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Schedule 2 - Parent Company Financial Statements (Tables) | 12 Months Ended
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Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract] |
Parent Company Balance Sheets | KEMPER CORPORATION PARENT COMPANY BALANCE SHEETS (Dollars in Millions)
|  | December 31,
|  | 2019 |  | 2018
ASSETS |  |  |  |
Investments in Subsidiaries |  | $ | 4,383.7 |  |  | $ | 3,736.0 |
Fixed Maturities at Fair Value (Amortized Cost: 2018 – $12.6) |  | — |  |  | 12.6 |
Equity Securities at Fair Value |  | 55.7 |  |  | 20.4 |
Short-term Investments |  | 89.3 |  |  | 64.6 |
Cash |  | 61.8 |  |  | 2.9 |
Other Receivables |  | 21.9 |  |  | 5.7 |
Other Assets |  | 21.9 |  |  | 14.4 |
Right-of-Use Assets |  | 18.6 |  |  | — |
Total Assets |  | $ | 4,652.9 |  |  | $ | 3,856.6 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |
Term Loan due June 29, 2020 (Fair Value: 2018 – $35.0) |  | — |  |  | 34.9 |
Term Loan due July 5, 2023 (Fair Value: 2019 – $50.0) |  | 49.9 |  |  | — |
Senior Notes Payable, 4.35% due 2025 (Fair Value: 2019 – $478.6; 2018 – $444.2) |  | 448.6 |  |  | 448.4 |
Subordinated Debentures due 2054 (Fair Value: 2018 – $151.1) |  | — |  |  | 144.2 |
Current Income Tax Liability |  | 55.3 |  |  | 40.5 |
Deferred Income Tax Liability |  | 32.2 |  |  | 20.2 |
Liabilities for Benefit Plans |  | 44.3 |  |  | 98.2 |
Right-of-Use Liabilities |  | 31.3 |  |  | — |
Accrued Expenses and Other Liabilities |  | 19.0 |  |  | 20.1 |
Total Liabilities |  | 680.6 |  |  | 806.5 |
Shareholders’ Equity: |  |  |  |
Common Stock |  | 6.7 |  |  | 6.5 |
Additional Paid-in Capital |  | 1,819.2 |  |  | 1,666.3 |
Retained Earnings |  | 1,810.3 |  |  | 1,355.5 |
Accumulated Other Comprehensive Income |  | 336.1 |  |  | 21.8 |
Total Shareholders’ Equity |  | 3,972.3 |  |  | 3,050.1 |
Total Liabilities and Shareholders’ Equity |  | $ | 4,652.9 |  |  | $ | 3,856.6 |
See Accompanying Report of Independent Registered Public Accounting Firm.
Parent Company Statements of Income | KEMPER CORPORATION PARENT COMPANY STATEMENTS OF INCOME (Dollars in Millions)
|  | For the Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Net Investment Income |  | $ | 2.1 |  |  | $ | 2.5 |  |  | $ | 3.0 |
Income from Change in Fair Value of Equity Securities |  | 1.6 |  |  | 1.4 |  |  | — |
Net Realized Gains (Losses) on Sales of Investments |  | 0.3 |  |  | (0.7 | ) |  | 0.6 |
Total Revenues |  | 4.0 |  |  | 3.2 |  |  | 3.6 |
Interest Expense |  | 28.5 |  |  | 37.6 |  |  | 36.6 |
Loss from Early Extinguishment of Debt |  | 5.8 |  |  | — |  |  | — |
Other Operating (Benefits) Expenses |  | 4.0 |  |  | 26.3 |  |  | (5.1 | )
Total Operating Expenses |  | 38.3 |  |  | 63.9 |  |  | 31.5 |
Loss before Income Taxes and Equity in Net Income of Subsidiaries |  | (34.3 | ) |  | (60.7 | ) |  | (27.9 | )
Income Tax Benefit |  | 9.4 |  |  | 12.2 |  |  | 21.2 |
Loss before Equity in Net Income of Subsidiaries |  | (24.9 | ) |  | (48.5 | ) |  | (6.7 | )
Equity in Net Income of Subsidiaries |  | 556.0 |  |  | 238.6 |  |  | 127.6 |
Net Income |  | $ | 531.1 |  |  | $ | 190.1 |  |  | $ | 120.9 |
See Accompanying Report of Independent Registered Public Accounting Firm.
