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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The tax effects of temporary differences that give rise to significant portions of the Company’s Net Deferred Income Tax Assets and Deferred Income Tax Liabilities at December 31, 2024 and 2023 were:
DOLLARS IN MILLIONS |  | 2024 |  | 2023
Deferred Income Tax Assets: |  |  |  |
Unearned Premium Reserves |  | $ | 52.8 |  |  | $ | 54.0 |
Tax Capitalization of Policy Acquisition Costs |  | 49.5 |  |  | 46.3 |
Payroll and Employee Benefit Accruals |  | 34.7 |  |  | 34.8 |
Investments |  | 147.6 |  |  | 103.4 |
Net Operating Loss and Credit Carryforwards |  | 14.0 |  |  | 114.6 |
Other |  | 45.9 |  |  | 32.2 |
Subtotal |  | 344.5 |  |  | 385.3 |
Valuation Allowance |  | (38.7) |  |  | (27.4) |
Total Deferred Income Tax Assets |  | 305.8 |  |  | 357.9 |
Deferred Income Tax Liabilities: |  |  |  |
Insurance Reserves |  | 39.5 |  |  | 12.7 |
Deferred Policy Acquisition Costs |  | 132.3 |  |  | 124.3 |
Goodwill and Other Intangible Assets |  | 35.0 |  |  | 35.8 |
Depreciable Assets |  | 14.6 |  |  | 19.3 |
Other |  | 4.4 |  |  | 6.0 |
Total Deferred Income Tax Liabilities |  | 225.8 |  |  | 198.1 |
Net Deferred Income Tax Assets 1 |  | $ | 80.0 |  |  | $ | 159.8 |
1 Includes $1.5 million attributable to Kemper Reciprocal, which is reported as a consolidated variable interest entity.
Due to jurisdictional differences in which the Company operates, the consolidated net deferred tax asset of $80.0 million is reported on the Consolidated Balance Sheets as a total deferred tax asset of $94.8 million and a deferred tax liability of $14.8 million. The evaluation of the recoverability of the deferred tax asset and the need for a valuation allowance is based on the weight of all available positive and negative evidence. For the year ended December 31, 2024, a valuation allowance of $38.7 million was recorded against those deferred tax assets that were determined not to be more likely than not to be realized based on Management’s assessment, an increase of $11.3 million from the year ended December 31, 2023 when a $27.4 million valuation allowance was recorded. The expiration of federal net operating loss (“NOL”) carryforwards and their related deferred income tax assets at December 31, 2024 is presented below by year of expiration.
DOLLARS IN MILLIONS |  | NOL Carry-forwards |  | Deferred Tax Asset
Expiring in: |  |  |  |
2043 |  | 0.3 |  |  | 0.1 |
2044 |  | 6.0 |  |  | 1.3 |
No Expiration |  | 60.2 |  |  | 12.6 |
Total All Years |  | $ | 66.5 |  |  | $ | 14.0 |
The carryforwards relate to federal NOL carryforwards which the Company expects to fully utilize prior to expiration. There were no Unrecognized Tax Benefits at December 31, 2024, 2023 or 2022. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in Income Tax Expense (Benefit). There were no liabilities for accrued interest and penalties as of December 31, 2024, 2023 or 2022. NOTE 28. INCOME TAXES (Continued) The statute of limitations related to Kemper and its eligible subsidiaries’ consolidated Federal income tax returns is closed for all tax years up to and including 2011 as well as 2018 and 2019. As a result of the Company filing amended federal income tax returns, tax years 2012 and 2013 are under limited examination with respect to carryback adjustments associated with the amended returns. Tax years 2020 and 2022 are currently under examination. The statute of limitations related to tax years 2014, 2015, 2016, and 2017 has been extended to December 31, 2025. Tax years 2021, 2022 and 2023 are subject to a statute of three years from the extended due dates of October 15, 2022, 2023 and 2024, respectively. The expiration of the statute of limitations related to the various state income tax returns that Kemper and its subsidiaries file varies by state. The components of Income Tax Expense (Benefit) from Operations for the years ended December 31, 2024, 2023 and 2022 were:
DOLLARS IN MILLIONS |  | 2024 |  | 2023 |  | 2022
Current Income Tax Expense (Benefit) |  | $ | 11.9 |  |  | $ | (4.0) |  |  | $ | 6.2 |
Deferred Income Tax Expense (Benefit) |  | 64.1 |  |  | (70.8) |  |  | (90.6) |
Income Tax Expense (Benefit) |  | $ | 76.0 |  |  | $ | (74.8) |  |  | $ | (84.4) |
Federal income taxes paid, net of income tax refunds received, were $9.9 million and $1.1 million in 2024 and 2022, respectively. Federal income tax refunds received, net of income taxes paid, were $107.7 million in 2023. State income taxes paid, net of income tax refunds received, were $1.3 million and $1.0 million in 2024 and 2023, respectively. State income taxes refunds received, net of income taxes paid, were $0.4 million in 2022. No foreign income taxes were paid or refunded in 2024, 2023, or 2022. A reconciliation of the Statutory Federal Income Tax Expense (Benefit) and Rate to the Company’s Effective Income Tax Expense (Benefit) and Rate from Operations for the years ended December 31, 2024, 2023 and 2022 is presented below.
