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Variable Interest Entities | 9 Months Ended
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Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Variable Interest Entity Disclosure | Variable Interest Entities A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity's operations through voting rights or do not substantively participate in the gains and losses of the entity. The Company consolidates VIEs in which the Company is deemed the primary beneficiary. The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect that entity's economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. Reciprocal Exchange The Company has formed a management company that acts as attorney-in-fact (“AIF”) for Kemper Reciprocal (the “Reciprocal Exchange” or “Exchange”), an Illinois-domiciled reciprocal insurance exchange. The Exchange principally writes specialty personal automobile policies sold to subscribers of the Exchange. The establishment of Kemper Reciprocal was completed in the third quarter of 2023. The Company consolidates the Exchange since (1) the AIF manages the business operations of the Exchange and therefore has the power to direct the activities that most significantly impact the economic performance of the Exchange and (2) the Company has provided capital to the Exchange and would absorb any expected losses that could potentially be significant to the Exchange. The Exchange’s anticipated economic performance is the product of its underwriting and investment results. The AIF receives a management fee for the services provided to the Reciprocal Exchange. The management fee revenues are based upon all premiums written or assumed by the Exchange. The AIF determines the management fee rate to be paid by the Exchange. This rate cannot exceed 30% of the Exchange’s gross written and assumed premiums. The assets of the Reciprocal Exchange can be used only to settle the obligations of the Reciprocal Exchange for which creditors and other beneficial owners have no recourse to the Company. The Company has no obligation related to any underwriting and/or investment losses experienced by the Exchange. As of September 30, 2023, the Company contributed $4.0 million of surplus to the Reciprocal Exchange. The effects of the transactions between the Company and the Reciprocal Exchange are eliminated in consolidation to derive consolidated Net Loss. However, the management fee income earned by the AIF is reported in Net Loss attributable to Kemper Corporation and is included in the basic and diluted earnings per share. Noncontrolling interest is the portion of equity (net assets) not attributable, directly or indirectly, to a parent. Since the Company has no ownership interest in the Exchange, the difference between the value of the Exchange’s assets and liabilities represents noncontrolling interest and any income or loss generated by the net assets of the Exchange is presented as income or loss attributable to noncontrolling interest. Alternative Energy Partnership The Company invests in an Alternative Energy Partnership formed to provide sustainable energy projects that are designed to generate a return primarily through the realization of federal tax credits. This entity was formed to invest in newly installed residential solar leases and power purchase agreements. As a result of this investment, the Company has the right to certain investment tax credits and tax depreciation benefits, and to a lesser extent, cash flows generated from the installed solar systems leased to individual consumers. Note 12 - Variable Interest Entities (Continued) The Company’s interest in the Alternative Energy Partnership Investment is considered an investment in a VIE. The Company has determined that it is not the primary beneficiary as it does not have the power to direct the activities that most significantly impact the economic performance of the entity and therefore is not required to consolidate the VIE. The project sponsor governs the entity and the Company only has consent rights that have been deemed protective in nature and does not participate in key economic decisions of the entity. The investment is accounted for using the equity method of accounting and included in Alternative Energy Partnership Investments in the Condensed Consolidated Balance Sheets. The Company uses the HLBV equity method to account for earnings and losses. This method provides an earnings allocation that appropriately reflects the substantive economics of the investment. Earnings and losses on the investment are reported in Change in Value of Alternative Energy Partnership Investments and investment tax credits are recognized in Income Tax Benefit on the Consolidated Statements of Loss. The following table presents information regarding activity in the Company’s Alternative Energy Partnership Investments for the nine and three months ended September 30, 2023 and 2022.
|  | Nine Months Ended |  | Three Months Ended
(Dollars in millions) |  | Sep 30, 2023 |  | Sep 30, 2022 |  | Sep 30, 2023 |  | Sep 30, 2022
Fundings |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Cash Distribution from Investment |  | 1.5 |  |  | 1.5 |  |  | 0.5 |  |  | 0.6 |
Income (Loss) on Investments in Alternative Energy Partnership |  | 2.3 |  |  | (21.2) |  |  | 0.8 |  |  | 0.4 |
Income Tax (Recaptures) Credits Recognized |  | (0.1) |  |  | 3.9 |  |  | — |  |  | — |
Tax (Expense) Benefit Recognized from Alternative Energy Partnership |  | (0.5) |  |  | 4.1 |  |  | (0.2) |  |  | (0.1) |
The following table represents the carrying value of the associated assets and liabilities and the associated maximum loss exposure of the Alternative Energy Partnership Investments as of September 30, 2023 and December 31, 2022.
(Dollars in millions) |  | Sep 30, 2023 |  | Dec 31, 2022
Cash |  | $ | 2.8 |  |  | $ | 3.0 |
Equipment, Net of Depreciation |  | 256.6 |  |  | 261.7 |
Other Assets |  | 6.9 |  |  | 5.1 |
Total Unconsolidated Assets |  | 266.4 |  |  | 269.7 |
Maximum Loss Exposure |  | 17.2 |  |  | 16.3 |
The Company’s maximum loss exposure in the event that all of the assets in the Alternative Energy Partnership are deemed worthless is $17.2 million and $16.3 million, which is the carrying value of the investment at September 30, 2023 and December 31, 2022, respectively.

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//810/tableOfContent + Details
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