Jane Dotson
Kemper Corporation has recently exited the preferred home and auto insurance market in California, New York, and other states. This decision comes after a strategic review of their business and a net loss of about $97 million in the second quarter. However, there is no indication that Kemper Insurance is going out of business entirely. The company will continue to operate its specialty auto and life insurance units, and it will still have claims adjusters to handle existing claims. The exit from the preferred home and auto insurance market is a strategic shift to focus on specialty commercial lines and life insurance products, allowing Kemper to improve its risk profile and increase capital available for core operations.
| Characteristics | Values |
|---|---|
| Exiting the market | Yes, Kemper is exiting the market for certain types of policies, including preferred home and auto insurance. |
| Going out of business | No, Kemper is not going out of business. They are still issuing other types of policies and will handle claims. |
| Impact on specialty auto and life insurance | No impact. The company will continue to focus on its specialty auto and life insurance units. |
| Impact on existing policies | Kemper has started notifying policyholders and working to secure new coverage for them. |
| Reason for exiting | Strategic decision to improve risk profile and operating leverage and support stakeholders. |
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What You'll Learn
Kemper exits the California home insurance market
Kemper Corporation has recently announced that it will be exiting the California home insurance market. This decision comes as the company plans to shift its focus to its specialty auto and life insurance units. The company has stated that it will start "non-renewing and cancelling all policies" under its Kemper Personal Insurance brand.
The exit from the California market is part of Kemper's broader strategy to exit the preferred home and auto insurance market across all states. This decision was made after a strategic review of the business, which revealed that exiting this market would be the most effective way to support its stakeholders. According to Joseph P. Lacher, Jr., Kemper's President, CEO, and Chairman, "It enables us to release capital and increase the resources available to support our core specialty auto and life businesses."
The impact of Kemper's exit is already being felt by California residents, particularly in areas like Santa Rosa, where residents are concerned about the availability and cost of future insurance policies. This exit also comes at a time when several other insurance companies are leaving California, prompting lawmakers in Sacramento to consider a last-minute bill that some critics worry could lead to a bailout for the industry.
While Kemper is exiting the California home insurance market, it is important to note that the company is not going out of business entirely. The company's specialty auto business, Kemper Auto, and its life insurance division, Kemper Life, are not affected by these changes. However, the company has started to notify policyholders in other states, such as New York, that it will be exiting those marketplaces as well.
This strategic shift by Kemper is indicative of the broader challenges faced by the insurance industry, particularly in states like California, where insurers are pressing for reforms in how they calculate risk to continue operating in the state. As climate change escalates the risk of disasters like wildfires, insurers are advocating for the adoption of predictive modelling in rate-setting to factor in future risks.
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Kemper exits preferred home and auto insurance
Kemper Corporation has announced that it will be exiting the preferred home and auto insurance market. The decision to exit the market comes after the company took a $45.5 million goodwill impairment charge related to the preferred business in the fourth quarter of 2022. This non-cash charge reflected reduced expectations for future earnings power.
The company has stated that it will immediately begin non-renewing and canceling all policies issued under its Kemper Personal Insurance brand. However, the exit will not impact Kemper's specialty auto unit or its life insurance division. The preferred home and auto policies represent about $500 million in annual premiums written across eight underwriting companies.
In a statement, Kemper CEO Joseph P. Lacher Jr. said that the decision to exit the business was made after a thoughtful evaluation of their options and was considered the most effective and efficient way to support their stakeholders. He added that the move will allow them to release capital and increase resources available to support their core specialty auto and life businesses.
The exit comes as big-name insurers have been taking personal insurance action and reducing their personal lines exposure. Kemper's exit from the preferred home and auto insurance market is expected to impact all states it serves and not just California, where the company is based.
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Kemper's $45.5 million after-tax goodwill impairment charge
Kemper Corporation has recently exited the preferred home and auto insurance market to focus more on its specialty auto and life insurance units. The company will start non-renewing and cancelling all policies issued under its Kemper Personal Insurance brand. The decision to exit the market was made after a thoughtful evaluation of the company's options, and it is considered the most effective and efficient way to support its stakeholders.
The Illinois-based insurer's exit comes after a $45.5 million after-tax goodwill impairment charge related to its preferred business strategic review. This non-cash charge reflects reduced expectations for future earnings power. The company's preferred property and casualty (P&C) business is comprised of eight underwriting companies, accounting for around $500 million in premium.
