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Kemper Corporation$58.65   

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 Kemper Corporation Reports Fourth Quarter and Full Year 2016 Results
   Thursday, February 09, 2017 4:16:00 PM ET

--Improved Alliance United’s quarterly net operating results by $18 million; Net operating income of $2 million in the fourth quarter of 2016, compared to a net operating loss of $16 million last year

--Generated investment portfolio pre-tax equivalent annualized book yield of 5.4 percent in the quarter; 5.1 percent in 2016

Kemper Corporation (KMPR ) reported today net income of $31.2 million, or $0.60 per diluted share, for the fourth quarter of 2016, compared to $4.6 million, or $0.09 per share, for the fourth quarter of 2015. Consolidated net operating income(1) was $28.8 million, or $0.56 per diluted share, for the fourth quarter of 2016, compared to $4.8 million, or $0.09 per share, for the fourth quarter of 2015. Net operating results increased primarily from Alliance United’s underlying performance, and to a lesser extent, lower retirement benefits, lower catastrophe losses and lower expenses at the Kemper Home Service Companies.

                                                                                    Three Months Ended                                                   Year Ended
                                                                                      -----------------------------------------------------                     ------------------------------------------------------------------------
(Dollars in Millions, Except Per Share Amounts) (Unaudited)                                Dec 31,           Dec 31,                              Dec 31,                    Dec 31,
                                                                                            2016                                 2015                                 2016                                          2015
----------------------------------------------------------------                      -------------                        -------------                        -------------                        --------------------------------
Consolidated Net Operating Income (1)                                                    $  28.8                              $   4.8                              $  12.4                                $   69.9
Income from Continuing Operations                                                           29.1                                  1.3                                 12.7                                    80.2
Net Income                                                                                  31.2                                  4.6                                 16.8                                    85.7
                                                                                                                                                                                                      
Impact of Catastrophe Losses and Related Loss Adjustment Expense                         $  (8.2 )                            $ (10.4 )                            $ (74.8 )                              $  (44.4 )
(LAE) on Net Income
                                                                                                                                                                                                      
Diluted Net Income Per Share From:
    Consolidated Net Operating Income (1)                                                $  0.56                              $  0.09                              $  0.25                                $   1.35
    Continuing Operations                                                                   0.56                                 0.03                                 0.25                                    1.55
    Net Income                                                                              0.60                                 0.09                                 0.33                                    1.65
                                                                                                                                                                                                      
Impact of Catastrophe Losses and Related LAE on Net Income Per                           $ (0.16 )                            $ (0.20 )                            $ (1.45 )                              $  (0.85 )
Share
                                                                                                                                                                                                                    
(1) Consolidated net operating income is an after-tax,
non-GAAP financial measure. See "Use of Non-GAAP Financial
Measures" for additional information.

"Kemper had a solid quarter and delivered $31 million in net income," commented Joseph P. Lacher, Jr., Kemper’s President and Chief Executive Officer. "We are making substantial progress, especially in our nonstandard personal auto lines.

"Our preferred auto book experienced elevated loss cost trends, consistent with the industry, so we will take pricing and other actions to address the emerging trends.

"The Life & Health division delivered $23 million of net income in the quarter, benefiting from lower expenses," concluded Lacher.

Capital

During the fourth quarter of 2016, Kemper paid dividends of $12.3 million. During 2016, Kemper returned $53.0 million of capital to shareholders, through $49.2 million of dividends and $3.8 million of share repurchases.

Kemper ended the year with a book value per share of $38.52, down slightly from $38.82 at the end of 2015, as dividends paid more than offset net income and a favorable change in the postretirement benefits liability. Book value per share excluding net unrealized gains on fixed maturities was $35.00, essentially flat from $35.13 at the end of 2015.

Revenues

Total revenues for the fourth quarter of 2016 increased $25.7 million, or 4 percent, to $642.7 million, driven by $20.8 million higher earned premiums from Alliance United. Net realized investment gains were $0.4 million in the fourth quarter of 2016, compared to net realized investment losses of $5.3 million last year.

Net investment income increased $0.5 million to $79.9 million in the fourth quarter of 2016, from higher interest income on fixed maturities and non-alternative equity securities, partially offset by lower returns on the alternative investments portfolio.

