  | 210.6 |  |  | (8.7 | )
Total |  | $ | 1,244.8 |  |  | $ | (71.1 | ) |  | $ | 79.0 |  |  | $ | (6.4 | ) |  | $ | 1,323.8 |  |  | $ | (77.5 | )
The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. The portions of the declines in the fair values of investments that are determined to be other than temporary are reported as losses in the Condensed Consolidated Statements of Income in the periods when such determinations are made. Unrealized losses on fixed maturities, which the Company has determined to be temporary at September 30, 2013, were $68.8 million, of which $5.3 million is related to fixed maturities that were in an unrealized loss position for 12 months or longer. Included in the preceding table under the heading “Less Than 12 Months” are unrealized losses of $0.5 million at September 30, 2013 related to securities for which the Company has recognized credit losses in earnings. Included in the preceding table under the heading “12 Months or Longer” are unrealized losses of $0.5 million related to securities for which the Company has recognized credit losses in earnings. Included in the preceding table under the heading “12 Months or Longer” are unrealized losses of $0.1 million at September 30, 2013 related to securities for which the Company has previously recognized foreign currency losses in earnings. Investment-grade fixed maturity investments comprised $63.1 million and below-investment-grade fixed maturity investments comprised $5.7 million of the unrealized losses on investments in fixed maturities at September 30, 2013. Unrealized losses for below-investment-grade fixed maturities included unrealized losses totaling $0.1 million for one issuer that the Company previously recognized foreign currency impairment losses in earnings. For the other remaining below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was less than 5% of the amortized cost basis of the investment. At September 30, 2013, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at September 30, 2013 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date. Note 2 - Investments (continued) For equity securities, the Company considers various factors when determining whether a decline in the fair value is other than temporary, including, but not limited to:
• | The financial condition and prospects of the issuer;
• | The length of time and magnitude of the unrealized loss;
• | The volatility of the investment;
• | Analyst recommendations and near term price targets;
• | Opinions of the Company’s external investment managers;
• | Market liquidity;
• | Debt-like characteristics of perpetual preferred stocks and issuer ratings; and
• | The Company’s intentions to sell or ability to hold the investments until recovery.
The Company concluded that the unrealized losses on its investments in preferred and common stocks at September 30, 2013 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability companies and limited partnerships that primarily invest in distressed debt, mezzanine debt and secondary transactions. By the nature of their underlying investments, the Company believes that its investments in the limited liability companies and limited partnerships exhibit debt-like characteristics which, among other factors, the Company also considers when evaluating these investments for impairment. Based on evaluations of the factors in the preceding paragraph, the Company concluded that the declines in the fair values of the Company’s investments in equity securities were temporary at September 30, 2013. Note 2 - Investments (continued) An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2012 is presented below:
|  | Less Than 12 Months |  | 12 Months or Longer |  | Total
(Dollars in Millions) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed Maturities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and Government Agencies and Authorities |  | $ | 40.8 |  |  | $ | (0.2 | ) |  | $ | — |  |  | $ | — |  |  | $ | 40.8 |  |  | $ | (0.2 | )
States and Political Subdivisions |  | 6.3 |  |  | (0.1 | ) |  | 0.3 |  |  | — |  |  | 6.6 |  |  | (0.1 | )
Corporate Securities: |  |  |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 268.5 |  |  | (5.2 | ) |  | 38.1 |  |  | (2.3 | ) |  | 306.6 |  |  | (7.5 | )
Redeemable Preferred Stocks |  | — |  |  | — |  |  | 0.4 |  |  | — |  |  | 0.4 |  |  | — |
Mortgage and Asset-backed |  | — |  |  | — |  |  | 1.7 |  |  | (0.3 | ) |  | 1.7 |  |  | (0.3 | )
Total Fixed Maturities |  | 315.6 |  |  | (5.5 | ) |  | 40.5 |  |  | (2.6 | ) |  | 356.1 |  |  | (8.1 | )
Equity Securities: |  |  |  |  |  |  |  |  |  |  |  |
Preferred Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | — |  |  | — |  |  | 2.4 |  |  | (0.1 | ) |  | 2.4 |  |  | (0.1 | )
Other Industries |  | 2.3 |  |  | (0.8 | ) |  | 3.7 |  |  | (0.1 | ) |  | 6.0 |  |  | (0.9 | )
Common Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Manufacturing |  | 6.3 |  |  | (0.4 | ) |  | — |  |  | — |  |  | 6.3 |  |  | (0.4 | )
