Key Takeaways
- Kemper shares jumped 10% after a preliminary third quarter showed adjusted operating income of about $1.01 a share, nearly double estimates.
- Reserve help pushed Specialty Auto’s combined ratio to 99.2%, but its underlying 101.7% is still an underwriting loss.
- Progressive, Allstate and Mercury General all turned underwriting profits, so Kemper’s auto problem looks like its own.
- Kemper’s full results on Nov. 9 will show whether the underlying ratio keeps improving.
Kemper (KMPR) shares are up 10% today after the insurer pre-announced third-quarter results after Wednesday’s close. Adjusted operating income came in at about $1.01 a share, nearly double the 55 cents analysts expected.
CEO Stephen J. McAnena kept the celebration short: “We are pleased with the improvement in our third quarter results, but we have more work to do.”
He’s right. Kemper’s auto business still loses money on this year’s policies, while Progressive (PGR), Allstate (ALL) and Mercury General (MCY) all turned underwriting profits in their latest quarters.
The beat had help
Kemper expects net income of about $52 million. In the second quarter it lost $465 million. A profit now would end a run of four straight losing quarters:
Specialty Auto’s combined ratio improved to about 99.2%, from 104.0% in the second quarter. But that includes about $23 million of favorable prior-year reserve development. Take it out, along with catastrophes, and the underlying ratio was about 101.7%, only a little better than the second quarter’s 102.3%.
TIKR tracks 6 analysts on Kemper. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Kemper, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Kemper’s Analyst Ratings
Kemper’s peers are in better shape
Progressive posted an 88.7% combined ratio in the third quarter. Without its prior-year development for the first nine months of 2026, it would still be around 90%. So the auto market isn’t what’s holding Kemper back.
Allstate and Mercury General get reserve help too. Allstate’s second-quarter auto combined ratio was 83.3%, and a healthy 87.6% on an underlying basis. Mercury booked about $44 million of favorable development in the first half of 2026, and ran an 89.9% combined ratio in the second quarter.
Both report next week. If their auto results stay that profitable, it’ll be hard to blame the market for Kemper’s 101.7%.
Nov. 9 is the real test
Analysts expect earnings to roughly double in 2027 after a weak 2026.
This quarter’s $1.01 is already about half the $2.05 analysts expect for all of 2026, so I’d expect that estimate to rise.
My take: Kemper earned the jump. But I’d want to see the underlying combined ratio under 100% before I’d call this a turnaround.
Of course, Kemper says it will keep looking for efficiencies through 2027, and lower expenses could close that gap.
So what is Kemper stock actually worth?
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