The investment portfolio in total generated a pre-tax equivalent annualized book yield of 5.4 percent for the fourth quarter of 2016, and 5.1 percent for the year, compared to 5.5 percent and 5.3 percent, respectively, in 2015.

Segment Results

The results of Alliance United’s operations since the acquisition date, April 30, 2015, are included in the Property & Casualty Insurance segment.

Unless otherwise noted, (i) the segment results discussed below are presented on an after-tax basis, (ii) prior-year development includes both catastrophe and non-catastrophe losses and LAE, (iii) catastrophe losses and LAE exclude the impact of prior-year development, (iv) underlying loss ratio includes loss and LAE, and (v) all comparisons are made to the prior year quarter unless otherwise stated.

                                                                                        Three Months Ended                                                                               Year Ended
                                                                     -----------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------
(Dollars in Millions) (Unaudited)                                                   Dec 31,                                Dec 31,                                                   Dec 31,                            Dec 31,
                                                                                     2016                                                      2015                                                      2016                                                  2015
-----------------------------------------------                      ----------------------------------                        ----------------------------------                        ----------------------------------                        --------------------------
Segment Net Operating Income (Loss):
   Property & Casualty Insurance                                           $     7.0                                                 $    (5.1 )                                               $    (2.9 )                                          $ 26.7
   Life & Health Insurance                                                      23.0                                   17.8                                   30.3                           71.7  
                                                                     ------------------------------------                      ------------------------------------                      ------------------------------------                      ----------------------------
Total Segment Net Operating Income                                              30.0                                                      12.7                                                      27.4                                              98.4
Corporate and Other Net Operating Loss                                          (1.2 )                                                    (7.9 )                                                   (15.0 )                                           (28.5 )
                                                                     ------------------------------------                      ------------------------------------                      ------------------------------------                      ----------------------------
Consolidated Net Operating Income                                               28.8                                                       4.8                                                      12.4                                              69.9
Net Income (Loss) From:
   Net Realized Gains on Sales of Investments                                    5.9                                                       6.1                                                      21.5                                              33.9
   Net Impairment Losses Recognized in Earnings                                 (5.6 )                                                    (9.6 )                                                   (21.2 )                                           (17.7 )
   Loss from Early Extinguishment of Debt                             --                         --                         --                           (5.9 )
                                                                     ------------------------------------                      ------------------------------------                      ------------------------------------                      ----------------------------
Income from Continuing Operations                                          $    29.1                              $     1.3                              $    12.7                         $ 80.2  
                                                                     ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      == ==== ====================

The Property & Casualty Insurance segment reported net operating income of $7.0 million in the fourth quarter of 2016, compared to a net operating loss of $5.1 million in 2015. Net operating results improved largely from Alliance United’s underlying performance, and to a lesser extent, lower catastrophe losses, partially offset by higher underlying loss results in the legacy lines of business and higher levels of adverse prior-year reserve development. Both periods experienced a low level of catastrophe losses, with $7.6 million in the fourth quarter of 2016, compared to $9.2 million last year. Prior-year reserve development had an adverse impact of $2.1 million in the fourth quarter of 2016, compared to $0.6 million last year.

Alliance United reported net operating income of $2.0 million in the fourth quarter of 2016, compared to a net operating loss of $15.7 million in 2015, driven by improved underlying loss results, lower levels of adverse prior-year development and lower policy acquisition costs. Alliance United’s fourth quarter 2016 underlying loss ratio was 87.6 percent and benefitted 3.1 percentage points from $4.1 million pre-tax of current-year development. Alliance United’s underlying loss ratio for the fourth quarter 2015 was 100.9 percent and included $7.5 million pre-tax, or 6.7 points, of adverse current-year development. Excluding the impacts of current year-development, Alliance United’s underlying loss ratio was 90.7 percent in the fourth quarter of 2016, compared to 94.2 percent last year.

Alliance United took aggressive rate and other underwriting actions during 2016, which resulted in significant average earned premium growth and improved underwriting margin. Additionally, Alliance United has filed and received approval for a 6.9 percent rate increase on roughly half its book of business, which is expected to be implemented during the first quarter of 2017, and expects continued improvement in underwriting margin.

