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Schedule 2 - Parent Company Financial Statements (Tables)

12 Months Ended

Dec. 31, 2021

Condensed Financial Information Disclosure [Abstract]

Parent Company Balance Sheets

KEMPER CORPORATION

PARENT COMPANY BALANCE SHEETS

(Dollars in Millions)

						December 31,
						2021						2020
ASSETS
Investments in Subsidiaries						$	4,729.1					$	4,896.0
Fixed Maturities at Fair Value (Amortized Cost: 2021 – $0.3; 2020 - $91.8)						0.4						99.8
Equity Securities at Fair Value (Cost: 2021 - $106.8; 2020 - $73.4)						107.4						78.8
Short-term Investments						96.9						508.2
Cash						27.7						46.0
Other Receivables						2.3						1.1
Right-of-Use Assets						12.8						13.4
Other Assets						18.9						29.2
Total Assets						$	4,995.5					$	5,672.5
LIABILITIES AND SHAREHOLDERS’ EQUITY
Term Loan due July 5, 2023 (Fair Value: 2021 – $—; 2020 – $50.0)						$	—					$	49.9
Senior Notes Payable, 4.35% due 2025 (Fair Value: 2021 – $481.4; 2020 – $499.5)						449.0						448.8
Senior Notes Payable, 2.40% due 2030 (Fair Value: 2021 – $387.8, 2020 – $405.6)						396.2						395.8
Current Income Tax Liability						18.5						41.5
Deferred Income Tax Liability						46.5						38.9
Liabilities for Benefit Plans						42.3						47.6
Right-of-Use Liabilities						25.8						26.9
Accrued Expenses and Other Liabilities						9.5						59.7
Total Liabilities						987.8						1,109.1
Shareholders’ Equity:
Common Stock						6.4						6.5
Additional Paid-in Capital						1,790.7						1,805.2
Retained Earnings						1,762.5						2,071.2
Accumulated Other Comprehensive Income						448.1						680.5
Total Shareholders’ Equity						4,007.7						4,563.4
Total Liabilities and Shareholders’ Equity						$	4,995.5					$	5,672.5

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,
						2021						2020						2019
Net Investment Income						$	3.4					$	1.4					$	2.1
Income from Change in Fair Value of Equity Securities						10.0						4.3						1.6
Net Realized Gains (Losses) on Sales of Investments						10.6						0.1						0.3
Total Revenues						24.0						5.8						4.0
Interest Expense						32.0						24.2						28.5
Loss from Early Extinguishment of Debt						—						—						5.8
Pension Settlement Expense						—						64.1						—
Other Operating (Benefits) Expenses						5.9						(3.6)						4.0
Total Operating Expenses						37.9						84.7						38.3
Loss before Income Taxes and Equity in Net Income of Subsidiaries						(13.9)						(78.9)						(34.3)
Income Tax Benefit (Expense)						(0.6)						13.4						9.4
Loss before Equity in Net Income (Loss) of Subsidiaries						(14.5)						(65.5)						(24.9)
Equity in Net Income (Loss) of Subsidiaries						(106.0)						475.4						556.0
Net Income (Loss)						$	(120.5)					$	409.9					$	531.1

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,
						2021						2020						2019
Net Income (Loss)						$	(120.5)					$	409.9					$	531.1
Other Comprehensive Income (Loss):
Changes in Net Unrealized Gains (Losses) on Investment Securities:
Having No Credit Losses Recognized in Consolidated Statements of Income (Loss):
Securities Held by Subsidiaries						(230.4)						378.7						433.2
Securities Held by Parent						—						8.0						0.2
Having Credit Losses Recognized in Consolidated Statements of Income (Loss):
Securities Held by Subsidiaries						(2.0)						(2.6)						—
Reclassification Adjustment for Amounts Included in Net Income (Loss):
Securities Held by Subsidiaries						(43.5)						(16.6)						(27.9)
Securities Held by Parent						(10.6)						(0.1)						(0.2)
Unrecognized Postretirement Benefit Costs Arising During the Year:
Securities Held by Subsidiaries						0.6						—						(0.6)
Securities Held by Parent						(9.5)						3.6						(4.2)
Reclassification Adjustments for Amounts Included in Net Income (Loss):
Pension Settlement Cost Recognized						—						64.1						—
Amortization of Unrecognized Postretirement Benefits (Costs)						0.1						2.5						(3.0)
Gains (Losses) on Cash Flow Hedge						0.5						0.4						0.4
Other Comprehensive Income (Loss) before Income Taxes						(294.8)						438.0						397.9
Income Tax Benefit (Expense):
Changes in Net Unrealized Gains (Losses) on Investment Securities:
Having No Credit Losses Recognized in Consolidated Statements of Income (Loss):
Securities Held by Subsidiaries						48.4						(80.6)						(91.0)
Securities Held by Parent						—						(1.7)						—
Having Credit Losses Recognized in Consolidated Statements of Income (Loss):
Securities Held by Subsidiaries						0.4						0.5						—
Reclassification Adjustment for Amounts Included in Net Income (Loss):
Securities Held by Subsidiaries						9.1						3.5						5.8
Securities Held by Parent						2.2						—						—
Unrecognized Postretirement Benefit Costs Arising During the Year:
Securities Held by Subsidiaries						(0.1)						—						—
Securities Held by Parent						2.5						(1.3)						1.0
Reclassification Adjustments for Amounts Included in Net Income (Loss):
Pension Settlement Cost Recognized						—						(13.5)						—
Amortization of Unrecognized Postretirement Benefit Costs						—						(0.5)						0.7
Changes in Gain (Loss) on Cash Flow Hedges						(0.1)						—						(0.1)
Income Tax Benefit (Expense)						62.4						(93.6)						(83.6)
Other Comprehensive Income (Loss)						(232.4)						344.4						314.3
Total Comprehensive Income (Loss)						$	(352.9)					$	754.3					$	845.4

