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Contingencies | 9 Months Ended
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Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract] |
Contingencies | Note 12 - Contingencies In the ordinary course of its businesses, the Company is involved in legal proceedings, including lawsuits, regulatory examinations, audits and inquiries. Except with regard to the matters discussed below, based on currently available information, the Company does not believe that it is reasonably possible that any of its pending legal proceedings will have a material effect on the Company’s consolidated financial statements. Over the last several years there have been an array of initiatives that seek, in various ways, to impose new duties on life insurance companies to proactively search for information related to the deaths of their insureds. These initiatives, which can include legislation, unclaimed property audits, market conduct examinations, and related litigation, could have the effect of altering the terms of Kemper’s life insurance subsidiaries’ existing life insurance contracts by imposing requirements that did not exist and were not contemplated at the time those companies entered into such contracts. In the third quarter of 2016, the Company voluntarily began implementing a comprehensive process to compare its life insurance records against one or more death verification databases to determine if any of its insureds may be deceased. Any attempt to estimate the ultimate outcomes of the aforementioned initiatives entails uncertainties including, but not limited to (i) the scope and interpretation of statutes that require proactive use of death verification databases (“DMF”), including the matching criteria and methodologies to be used in comparing policy records against a DMF, (ii) the universe of policies affected, (iii) the results of audits, examinations and other actions by regulators, and (iv) related litigation. Gain Contingency In October 2015, Kemper’s subsidiary, Kemper Corporate Services, Inc. (“KCSI”), filed a demand for arbitration with the American Arbitration Association (“AAA”), claiming that a vendor had breached the terms of a master software license and services agreement and related agreements (collectively, the “Agreements”) by failing, among other things, to timely produce and deliver certain software to KCSI. The vendor denied KCSI’s claims and filed a counterclaim. In April 2017, the parties participated in an evidentiary hearing before a AAA-appointed arbitrator. Subsequently, the parties submitted post-hearing briefs, held closing arguments, and submitted proposed awards to the arbitrator. On October 2, 2017, the arbitrator issued a partial final award (the “Partial Final Award”) in favor of KCSI. Pursuant to the material portions of the Partial Final Award: (i) KCSI’s claim that the vendor had breached the Agreements was granted; (ii) the vendor’s counterclaim and affirmative defenses were denied; (iii) KCSI was awarded direct damages of $84.3 million; and (iv) KCSI is entitled to pre-judgment interest in an amount to be calculated at an annual rate of 9% pursuant to applicable law. Under the Partial Final Award, KCSI is also entitled to submit a petition seeking an award of certain costs and expenses of the arbitration. On October 11, 2017, KCSI submitted to the arbitrator a supplemental petition seeking pre-judgment interest and an award for certain costs and expenses.There is presently no schedule set for issuance of the final award. The arbitrator’s decision on the vendor’s liability for breach and the damages for that breach is final, subject to challenge by the vendor on any grounds available under applicable law. On October 10, 2017, KCSI filed a motion to confirm the arbitration award in the United States District Court for the Northern District of Texas seeking confirmation and enforcement of the Partial Final Award. KCSI intends to amend its motion to confirm the arbitration award with respect to the final award to be rendered by the arbitrator that may include some or all of the requested attorneys’ fees, costs and pre-judgment interest. The Company cannot make any assurance as to the final amount that will actually be awarded or when it will be collected. The Partial Final Award and the final award are treated as gain contingencies for accounting purposes and, accordingly, are not recognized in these Condensed Consolidated Financial Statements.

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