Excluding Alliance United, the Property & Casualty segment’s fourth quarter underlying loss ratio increased nearly one percentage point to 70.4 percent, as improvement in the accident quarter results was offset by adverse current-year development. The underlying loss ratio for legacy nonstandard personal auto improved 6.4 percentage points, primarily from continued rate, underwriting and agency management actions. The preferred personal auto underlying loss ratio increased 4.2 percentage points, driven by the adverse impact of current-year development.

The Life & Health Insurance segment reported net operating income of $23.0 million for the fourth quarter of 2016, compared to $17.8 million in 2015. Results increased primarily from lower legal expenses.

Corporate and Other net operating loss improved $6.7 million, compared to the fourth quarter of 2015, primarily related to lower retirement benefits and higher net investment income.

Unaudited condensed consolidated statements of income for the three months and year ended December 31, 2016 and 2015 are presented below.

                                                                                                                                      Three Months Ended                                                                                   Year Ended
                                                                                                                   -----------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------
(Dollars in Millions, Except Per Share Amounts)                                                                                   Dec 31,                                Dec 31,                                                   Dec 31,                                Dec 31,
                                                                                                                                   2016                                                      2015                                                      2016                                                      2015
---------------------------------------------------------------------------------------------                      ----------------------------------                        ----------------------------------                        ----------------------------------                        ---------------------------------
Revenues:
   Earned Premiums                                                                                                       $   561.4                                                 $   541.5                                                 $ 2,220.0                                                $ 2,009.6
   Net Investment Income                                                                                                      79.9                                                      79.4                                                     298.3                                                    302.6
   Other Income                                                                                                                1.0                                                       1.4                                                       3.2                                                      3.7
   Net Realized Gains on Sales of Investments                                                                                  9.1                                                       9.4                                                      33.1                                                     52.1
   Other-than-temporary Impairment Losses:
      Total Other-than-temporary Impairment Losses                                                                            (8.7 )                                                   (14.9 )                                                   (33.0 )                                                  (27.4 )
      Portion of Losses Recognized in Other Comprehensive Income                                                    --                                    0.2                                    0.3                                   0.2  
                                                                                                                   ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
   Net Impairment Losses Recognized in Earnings                                                                               (8.7 )                                                   (14.7 )                                                   (32.7 )                                                  (27.2 )
                                                                                                                   ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Total Revenues                                                                                                               642.7                                  617.0                                2,521.9                               2,340.8  
                                                                                                                   ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Expenses:
   Policyholders’ Benefits and Incurred Losses and Loss Adjustment                                418.3                                                     416.0                                                   1,780.8                                                  1,467.6
   Expenses
   Insurance Expenses                                                                                                        158.5                                                     177.0                                                     647.3                                                    645.1
   Write-off of Long-lived Asset                                                                                    --                                            --                                            --                                                     11.1
   Loss from Early Extinguishment of Debt                                                                           --                                            --                                            --                                                      9.1
   Interest and Other Expenses                                                                                                25.3                                   25.6                                   90.3                                 107.6  
                                                                                                                   ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Total Expenses                                                                                                               602.1                                  618.6                                2,518.4                               2,240.5  
                                                                                                                   ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Income (Loss) from Continuing Operations before Income Taxes                                                                  40.6                                                      (1.6 )                                                     3.5                                                    100.3
Income Tax Benefit (Expense)                                                                                                 (11.5 )                                                     2.9                                    9.2                                 (20.1 )
                                                                                                                   ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Income from Continuing Operations                                                                                             29.1                                                       1.3                                                      12.7                                                     80.2
Income from Discontinued Operations                                                                                            2.1                                    3.3                                    4.1                                   5.5  
                                                                                                                   ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Net Income                                                                                                               $    31.2                              $     4.6                              $    16.8                             $    85.7  
                                                                                                                   ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                                  
Income from Continuing Operations Per Unrestricted Share:
   Basic                                                                                                                 $    0.56                              $    0.03                              $    0.25                             $    1.55  
                                                                                                                   ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
   Diluted                                                                                                               $    0.56                              $    0.03                              $    0.25                             $    1.55  
                                                                                                                   ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                                  
Net Income Per Unrestricted Share:
   Basic                                                                                                                 $    0.60                              $    0.09                              $    0.33                             $    1.65  
                                                                                                                   ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
   Diluted                                                                                                               $    0.60                              $    0.09                              $    0.33                             $    1.65  
                                                                                                                   ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                                  
Weighted-average Outstanding (Shares in Thousands):
   Unrestricted Shares - Basic                                                                                            51,202.6                               51,214.7                               51,156.1                              51,606.9  
                                                                                                                   ====================================                      ====================================                      ====================================                      ===================================
   Unrestricted Shares and Equivalent Shares - Diluted                                                                    51,350.4                               51,286.6                               51,214.7                              51,683.5  
                                                                                                                   ====================================                      ====================================                      ====================================                      ===================================
                                                                                                                                                                                                                                                                                                  