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,
						2021						2020						2019
Operating Activities:
Net Income (Loss)						$	(120.5)					$	409.9					$	531.1
Adjustment Required to Reconcile Net Income (Loss) to Net Cash Provided by Operations:
Equity in Net Income (Loss) of Subsidiaries						106.0						(475.4)						(556.0)
Cash Dividends from Subsidiaries						170.3						216.2						239.0
Net Realized Investment (Gains) Losses						(10.6)						(0.1)						(0.3)
Settlement Costs Related to Defined Benefit Pension Plan						—						64.1						—
Contribution to Defined Benefit Pension Plan						—						—						(55.3)
Loss from Early Extinguishment of Debt						—						—						5.8
Decrease (Increase) in Value of Equity and Convertible Securities at Fair Value						(10.0)						(4.3)						(1.6)
Other, Net						(35.3)						52.2						9.8
Net Cash Provided by Operating Activities						99.9						262.6						172.5
Investing Activities:
Capital Contributed to Subsidiaries						(36.5)						(62.0)						(83.0)
Capital Distribution from Subsidiaries						—						—						85.0
Proceeds from Sales, Calls and Maturities of Fixed Maturities						181.3						2.0						12.7
Proceeds from the Sales or Paydowns of Investments:
Equity Securities						28.5						2.2						15.3
Purchases of Investments:
Equity Securities						(48.7)						(21.0)						(48.9)
Net Sales (Purchases) of Short-term Investments						411.3						(415.7)						(23.3)
Acquisition of Business						(370.9)						—						—
Net Cash Provided (Used) by Investing Activities						165.0						(494.5)						(42.2)
Financing Activities:
Net Proceeds from Issuance of Long-term Debt						—						395.6						49.9
Repayments of Long-term Debt						(50.0)						—						(185.0)
Proceeds from Issuance of Common Stock, Net of Transaction Costs						—						—						127.5
Proceeds from Shares Issued under Employee Stock Purchase Plan						5.4						4.4						1.6
Common Stock Repurchases						(161.7)						(110.4)						—
Dividends and Dividend Equivalents Paid						(80.6)						(78.9)						(67.8)
Other						3.7						5.4						2.4
Net Cash Provided (Used) by Financing Activities						(283.2)						216.1						(71.4)
Increase (Decrease) in Cash						(18.3)						(15.8)						58.9
Cash, Beginning of Year						46.0						61.8						2.9
Cash, End of Year						$	27.7					$	46.0					$	61.8

See Accompanying Report of Independent Registered Public Accounting Firm.

Lease, Cost

The following table presents operating lease right-of-use assets and lease liabilities.

(Dollars in Millions)						2021						2020
Operating Lease Right-of-Use Assets						$	64.4					$	68.6
Operating Lease Liabilities						84.8						89.6

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)						2021						2020
Lease Cost:
Amortization of Right-of-Use Assets - Finance Leases						$	0.2					$	0.3
Operating Lease Cost						22.3						20.9
Variable Lease Cost						0.2						—
Short-Term Lease Cost (1)						5.0						4.6
Total Lease Expense						$	27.7					$	25.8
Less: Sub-Lease Income						0.3						—
Total Lease Cost						$	27.4					$	25.8

(1) - Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheet.

DOLLARS IN MILLIONS						2021						2020
Operating Lease Right-of-Use Assets						$	12.8					$	13.4
Operating Lease Liabilities						25.8						26.9

Supplemental cash flow information related to Kemper’s operating leases for the year-ended December 31, 2021 and December 31, 2020 respectively are presented follows.

DOLLARS IN MILLIONS						2021						2020
Operating Cash Flows from Operating Leases (Fixed Payments)						$	2.2					$	(2.1)
Operating Cash Flows from Operating Leases (Liability Reduction)						1.1						0.3
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities						—						—

Significant judgments and assumptions for determining lease asset and liability as December 31, 2021 and December 31, 2020 respectively are presented below.

DOLLARS IN MILLIONS						2021						2020
Weighted-average Remaining Lease Term - Operating Leases						11.9 years						13.0 years
Weighted-average Discount Rate - Operating Leases						4.0		%				4.0		%

Schedule of Future Minimum Lease Payments for Operating Leases

Future minimum operating lease payments at December 31, 2021 were:

DOLLARS IN MILLIONS						Operating Leases
2022						$	2.4
2023						2.4
2024						2.5
2025						2.6
2026						2.6
2027 and Thereafter						20.4
Total Future Payments						$	32.9
Less Discount						7.1
Present Value of Minimum Lease Payments						$	25.8

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