Parent Company Statements of Comprehensive Income | KEMPER CORPORATION PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME (Dollars in Millions)
|  | For the Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Net Income |  | $ | 531.1 |  |  | $ | 190.1 |  |  | $ | 120.9 |
Other Comprehensive Income (Loss): |  |  |  |  |  |
Unrealized Holding Gains (Losses) Arising During the Year: |  |  |  |  |  |
Securities Held by Subsidiaries |  | 433.2 |  |  | (214.1 | ) |  | 119.5 |
Securities Held by Parent |  | 0.2 |  |  | (0.1 | ) |  | (0.4 | )
Reclassification Adjustment for Amounts Included in Net Income: |  |  |  |  |  |
Securities Held by Subsidiaries |  | (27.9 | ) |  | (21.9 | ) |  | (35.3 | )
Securities Held by Parent |  | (0.2 | ) |  | — |  |  | — |
Unrealized Holding Gains (Losses) |  | 405.3 |  |  | (236.1 | ) |  | 83.8 |
Unrecognized Postretirement Benefit Costs Arising During the Year: |  |  |  |  |  |
Securities Held by Subsidiaries |  | (0.6 | ) |  | — |  |  | — |
Securities Held by Parent |  | (4.2 | ) |  | (8.0 | ) |  | 3.9 |
Reclassification Adjustments for Amounts Included in Net Income: |  |  |  |  |  |
Amortization of Unrecognized Postretirement Benefits (Costs) |  | (3.0 | ) |  | 1.1 |  |  | (0.6 | )
Total Reclassification Adjustments for Amounts Included in Net Income |  | (3.0 | ) |  | 1.1 |  |  | (0.6 | )
Net Unrecognized Postretirement Benefit Costs |  | (7.8 | ) |  | (6.9 | ) |  | 3.3 |
Foreign Currency Translation Adjustments on Investments Held by Subsidiaries |  | — |  |  | 0.3 |  |  | 1.7 |
Gains (Losses) on Cash Flow Hedge |  | 0.4 |  |  | 1.2 |  |  | (6.7 | )
Other Comprehensive Income (Loss) before Income Taxes |  | 397.9 |  |  | (241.5 | ) |  | 82.1 |
Income Tax Benefit (Expense): |  |  |  |  |  |
Unrealized Holding Gains and Losses Arising During the Year: |  |  |  |  |  |
Securities Held by Subsidiaries |  | (91.0 | ) |  | 45.0 |  |  | (38.3 | )
Securities Held by Parent |  | — |  |  | — |  |  | 0.1 |
Reclassification Adjustment for Amounts Included in Net Income: |  |  |  |  |  |
Securities Held by Subsidiaries |  | 5.8 |  |  | 4.6 |  |  | 12.3 |
Unrealized Holding Gains and Losses |  | (85.2 | ) |  | 49.6 |  |  | (25.9 | )
Unrecognized Postretirement Benefit Costs Arising During the Year |  | 1.0 |  |  | 1.7 |  |  | (0.8 | )
Reclassification Adjustments for Amounts Included in Net Income: |  |  |  |  |  |
Amortization of Unrecognized Postretirement Benefit Costs |  | 0.7 |  |  | (0.2 | ) |  | 0.2 |
Total Reclassification Adjustments for Amounts Included in Net Income |  | 0.7 |  |  | (0.2 | ) |  | 0.2 |
Net Unrecognized Postretirement Benefit Costs |  | 1.7 |  |  | 1.5 |  |  | (0.6 | )
Foreign Currency Translation Adjustments on Investments Held by Subsidiaries |  | — |  |  | (0.1 | ) |  | (0.6 | )
Gains (Losses) on Cash Flow Hedge |  | (0.1 | ) |  | (0.3 | ) |  | 2.4 |
Income Tax Benefit (Expense) |  | (83.6 | ) |  | 50.7 |  |  | (24.7 | )
Other Comprehensive Income (Loss) |  | 314.3 |  |  | (190.8 | ) |  | 57.4 |
Total Comprehensive Income (Loss) |  | $ | 845.4 |  |  | $ | (0.7 | ) |  | $ | 178.3 |
See Accompanying Report of Independent Registered Public Accounting Firm.
