What Happened?

Shares of insurance holding company Kemper (NYSE: KMPR) fell 12.1% in the morning session after the company reported weaker-than-expected fourth-quarter financial results, falling short of Wall Street's estimates. 

The insurance firm announced adjusted earnings of $0.25 per share, significantly below analysts' forecasts of $0.86. Revenue also declined by 4.8% year-over-year to $1.13 billion, missing expectations. The underperformance was broad-based, with net premiums earned falling 3.5% to $1.04 billion, also below consensus. A key metric for profitability, the company's combined ratio, came in at 106%. This figure was significantly worse than the 99.9% analysts had anticipated and indicates that the company paid out more in claims and expenses than it earned in premiums, signaling an underwriting loss for the quarter.

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What Is The Market Telling Us

Kemper’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for Kemper and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 21.2% on the news that the company posted disappointing second-quarter financial results and received a subsequent analyst downgrade. 

The insurance provider reported adjusted earnings of $1.30 per share, which fell short of the $1.52 consensus estimate. The company attributed the earnings shortfall primarily to unfavorable developments in its commercial auto business. In response to the results, analysts at Piper Sandler downgraded the stock to "Underweight" from "Overweight" and slashed their price target to $50 from $75. The firm expressed concerns about Kemper's growth in policies and its underwriting profitability, suggesting that the company's near-term earnings may have peaked.

Kemper is down 13.3% since the beginning of the year, and at $34.27 per share, it is trading 50.7% below its 52-week high of $69.50 from February 2025. Investors who bought $1,000 worth of Kemper’s shares 5 years ago would now be looking at an investment worth $478.03.

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