[Management View]
Kemper's interim CEO, Tom Evans, acknowledged disappointing quarterly results, attributing them to operational execution shortcomings and external challenges. The company is focused on maintaining disciplined underwriting and driving profitable growth amidst increased market pricing pressure.

[Outlook]
Kemper plans to implement restructuring measures targeting $30 million in annual expense reductions and reinforce operational discipline. The company aims to enhance competitive advantages, improve profitability, and achieve consistent growth in policies in force (PIF).

[Financial Performance]
Kemper reported a net loss of $21 million or $0.34 per diluted share, impacted by adverse development, restructuring charges, and software asset write-offs. Adjusted consolidated net operating income was $20.4 million or $0.33 per diluted share. The underlying combined ratio rose six percentage points sequentially to 99.6%, primarily due to California bodily injury claim severity and competitive pricing pressure.

[Q&A Highlights]
Question 1: Did the commercial auto segment experience unfavorable prior year development, and what are the expectations for future development?
Answer: Kemper experienced adverse development in the commercial auto segment due to large loss activity and BI severity trends from social inflation. The company has adjusted expectations and IBNR development factors to capture probable future developments.

Question 2: How does Kemper's private passenger auto combined ratio compare to competitors, and what actions are being taken in California?
Answer: Kemper's private passenger auto combined ratio is higher due to its minimum limits customer base and significant exposure in California. The company is confident in its data analytics and is actively pursuing rate approvals with the California Department of Insurance.

Question 3: Is Kemper open to acquisition discussions?
Answer: Kemper, as a public company, is for sale every day, but specific comments on acquisition discussions cannot be made.

Question 4: What areas are targeted for cost savings in the restructuring initiative?
Answer: Kemper is targeting organizational design, process efficiencies, and various one-off changes for cost savings, expecting approximately $30 million in annual savings.

Question 5: What is the competitive environment in Florida and Texas, and what non-rate actions are being taken?
Answer: Florida and Texas are competitive markets, and Kemper is implementing segmentation pricing changes and non-rate actions like tightening underwriting and adjusting billing features to stabilize its in-force book.

Question 6: What was the software write-off related to, and what changes are being made in claims and IT?
Answer: The software write-off was related to Kemper's preferred business, which is in runoff. Changes in claims and IT include process improvements and leveraging data science and AI for efficiency.

Question 7: What are Kemper's thoughts on share repurchases and policy in force growth?
Answer: Kemper finds its stock attractive and prioritizes capital deployment for organic growth and financial flexibility. PIF growth is expected to be modest, with potential for mid-single-digit growth in 2026.

[Sentiment Analysis]
Analysts expressed concern over Kemper's competitive positioning and operational challenges. Management maintained a confident tone, emphasizing strategic actions and restructuring efforts to address these issues.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 | YoY Change |
|--------|---------|---------|------------|
| Net Loss | $21M | N/A | N/A |
| Adjusted Net Operating Income | $20.4M | N/A | N/A |
| Return on Equity | -3% | N/A | N/A |
| Book Value Per Share Growth | 4.8% | N/A | N/A |
| Underlying Combined Ratio | 99.6% | 93.6% | +6 pts |
| Personal Auto Combined Ratio | 102.1% | N/A | N/A |
| Commercial Auto Combined Ratio | 91.1% | N/A | N/A |
| Policies in Force Growth | 0.6% | N/A | N/A |

[Risks and Concerns]
Kemper faces competitive pressures, particularly in key auto markets, leading to elevated claims severity and pricing difficulties. The company is also dealing with adverse development in commercial auto and challenges in California due to changes in minimum financial responsibility limits.

[Final Takeaway]
Kemper's Q3 2025 results reflect significant challenges in the auto insurance market, driven by competitive pressures and increased claim severity. The company is actively pursuing restructuring initiatives and strategic actions to improve profitability and operational efficiency. While the outlook remains cautious, Kemper's strong balance sheet and liquidity position provide a foundation for future growth and shareholder value creation.