Dividends Paid to Shareholders Per Share                                                                                 $    0.24                              $    0.24                              $    0.96                             $    0.96  
                                                                                                                   ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================

Unaudited business segment revenues for the three months and year ended December 31, 2016 and 2015 are presented below.

                                                                              Three Months Ended                                                                        Year Ended
                                                                  ---------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------
(Dollars in Millions)                                                         Dec 31,                         Dec 31,                                             Dec 31,                            Dec 31,
                                                                               2016                                               2015                                                2016                                                  2015
--------------------------------------------                      ---------------------------                        ---------------------------                        ------------------------------                        ------------------------------
REVENUES:
Property & Casualty Insurance:
   Earned Premiums:
         Personal Automobile                                       $ 317.2                                            $ 296.8                                             $ 1,244.6                                             $ 1,027.7
         Homeowners                                                   67.7                                               70.0                                                 271.9                                                 286.3
         Other Personal                                               11.1                            11.5                               45.0                               46.7  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
      Total Personal                                                 396.0                                              378.3                                               1,561.5                                               1,360.7
      Commercial Automobile                                           13.1                            13.8                               53.3                               54.5  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
   Total Earned Premiums                                             409.1                                              392.1                                               1,614.8                                               1,415.2
   Net Investment Income                                              20.4                                               21.6                                                  72.4                                                  73.3
   Other Income                                                        0.1                             0.1                                0.5                                0.6  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
Total Property & Casualty Insurance                                  429.6                           413.8                            1,687.7                            1,489.1  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
Life & Health Insurance:
   Earned Premiums:
         Life                                                         95.9                                               94.6                                                 381.6                                                 374.1
         Accident and Health                                          38.2                                               36.2                                                 149.4                                                 144.9
         Property                                                     18.2                            18.6                               74.2                               75.4  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
   Total Earned Premiums                                             152.3                                              149.4                                                 605.2                                                 594.4
   Net Investment Income                                              53.6                                               55.2                                                 213.2                                                 214.2
   Other Income                                                        0.9                             0.7                                2.8                                2.4  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
Total Life & Health Insurance                                        206.8                           205.3                              821.2                              811.0  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
Total Segment Revenues                                               636.4                                              619.1                                               2,508.9                                               2,300.1
Net Realized Gains on Sales of Investments                             9.1                                                9.4                                                  33.1                                                  52.1
Net Impairment Losses Recognized in Earnings                          (8.7 )                                            (14.7 )                                               (32.7 )                                               (27.2 )
Other                                                                  5.9                             3.2                               12.6                               15.8  
                                                                  -----------------------------                      -----------------------------                      --------------------------------                      --------------------------------
Total Revenues                                                     $ 642.7                         $ 617.0                          $ 2,521.9                          $ 2,340.8  
                                                                  == ===== ====================                      == ===== ====================                      === ======= ====================                      === ======= ====================
                                                               KEMPER CORPORATION AND SUBSIDIARIES
