67 WALL STREET, New York - June 10, 2013 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors
Companies include: Kemper Corporation (KMPR) and many more.
In the following excerpt from the Insurance Report, the Chairman, President and CEO of Kemper Corporation (KMPR) discusses company strategy and the outlook for this vital industry:
TWST: What strategies and philosophies guide your investment activities and how has your portfolio performed over the last few quarters?
Mr. Southwell: Our portfolio has done quite well over the last couple of quarters, given that new money investment rates are still low. We are an income-oriented investor. Certainly on the life side, we need income to support the reserve growth. Having said that, though, total returns are also important, and we've got a significant minority percentage of our assets into equities and equity-like investments. So the big challenge - particularly for life insurance, but the challenge for all insurance companies - is, with new money rates so low, like our reinvestment assumption is somewhere around 3%, where do you go for yield? We've stayed fully invested. We've not stretched our durations too far, nor pressed our credit too far, and fortunately our portfolio yields have held up pretty well, and our total returns have been competitive with our benchmark, which we established really looking at how many other insurance companies invest. We think our total returns have been quite strong.
TWST: Can you tell us about your plans for capital deployment and are you on track to meet your stated goals?
Mr. Southwell: We do have excess capital. And so capital deployment is something we think a lot about. Our excess capital came partly as a result of exiting some businesses that we didn't want to be in. For example, we had a bank that we decided to exit, and that freed up a couple of hundred million dollars of capital, and then as we've been focusing our efforts on improving margins over growth. We've also been able to generate more capital than we've needed. So we are in the enviable position of having excess capital, and we've given an awful lot a thought about our capital priorities. So I'd like to answer your question really with a long-term/short-term kind of an answer.
For the long haul, we think that the top priority for capital is to fund profitable organic growth. We'd also think our capital priority is to acquire businesses that are strategic for us with the kinds of businesses we are already in to make those businesses stronger. And then the third priority for capital is to return it to shareholders in part through a dividend. We have a competitive dividend of about a 3% yield. And so it's competitive and affordable, and that's right where we want it. And we've also been returning capital through stock buybacks. So you think about those three priorities.
In the short run, we've skewed towards the last of those three priorities, because of the fact that we've been exiting one business, which...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
- Budget, Tax & Economy
- Kemper Corporation