Parent Company Statements of Cash Flows | KEMPER CORPORATION PARENT COMPANY STATEMENTS OF CASH FLOWS (Dollars in Millions)
|  | For the Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Operating Activities: |  |  |  |  |  |
Net Income |  | $ | 531.1 |  |  | $ | 190.1 |  |  | $ | 120.9 |
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations: |  |  |  |  |  |
Equity in Net Income of Subsidiaries |  | (556.0 | ) |  | (238.6 | ) |  | (127.6 | )
Cash Dividends from Subsidiaries |  | 239.0 |  |  | 130.4 |  |  | 108.1 |
Cash Contribution to Defined Benefit Plan |  | (55.3 | ) |  | (5.0 | ) |  | — |
Increase in Value of Equity Securities at Fair Value |  | (1.6 | ) |  | (1.4 | ) |  | — |
Net Realized (Gains) Losses on Sales of Investments |  | (0.3 | ) |  | 0.7 |  |  | (0.6 | )
Loss from Early Extinguishment of Debt |  | 5.8 |  |  | — |  |  | — |
Other, Net |  | 9.8 |  |  | 29.6 |  |  | 0.7 |
Net Cash Provided by Operating Activities |  | 172.5 |  |  | 105.8 |  |  | 101.5 |
Investing Activities: |  |  |  |  |  |
Capital Contributed to Subsidiaries |  | (83.0 | ) |  | (20.0 | ) |  | — |
Capital Distribution from Subsidiary |  | 85.0 |  |  | 176.0 |  |  | — |
Sales, Paydowns and Maturities of Fixed Maturities |  | 12.7 |  |  | (0.2 | ) |  | 45.7 |
Purchases of Equity Securities |  | (48.9 | ) |  | (2.3 | ) |  | — |
Sales of Equity Securities |  | 15.3 |  |  | 67.5 |  |  | — |
Sales of Fair Value Option Investments |  | — |  |  | — |  |  | 42.2 |
Purchases of Fair Value Option Investments |  | — |  |  | — |  |  | (7.0 | )
Acquisition of Business |  | — |  |  | (564.6 | ) |  | — |
Change in Short-term Investments |  | (23.3 | ) |  | 253.4 |  |  | 15.6 |
Net Cash Provided (Used) by Investing Activities |  | (42.2 | ) |  | (90.2 | ) |  | 96.5 |
Financing Activities: |  |  |  |  |  |
Notes Payable Proceeds: |  |  |  |  |  |
Net Proceeds from Issuance of Debt |  | 49.9 |  |  | 249.4 |  |  | 200.2 |
Repayments of Debt |  | (185.0 | ) |  | (215.0 | ) |  | (360.0 | )
Proceeds from Issuance of Common Stock, Net of Transaction Costs |  | 127.5 |  |  | — |  |  | — |
Cash Dividends Paid |  | (67.8 | ) |  | (56.4 | ) |  | (49.5 | )
Proceeds from Shares Issued under Employee Stock Purchase Plan |  | 1.6 |  |  | — |  |  | — |
Cash Exercise of Stock Options |  | 2.4 |  |  | 0.9 |  |  | 4.0 |
Net Cash Used by Financing Activities |  | (71.4 | ) |  | (21.1 | ) |  | (205.3 | )
Increase (Decrease) in Cash |  | 58.9 |  |  | (5.5 | ) |  | (7.3 | )
Cash, Beginning of Year |  | 2.9 |  |  | 8.4 |  |  | 15.7 |
Cash, End of Year |  | $ | 61.8 |  |  | $ | 2.9 |  |  | $ | 8.4 |
See Accompanying Report of Independent Registered Public Accounting Firm.
Lease, Cost | Supplemental cash flow information related to the Company’s operating leases for the year-ended December 31, 2019 is as follows:
DOLLARS IN MILLIONS |  | 2019
Operating Cash Flows from Operating Leases (Fixed Payments) |  | $ | 20.0 |
Operating Cash Flows from Operating Leases (Liability Reduction) |  | 17.6 |
Financing Cash Flows from Finance Leases |  | 0.7 |
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities |  | 25.9 |
Significant judgments and assumptions for determining lease asset and liability as December 31, 2019 are presented below.