                                                              CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                      (Dollars in Millions)
                                                                                        Dec 31,                  Dec 31,
                                                                                                            2016                                        2015
                                                                                             -------------------------------                        -----------
Assets:                                                                                      (Unaudited)
Investments:
    Fixed Maturities at Fair Value                                                              $ 5,124.9                                              $ 4,852.3
    Equity Securities at Fair Value                                                                 481.7                                                  523.2
    Equity Method Limited Liability Investments at Cost Plus Cumulative                             175.9                                                  190.6
    Undistributed Earnings
    Fair Value Option Investments                                                                   111.4                                                  164.5
    Short-term Investments at Cost which Approximates Fair Value                                    273.7                                                  255.7
    Other Investments                                                                               439.9                               443.2
                                                                                             ---------------------------------                      -------------
Total Investments                                                                                 6,607.5                             6,429.5
                                                                                             ---------------------------------                      -------------
Cash                                                                                                115.7                                                  161.7
Receivables from Policyholders                                                                      336.5                                                  332.4
Other Receivables                                                                                   198.6                                                  193.2
Deferred Policy Acquisition Costs                                                                   332.0                                                  316.4
Goodwill                                                                                            323.0                                                  323.0
Current Income Tax Assets                                                                            15.5                                                    9.5
Deferred Income Tax Assets                                                                           25.8                                                   31.9
Other Assets                                                                                        255.9                               238.5
                                                                                             ---------------------------------                      -------------
Total Assets                                                                                    $ 8,210.5                           $ 8,036.1
                                                                                             ==== ======= ====================                      ==== =======
Liabilities and Shareholders’ Equity:
Insurance Reserves:
    Life and Health                                                                             $ 3,475.3                                              $ 3,341.0
    Property and Casualty                                                                           931.4                               862.8
                                                                                             ---------------------------------                      -------------
Total Insurance Reserves                                                                          4,406.7                             4,203.8
                                                                                             ---------------------------------                      -------------
Unearned Premiums                                                                                   618.7                                                  613.1
Liabilities for Income Taxes                                                                          5.1                                                    3.8
Long-term Debt, Current and Non-current, at Amortized Cost                                          751.6                                                  750.6
Accrued Expenses and Other Liabilities                                                              453.2                               472.4
                                                                                             ---------------------------------                      -------------
Total Liabilities                                                                                 6,235.3                             6,043.7
                                                                                             ---------------------------------                      -------------
Shareholders’ Equity:
Common Stock                                                                                          5.1                                                    5.1
Paid-in Capital                                                                                     660.3                                                  654.0
Retained Earnings                                                                                 1,172.8                                                1,209.0
Accumulated Other Comprehensive Income                                                              137.0                               124.3
                                                                                             ---------------------------------                      -------------
Total Shareholders’ Equity                                             1,975.2                             1,992.4
                                                                                             ---------------------------------                      -------------
Total Liabilities and Shareholders’ Equity                           $ 8,210.5                           $ 8,036.1
                                                                                             ==== ======= ====================                      ==== =======