Other Industries |  | 14.2 |  |  | (0.4 | ) |  | 1.3 |  |  | (0.1 | ) |  | 15.5 |  |  | (0.5 | )
Other Equity Interests: |  |  |  |  |  |  |  |  |  |  |  |
Limited Liability Companies and Limited Partnerships |  | 5.5 |  |  | (0.5 | ) |  | 6.7 |  |  | (0.9 | ) |  | 12.2 |  |  | (1.4 | )
Total Equity Securities |  | 28.3 |  |  | (2.1 | ) |  | 14.1 |  |  | (1.2 | ) |  | 42.4 |  |  | (3.3 | )
Total |  | $ | 343.9 |  |  | $ | (7.6 | ) |  | $ | 54.6 |  |  | $ | (3.8 | ) |  | $ | 398.5 |  |  | $ | (11.4 | )
Unrealized losses on fixed maturities, which the Company has determined to be temporary at December 31, 2012, were $8.1 million, of which $2.6 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. Included in the preceding table under the heading “Less Than 12 Months” were unrealized losses of $0.3 million at December 31, 2012 related to securities for which the Company has recognized credit losses in earnings. There were no unrealized losses at December 31, 2012 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “12 Months or Longer.” Included in the preceding table under the heading “12 Months or Longer” are unrealized losses of $0.1 million at December 31, 2012 related to securities for which the Company has previously recognized foreign currency losses in earnings. Investment-grade fixed maturity investments comprised $3.8 million and below-investment-grade fixed maturity investments comprised $4.3 million of the unrealized losses on investments in fixed maturities at December 31, 2012. Unrealized losses for below-investment-grade fixed maturities included unrealized losses totaling $0.1 million for one issuer that the Company previously recognized foreign currency impairment losses in earnings. For the other remaining below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was less than 3% of the amortized cost basis of the investment. At December 31, 2012, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2012 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date. Note 2 - Investments (continued) The Company concluded that the unrealized losses on its investments in preferred and common stocks at December 31, 2012 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability companies and limited partnerships that primarily invest in distressed debt, mezzanine debt and secondary transactions. By the nature of their underlying investments, the Company believes that its investments in limited liability companies and limited partnerships also exhibit debt-like characteristics which, among other factors, the Company also considers when evaluating these investments for impairment. Based on evaluations of the factors in the preceding paragraph, the Company concluded that the declines in the fair values of the Company’s investments in equity securities were temporary at December 31, 2012. The following table sets forth the pre-tax amount of other-than-temporary-impairment (“OTTI”) credit losses, recognized in Retained Earnings for Investments in Fixed Maturities held by the Company as of the dates indicated, for which a portion of the OTTI loss has been recognized in Accumulated Other Comprehensive Income, and the corresponding changes in such amounts.
|  | Nine Months Ended |  | Three Months Ended
(Dollars in Millions) |  | Sep 30, 2013 |  | Sep 30, 2012 |  | Sep 30, 2013 |  | Sep 30, 2012
Balance at Beginning of Period |  | $ | 4.6 |  |  | $ | 3.9 |  |  | $ | 4.4 |  |  | $ | 3.6 |
Additions for Previously Unrecognized OTTI Credit Losses |  | 1.8 |  |  | — |  |  | 0.8 |  |  | — |
Increases to Previously Recognized OTTI Credit Losses |  | 1.3 |  |  | — |  |  | 1.3 |  |  | — |
Reductions to Previously Recognized OTTI Credit Losses |  | — |  |  | (0.1 | ) |  | — |  |  | — |
Reductions for Change in Impairment Status: |  |  |  |  |  |  |  |
From Status of Credit Loss to Status of Intent-to-sell or Required-to-sell |  | (3.2 | ) |  | — |  |  | (2.1 | ) |  | — |
Reductions for Investments Sold During Period |  | (0.1 | ) |  | (0.2 | ) |  | — |  |  | — |
Balance at End of Period |  | $ | 4.4 |  |  | $ | 3.6 |  |  | $ | 4.4 |  |  | $ | 3.6 |
The carrying values of the Company’s Other Investments at September 30, 2013 and December 31, 2012 were:
(Dollars in Millions) |  | Sep 30, 2013 |  | Dec 31, 2012
Loans to Policyholders at Unpaid Principal |  | $ | 272.8 |  |  | $ | 266.3 |
Real Estate at Depreciated Cost |  | 168.1 |  |  | 226.2 |
Trading Securities at Fair Value |  | 4.8 |  |  | 4.5 |
Other |  | 0.5 |  |  | 0.5 |
Total |  | $ | 446.2 |  |  | $ | 497.5 |
In the third quarter of 2013, the Company sold the 41-story office building where Kemper’s corporate offices are headquartered for a gain of $43.6 million before income taxes. Proceeds from the sale, net of transaction costs, were $101.5 million.

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- Definition The entire disclosure for investments, including all tables. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 6 -Section 10 -Paragraph (c) -Subparagraph (1) + Details
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