Weighted-average Remaining Lease Term - Finance Leases |  | 1.7 years |
Weighted-average Remaining Lease Term - Operating Leases |  | 7.0 years |
Weighted-average Discount Rate - Finance Leases |  | 4.0 | %
Weighted-average Discount Rate - Operating Leases |  | 3.9 | %
Lease expenses are primarily included in insurance expenses in the Consolidated Statements of Income. Additional information regarding the Company’s operating leases is presented below.
DOLLARS IN MILLIONS |  | 2019
Lease Cost: |  |
Amortization of Right-of-Use Assets - Finance Leases |  | $ | 0.7 |
Operating Lease Cost |  | 20.7 |
Short-Term Lease Cost (1) |  | 0.1 |
Total Expense |  | 21.5 |
Less: Sublease Income (2) |  | 0.1 |
Total Lease Cost |  | $ | 21.4 |
(1) - Leases with an initial term of twelve months of less are not recorded on the balance sheet. (2) - Sublease income consists of rent from third parties of office space and is recognized as part of other income in the Consolidated Statements of Income. The following table presents operating lease ROU assets and lease liabilities.
DOLLARS IN MILLIONS |  | 2019
Operating Lease Right-of-Use Assets |  | $ | 75.6 |
Operating Lease Liabilities |  | 93.2 |
The following table presents operating lease ROU assets and lease liabilities at December 31, 2019.
DOLLARS IN MILLIONS |  | 2019
Operating Lease Right-of-Use Assets |  | $ | 18.6 |
Operating Lease Liabilities |  | 31.3 |
Supplemental cash flow information related to Kemper’s operating leases for the year-ended December 31, 2019 follows.
DOLLARS IN MILLIONS |  | 2019
Operating Cash Flows from Operating Leases (Fixed Payments) |  | $ | 1.2 |
Operating Cash Flows from Operating Leases (Liability Reduction) |  | 1.0 |
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities |  | 7.9 |
Significant judgments and assumptions for determining lease asset and liability as December 31, 2019 are presented below.
Weighted-average Remaining Lease Term - Operating Leases |  | 13.0 years |
Weighted-average Discount Rate - Operating Leases |  | 4.0 | %
Schedule of Future Minimum Lease Payments for Operating Leases | Future minimum lease payments under finance and operating leases at December 31, 2019 were:
DOLLARS IN MILLIONS |  | Finance Leases |  | Operating Leases
2020 |  | $ | 0.3 |  |  | $ | 20.5 |
2021 |  | 0.2 |  |  | 19.3 |
2022 |  | — |  |  | 17.0 |
2023 |  | — |  |  | 14.7 |
2024 |  | — |  |  | 8.3 |
2025 and Thereafter |  | — |  |  | 28.1 |
Total Future Payments |  | $ | 0.5 |  |  | $ | 107.9 |
Less Discount |  | — |  |  | 14.7 |
Present Value of Minimum Lease Payments |  | $ | 0.5 |  |  | $ | 93.2 |
NOTE 9. LEASES (Continued) Future minimum lease payments under finance and operating leases at December 31, 2018 were:
DOLLARS IN MILLIONS |  | Finance Leases |  | Operating Leases
2019 |  | $ | 0.7 |  |  | $ | 20.5 |
2020 |  | 0.7 |  |  | 18.4 |
2021 |  | 0.3 |  |  | 16.9 |
2022 |  | 0.2 |  |  | 15.0 |
2023 |  | — |  |  | 12.5 |
2024 and Thereafter |  | — |  |  | 27.1 |
Total Future Payments |  | $ | 1.9 |  |  | $ | 110.4 |
Less Imputed Interest |  | — |  |  |
Present Value of Minimum Lease Payments |  | $ | 1.9 |  |  |
Future minimum operating lease payments at December 31, 2019 were:
DOLLARS IN MILLIONS |  | Operating Leases
2020 |  | $ | 2.1 |
2021 |  | 3.5 |
2022 |  | 3.7 |
2023 |  | 3.5 |
2024 |  | 2.5 |
2025 and Thereafter |  | 25.6 |
Total Future Payments |  | $ | 40.9 |
Less Discount |  | 9.6 |
Present Value of Minimum Lease Payments |  | $ | 31.3 |

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