Unaudited selected financial information for the Property & Casualty Insurance segment follows.

                                                                                                         Three Months Ended                                                                                   Year Ended
                                                                                      -----------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------
(Dollars in Millions)                                                                                Dec 31,                                Dec 31,                                                   Dec 31,                                Dec 31,
                                                                                                      2016                                                      2015                                                      2016                                                      2015
----------------------------------------------------------------                      ----------------------------------                        ----------------------------------                        ----------------------------------                        ---------------------------------
                                                                                                                                                                                                                                                                     
                                                                                                                                          Results of Operations
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net Premiums Written                                                                        $   390.1                              $   374.7                              $ 1,620.9                             $ 1,406.2  
                                                                                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                     
Earned Premiums                                                                             $   409.1                                                 $   392.1                                                 $ 1,614.8                                                $ 1,415.2
Net Investment Income                                                                            20.4                                                      21.6                                                      72.4                                                     73.3
Other Income                                                                                      0.1                                    0.1                                    0.5                                   0.6  
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Total Revenues                                                                                  429.6                                  413.8                                1,687.7                               1,489.1  
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Incurred Losses and LAE related to:
   Current Year:
      Non-catastrophe Losses and LAE                                                            310.6                                                     307.4                                                   1,223.9                                                  1,034.6
      Catastrophe Losses and LAE                                                                 11.7                                                      14.1                                                     109.6                                                     64.5
   Prior Years:
      Non-catastrophe Losses and LAE                                                              6.2                                                       2.3                                                       4.9                                                     (5.0 )
      Catastrophe Losses and LAE                                                                 (3.0 )                                                    (1.4 )                                                   (19.2 )                                                   (7.9 )
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Total Incurred Losses and LAE                                                                   325.5                                                     322.4                                                   1,319.2                                                  1,086.2
Insurance Expenses, Excluding Write-off of Long-lived Asset                                      96.9                                                     102.3                                                     385.7                                                    368.1
Write-off of Long-lived Asset                                                          --                         --                         --                                  11.1  
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Operating Profit (Loss)                                                                           7.2                                                     (10.9 )                                                   (17.2 )                                                   23.7
Income Tax (Expense) Benefit                                                                     (0.2 )                                                     5.8                                   14.3                                   3.0  
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Segment Net Operating Income (Loss)                                                         $     7.0                              $    (5.1 )                                               $    (2.9 )                                              $    26.7  
                                                                                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                     
                                                                                                                                     Ratios Based On Earned Premiums
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Current Year Non-catastrophe Losses and LAE Ratio                                                75.9                    %                                 78.4                    %                                 75.8                    %                                73.2                    %
Current Year Catastrophe Losses and LAE Ratio                                                     2.9                                                       3.6                                                       6.8                                                      4.6
Prior Years Non-catastrophe Losses and LAE Ratio                                                  1.5                                                       0.6                                                       0.3                                                     (0.4 )
Prior Years Catastrophe Losses and LAE Ratio                                                     (0.7 )                                                    (0.4 )                                                    (1.2 )                                                   (0.6 )
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Total Incurred Loss and LAE Ratio                                                                79.6                                                      82.2                                                      81.7                                                     76.8
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset                                 23.7                                                      26.1                                                      23.9                                                     26.0
Impact on Ratio from Write-off of Long-lived Asset                                     --                         --                         --                                   0.8  
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Combined Ratio                                                                                  103.3                    %                                108.3                    %                                105.6                    %                               103.6                    %
                                                                                      ====================================                      ====================================                      ====================================                      ===================================
                                                                                                                                                                                                                                                                     
                                                                                                                                        Underlying Combined Ratio
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Current Year Non-catastrophe Losses and LAE Ratio                                                75.9                    %                                 78.4                    %                                 75.8                    %                                73.2                    %
Insurance Expense Ratio, Excluding Write-off of Long-lived Asset                                 23.7                                                      26.1                                                      23.9                                                     26.0
Impact on Ratio from Write-off of Long-lived Asset                                     --                         --                         --                                   0.8  
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Underlying Combined Ratio                                                                        99.6                    %                                104.5                    %                                 99.7                    %                               100.0                    %
                                                                                      ====================================                      ====================================                      ====================================                      ===================================
                                                                                                                                                                                                                                                                     
                                                                                                                                     Non-GAAP Measure Reconciliation
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Underlying Combined Ratio                                                                        99.6                    %                                104.5                    %                                 99.7                    %                               100.0                    %
Current Year Catastrophe Losses and LAE Ratio                                                     2.9                                                       3.6                                                       6.8                                                      4.6
Prior Years Non-catastrophe Losses and LAE Ratio                                                  1.5                                                       0.6                                                       0.3                                                     (0.4 )
Prior Years Catastrophe Losses and LAE Ratio                                                     (0.7 )                                                    (0.4 )                                                    (1.2 )                                                   (0.6 )
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Combined Ratio as Reported                                                                      103.3                    %                                108.3                    %                                105.6                    %                               103.6                    %
                                                                                      ====================================                      ====================================                      ====================================                      ===================================

Unaudited selected financial information for the Life & Health Insurance segment follows.

                                                                                                                Three Months Ended                                                                        Year Ended
                                                                                                    ---------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------
(Dollars in Millions)                                                                                           Dec 31,                         Dec 31,                                            Dec 31,                           Dec 31,
                                                                                                                 2016                                               2015                                               2016                                                 2015
------------------------------------------------------------------------------                      ---------------------------                        ---------------------------                        ---------------------------                        --------------------------------
                                                                                                                                                                                                                                                              