DOLLARS IN MILLIONS |  | 2024 |  | 2023 |  | 2022
Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
Statutory Federal Income Tax Expense (Benefit) |  | $ | 81.6 |  |  | 21.0 | % |  | $ | (72.8) |  |  | 21.0 | % |  | $ | (77.9) |  |  | 21.0 | %
Tax-exempt Income and Dividends Received Deduction |  | (3.4) |  |  | (0.9) |  |  | (4.8) |  |  | 1.4 |  |  | (5.3) |  |  | 1.3 |
Untaxed Earnings on Company-Owned Life Insurance |  | (7.5) |  |  | (1.9) |  |  | (6.1) |  |  | 1.8 |  |  | (8.0) |  |  | 2.1 |
Tax credits |  | (1.2) |  |  | (0.3) |  |  | (3.1) |  |  | 0.9 |  |  | (6.5) |  |  | 1.7 |
Stock-Based Compensation |  | (0.1) |  |  | — |  |  | 0.3 |  |  | (0.1) |  |  | 1.3 |  |  | (0.3) |
Nondeductible Executive Compensation |  | 3.5 |  |  | 0.9 |  |  | 1.8 |  |  | (0.5) |  |  | 1.5 |  |  | (0.4) |
Goodwill impairment |  | — |  |  | — |  |  | 6.3 |  |  | (1.8) |  |  | — |  |  | — |
Expense on Transactions |  | — |  |  | — |  |  | — |  |  | — |  |  | 11.5 |  |  | (3.0) |
Effect of foreign operations |  | (11.3) |  |  | (2.9) |  |  | (27.4) |  |  | 7.9 |  |  | — |  |  | — |
Change in valuation allowance |  | 11.3 |  |  | 2.9 |  |  | 27.4 |  |  | (7.9) |  |  | — |  |  | — |
Other, Net |  | 3.1 |  |  | 0.8 |  |  | 3.6 |  |  | (1.1) |  |  | (1.0) |  |  | 0.3 |
Effective Income Tax Expense (Benefit) |  | $ | 76.0 |  |  | 19.6 | % |  | $ | (74.8) |  |  | 21.6 | % |  | $ | (84.4) |  |  | 22.7 | %
NOTE 28. INCOME TAXES (Continued) Comprehensive Income Tax Expense (Benefit) included in the Consolidated Financial Statements for the years ended December 31, 2024, 2023 and 2022 was:
DOLLARS IN MILLIONS |  | 2024 |  | 2023 |  | 2022
Income Tax Expense (Benefit): |  |  |  |  |  |
Operations |  | $ | 76.0 |  |  | $ | (74.8) |  |  | $ | (84.4) |
Unrealized (Depreciation) Appreciation on Securities |  | (42.2) |  |  | 50.3 |  |  | (325.5) |
Tax Effects from Postretirement Benefit Plans |  | (0.3) |  |  | 12.4 |  |  | 4.0 |
Tax Effects on changes in Discount Rate for Life Reserves |  | 58.3 |  |  | (21.2) |  |  | 289.9 |
Tax Effects from Cash Flow Hedge |  | (0.8) |  |  | — |  |  | 1.2 |
Comprehensive Income Tax Expense (Benefit) |  | $ | 91.0 |  |  | $ | (33.3) |  |  | $ | (114.8) |

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