The second-quarter loss included the $45.5 million after-tax goodwill impairment charge, and during the same quarter, Kemper improved its underlying combined ratio in the preferred insurance segment to 95.3, compared to 105.3 in the same quarter a year ago. The net operating loss in the segment was reduced to $2.7 million from $16.8 million in Q2 2022.
Kemper's specialty P&C insurance segment also posted a reduced Q2 net operating loss of $10.8 million, compared to nearly $39 million in 2022. The company's president and CEO, Joseph P. Lacher Jr., commented that the industry is dealing with "the most disrupted personal lines environment we've ever experienced," and models predicting market behaviour are producing patterns outside their historical norms.
The exit from the preferred home and auto insurance market will allow the redeployment of over $300 million in capital to Kemper's core segments, according to Chief Financial Officer Jim KcKinney. This move will simplify the business and enhance capital deployment efficiency.
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Kemper's exit from New York State marketplace
Kemper Corporation has recently announced its exit from the New York State marketplace, sparking concerns among policyholders about the status of their existing coverages. This decision comes as Kemper seeks to wind down its preferred personal insurance business and focus more on its specialty auto and life insurance units.
The Illinois-based insurer has stated that it will start non-renewing and cancelling all policies issued under its Kemper Personal Insurance brand, which includes preferred home and auto insurance policies. These policies account for approximately $500 million in annual premiums written across eight underwriting companies.
The decision to exit the New York market is part of a broader strategic shift by Kemper to narrow its focus on specialty commercial lines and life insurance products. By shedding its preferred book, Kemper aims to improve its risk profile and operating leverage. The company has assured that the exit will be orderly and compliant with all state regulations regarding notification and transition timelines.
While no final date has been announced for Kemper's exit from New York, policyholders are being encouraged to seek alternative coverage options. Empower Insurance Services, LLC, for instance, has stated that it will work with Kemper policyholders to secure new coverage on their behalf. This development underscores Kemper's shift away from certain markets and lines of business to focus on its core specialty offerings.
In addition to New York, Kemper has also recently exited the California home insurance market, citing the need to release capital and increase resources for its specialty auto and life businesses. This exit has sparked concerns about the availability and affordability of future insurance policies for California residents.
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Kemper's specialty auto and life insurance unaffected
Kemper Corporation has recently announced that it will be exiting the preferred home and auto insurance market. The company has stated that it will be winding down its preferred personal insurance business and will no longer be renewing or issuing policies under its Kemper Personal Insurance brand. This decision comes after a strategic review of the business and is intended to allow Kemper to focus more resources on its specialty auto and life insurance units.
While Kemper is exiting the preferred home and auto insurance market, the company has confirmed that its specialty auto business, Kemper Auto, and its life insurance division will not be affected by these changes. This means that customers with specialty auto and life insurance policies from Kemper can rest assured that their coverage will remain in place. The company has stated that the decision to exit the preferred home and auto insurance market was made to better support its core specialty auto and life insurance businesses.
In a statement, Kemper's President, CEO, and Chairman, Joseph P. Lacher, Jr., said, "The decision to exit the business was made after thoughtful evaluation of our options and considered the most effective and efficient way to support our stakeholders. It enables us to release capital and increase the resources available to support our core specialty auto and life businesses." This strategic shift is expected to improve Kemper's risk profile and operating leverage by narrowing its focus to specialty commercial lines and life insurance products.
The exit from the preferred home and auto insurance market will impact policies across eight underwriting companies, totalling approximately $500 million in annual premiums. Kemper has assured its customers that it will work to ensure an orderly exit that complies with all state regulations regarding notification and transition timelines. While this decision may cause some disruptions for customers with preferred home and auto insurance policies, Kemper's specialty auto and life insurance customers can expect business as usual.
It is important to note that Kemper's exit from the preferred home and auto insurance market does not indicate that the company is going out of business entirely. Instead, the company is refocusing its efforts on its specialty auto and life insurance offerings, which are expected to benefit from increased capital and resources as a result of this strategic shift. Therefore, customers with Kemper specialty auto and life insurance policies can be confident that their coverage remains secure and unaffected by the recent changes.
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Frequently asked questions
No, Kemper Insurance is not going out of business. However, they are exiting the preferred home and auto insurance market.
Kemper Insurance's exit comes after a $45.5 million goodwill impairment charge related to the preferred business in Q4 2022. The company will now focus on its specialty auto and life insurance units.
All states that Kemper serves will be affected by its exit from the preferred home and auto insurance market, including California and New York.
Your existing coverages will remain valid, and Kemper will continue to handle claims. If you have any concerns, you can reach out to your insurance agent or agency, or contact Empower Insurance Services, LLC, for assistance in securing new coverage.