                                                                                                                                      Results of Operations
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                              
Earned Premiums                                                                                      $ 152.3                                            $ 149.4                                            $ 605.2                                                $  594.4
Net Investment Income                                                                                   53.6                                               55.2                                              213.2                                                   214.2
Other Income                                                                                             0.9                             0.7                             2.8                                  2.4  
                                                                                                    -----------------------------                      -----------------------------                      -----------------------------                      ----------------------------------
Total Revenues                                                                                         206.8                           205.3                           821.2                                811.0  
                                                                                                    -----------------------------                      -----------------------------                      -----------------------------                      ----------------------------------
Policyholders’ Benefits and Incurred Losses and LAE                          92.8                                               93.5                                              461.6                                                   381.3
Insurance Expenses                                                                                      78.9                            84.5                           313.9                                320.0  
                                                                                                    -----------------------------                      -----------------------------                      -----------------------------                      ----------------------------------
Operating Profit                                                                                        35.1                                               27.3                                               45.7                                                   109.7
Income Tax Expense                                                                                     (12.1 )                                             (9.5 )                                            (15.4 )                                                 (38.0 )
                                                                                                    -----------------------------                      -----------------------------                      -----------------------------                      ----------------------------------
Segment Net Operating Income                                                                         $  23.0                         $  17.8                         $  30.3                             $   71.7  
                                                                                                    == ===== ====================                      == ===== ====================                      == ===== ====================                      ====== ====== ====================

Use of Non-GAAP Financial Measures

Consolidated Net Operating Income

Consolidated Net Operating Income is an after-tax, non-GAAP financial measure computed by excluding from income from continuing operations the after-tax impact of 1) net realized gains on sales of investments, 2) net impairment losses recognized in earnings related to investments, 3) loss from early extinguishment of debt and 4) significant non-recurring or infrequent items that may not be indicative of ongoing operations. Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years and (b) there has been no similar charge or gain within the prior two years. The most directly comparable GAAP financial measure is income from continuing operations.

Kemper believes that Consolidated Net Operating Income provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Net realized gains on sales of investments and net impairment losses recognized in earnings related to investments included in Kemper’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the company’s investments, the timing of which is unrelated to the insurance underwriting process. Loss from Early Extinguishment of Debt is driven by the company’s financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of Kemper’s business or economic trends.

A reconciliation of Consolidated Net Operating Income to Income from Continuing Operations for the three months and year ended December 31, 2016 and 2015 is presented below.

                                                                                        Three Months Ended                                                                               Year Ended
                                                                     -----------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------
(Dollars in Millions) (Unaudited)                                                   Dec 31,                                Dec 31,                                                   Dec 31,                            Dec 31,
                                                                                     2016                                                      2015                                                      2016                                                  2015
-----------------------------------------------                      ----------------------------------                        ----------------------------------                        ----------------------------------                        --------------------------
Consolidated Net Operating Income                                          $    28.8                                                 $     4.8                                                 $    12.4                                            $ 69.9
Net Income (Loss) From:
   Net Realized Gains on Sales of Investments                                    5.9                                                       6.1                                                      21.5                                              33.9
   Net Impairment Losses Recognized in Earnings                                 (5.6 )                                                    (9.6 )                                                   (21.2 )                                           (17.7 )
   Loss from Early Extinguishment of Debt                             --                         --                         --                           (5.9 )
                                                                     ------------------------------------                      ------------------------------------                      ------------------------------------                      ----------------------------
Income from Continuing Operations                                          $    29.1                              $     1.3                              $    12.7                         $ 80.2  
                                                                     ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      == ==== ====================

Diluted Consolidated Net Operating Income Per Unrestricted Share

Diluted Consolidated Net Operating Income Per Unrestricted Share is a non-GAAP financial measure computed by dividing Consolidated Net Operating Income attributed to unrestricted shares by the weighted-average unrestricted shares and equivalent shares outstanding. The most directly comparable GAAP financial measure is Diluted Income from Continuing Operations Per Unrestricted Share.

A reconciliation of Diluted Consolidated Net Operating Income Per Unrestricted Share to Diluted Income from Continuing Operations Per Unrestricted Share for the three months and year ended December 31, 2016 and 2015 is presented below.

                                                                                                         Three Months Ended                                                                               Year Ended
                                                                                      -----------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------
(Unaudited)                                                                                          Dec 31,                                Dec 31,                                                   Dec 31,                            Dec 31,
                                                                                                      2016                                                      2015                                                      2016                                                  2015
----------------------------------------------------------------                      ----------------------------------                        ----------------------------------                        ----------------------------------                        --------------------------
Diluted Consolidated Net Operating Income Per Unrestricted Share                            $    0.56                                                 $    0.09                                                 $    0.25                                            $ 1.35
Net Income (Loss) Per Unrestricted Share From:
   Net Realized Gains on Sales of Investments                                                    0.11                                                      0.12                                                      0.41                                              0.65
   Net Impairment Losses Recognized in Earnings                                                 (0.11 )                                                   (0.18 )                                                   (0.41 )                                           (0.34 )
   Loss from Early Extinguishment of Debt                                              --                         --                         --                          (0.11 )
                                                                                      ------------------------------------                      ------------------------------------                      ------------------------------------                      ----------------------------
Diluted Income from Continuing Operations Per Unrestricted Share                            $    0.56                              $    0.03                              $    0.25                         $ 1.55  
                                                                                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      == ==== ====================

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities

Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities is a ratio that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the after-tax impact of net unrealized gains on fixed income securities by total Common Shares Issued and Outstanding. Book Value Per Share is the most directly comparable GAAP financial measure. Kemper uses the trend in book value per share, excluding the after-tax impact of net unrealized gains on fixed income securities, in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods. Kemper believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are generally not influenced by management. Kemper believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.

A reconciliation of the numerator used in the computation of Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Book Value Per Share at December 31, 2016 and December 31, 2015 is presented below.

(Dollars in Millions) (Unaudited)                                                                      Dec 31,                 Dec 31,
                                                                                                                           2016                                       2015
---------------------------------------------------------------------------------------                      -----------------------------                        ----------
Shareholders’ Equity Excluding Net Unrealized Gains on Fixed                       $ 1,794.6                                             $ 1,803.2
Maturities
Net Unrealized Gains on Fixed Maturities                                                                          180.6                              189.2
                                                                                                             -------------------------------                      ------------
Shareholders’ Equity                                                               $ 1,975.2                          $ 1,992.4
                                                                                                             == ======= ====================                      === =======

Underlying Combined Ratio

Underlying Combined Ratio is a non-GAAP financial measure that is computed by adding the current year non-catastrophe losses and LAE ratio with the insurance expense (including the write-off of long-lived asset) ratio. The most directly comparable GAAP financial measure is the combined ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses and loss and LAE reserve development from prior years, with the insurance expense (including the write-off of long-lived asset) ratio. Kemper believes the underlying combined ratio is useful to investors and is used by management to reveal the trends in Kemper’s property and casualty insurance businesses that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses may cause loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on incurred losses and LAE and the combined ratio. Prior-year reserve development is caused by unexpected loss development on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing on the performance of the company’s insurance products in the current period. Kemper believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing its underwriting performance. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.

Conference Call

Kemper will discuss its fourth quarter 2016 results in a conference call on Friday, February 10, at 11 a.m. Eastern Time. Kemper’s conference call will be accessible via the internet and by telephone. The phone number for Kemper’s conference call is 844.826.3041. To listen via webcast, register online at the investor section of kemper.com at least 15 minutes prior to the webcast to download and install any necessary software.

A replay of the call will be available through February 24, 2017 at 877.344.7529 using conference ID number 10099572.

More detailed financial information can be found in Kemper’s Investor Financial Supplement for the fourth quarter of 2016, which is available at the investor section of kemper.com.

About Kemper

The Kemper family of companies is one of the nation’s leading insurers. With $8 billion in assets, Kemper is improving the world of insurance by offering personalized solutions for individuals, families and businesses. Kemper’s businesses collectively:

-- Offer insurance for home, auto, life, health and valuables

-- Service six million policies

-- Are represented by more than 20,000 independent agents and brokers

-- Employ 5,750 associates dedicated to providing exceptional service

-- Are licensed to sell insurance in 50 states and the District of Columbia

Learn more about Kemper.

Caution Regarding Forward-Looking Statements

This press release may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events, and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts.

Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. Forward-looking statements involve a number of risks and uncertainties that are difficult to predict, and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are those listed in periodic reports filed by Kemper with the Securities and Exchange Commission (the "SEC"). No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. Kemper assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this press release. The reader is advised, however, to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.

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SOURCE: Kemper Corporation

Kemper Corporation 
Investors: 
Diana Hickert-Hill 
312.661.4930 
investors@kemper.com


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